Subscriber Question of the Day (And My Response)

James Babcock

8m ago

Doug, why did Trumps executive order with medical cannabis usage not have to jump thru all the hoops that adult use has had to do? Thanks 

Dougie Kass

just now

Very good question.

They used (in medical marijuana) The Treaty Obligation….   

The medical half rode on 21 U.S.C. §811(d)(1), which lets the AG reschedule a substance by order, without the normal §811(a)–(b) rulemaking, when doing so is necessary to carry out U.S. treaty obligations. Blanche’s order reviewed the history of those obligations and concluded that the Single Convention would still be satisfied with marijuana in Schedule III, so he immediately reclassified state-licensed medical cannabis and FDA-approved products under his authority to reschedule drugs to carry out Single Convention obligations. The treaty route only stretches as far as the treaty does, though. The Single Convention confines cannabis to medical and scientific use, so DOJ’s position is that drawing the line at medical reasonably confines federal authorization to medical and scientific channels. Adult-use cannabis has no treaty-compliance rationale to hang on, so §811(d) can’t carry it.

That leaves the adult-use half stuck in the ordinary §811(a)–(b) process: HHS evaluation, notice-and-comment, and, because interested parties requested one, a formal on-the-record hearing before an ALJ. That proceeding already existed (it relates to the May 21, 2024 NPRM, which found currently accepted medical use and lower abuse potential than Schedule I or II), but it had been frozen since early 2025. Rather than start over, Blanche set the adult-use reclassification aside to go through the traditional APA process, including an ALJ hearing commencing June 29, and ordered DEA to finish the Biden-era proposed rule in the most expeditious manner, per Trump’s order.

The practical logic is speed and insulation. The order followed a December 2025 executive order directing the AG to expedite rescheduling; the treaty route delivered immediate 280E relief for state-licensed medical operators while leaving adult-use in Schedule I, and it did so without exposing the medical reclassification to the CAMU fight in the hearing record. The ALJ even walled it off: the judge ruled the hearing would not revisit the medical rescheduling, which had already occurred, and would take no evidence on it. The cost is the vulnerability you’ve already been pressing on — whether §811(d) actually authorizes a use-based split, which is exactly what the state and prohibitionist challenges in the D.C. Circuit are testing.

Positions: None

Google’s Investors’ Guard Dropped in Recent Months

* Bona fide business threats had emerged but were ignored as passive and relentless buying of Google’s shares masked a growing AI headwind

* Is Amazon as vulnerable as Google?

Google ($GOOGL) is not only an example that the threat to its search business is real…

Price Is Not Truth

… But it is also testimony to the threat represented by market structure.

What do I mean by that? Let me explain…

Well, passive price momentum-based products and strategies carried Google’s shares ever higher in recent months — and the blind monkeys in the business media (without any or with limited analytical rigor), confidently took the price increases as a sign of fundamental progress. Indeed Google became the darling of the hyperscalers based principally on chart gazing.

Here is perennial bull Gene Munster voicing his concerns:

This gets me back to Amazon ($AMZN).

What has kept me from buying AMZN at seemingly an attractive price-earnings multiple is what has threatened Google. Is the utility of using Amazon markedly reduced as AI/Personal Bots expand their tasks? 

Again from Gene Munster:

Finally, about two years ago we observed the dramatic change in the hyperscaler from capital light to capital intensive — suggesting that this was not market friendly and that it was price-earnings multiple altering/contracting:

Position: None

There Is No Gold in Them Thar Hills

“Gold is in Quad 2 crash mode…”

– Hedgeye’s Keith McCullough

I have positioned (trading sardine) $GLD profitably three times in the last two months — buying the dips and selling the rips.

At some point, gold is a buy and hold (based on, in part, sticky inflation, the lack of fiscal discipline in Washington DC and currency debasement), but quite frankly I have no idea at which level.

This morning GLD is down by another -$4.59 and shows no evidence of stabilizing:  

The proximate cause for this morning’s precipitous decline is the strength of the U.S. dollar:

Position: None

Oscillator Gets More Overbought as Brew Crew Triumphs

The S&P Short Range Oscillator moved to a larger overbought at 1.84% vs. 0.91%.

I covered all of my index shorts last night (on the collapse in stock futures):

Dougie Kass

At 11:13 PM Wednesday night coincident with the last out of the 2026 World Series just made,  clinching a win by the Milwaukee Brewers: I have closed out my Index shorts (S and P futures -41 handles, Nasdaq futures -445 handles):

  • SPY $768.29
  • QQQ $714.73

Good night and congrats Brewers! 

Position: None

Market Postscript

* Here are my thoughts following the plethora of EPS releases after the close…

With Google’s ($GOOGL) miss (the deceleration in its core business was unanticipated by every panelist on “the show”), Meta’s ($META) continued awful share price action, Nvidia’s ($NVDA) price rollover threatening chart support, Amazon’s ($AMZN) lackluster share price action (and underperformance) and some possible toppiness in Apple’s ($AAPL) share price, we are left with one… Microsoft ($MSFT).

Meanwhile, ServiceNow’s ($NOW) disappointing results (the company cut subscription revenues for the full year) will likely weigh heavily on software stocks (which were market leaders) tomorrow morning.

I remain independent in view.

As I said in response to subscriber jryan, most stocks do not meet my standards to buy and I won’t change my process or discipline — even if Perma Bulls Tom Lee and Dan Ives (confidently) see clear skies ahead…

The S&P Short Range Oscillator registered 1.84% (more overbought than the prior day) and I ended the day with a large short positioin in $SPY.

Position: Short SPY (L)