| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| -4% | -28% | -28% |
Bengal Capital's Q1 2026 letter centers on the DOJ's historic rescheduling of marijuana from Schedule I to Schedule III, providing immediate 280E tax relief for medical operations while sending adult-use through expedited rulemaking. The fund returned -28% in Q1 but recovered 13% in April following the announcement. The manager views rescheduling as constructive but not transformative, maintaining focus on operators with cost discipline and brand strength who can win in normalizing pricing environments. Key portfolio holding Grown Rogue demonstrated strong execution with 22% revenue growth and 43% EBITDA growth, expanding into New Jersey, Minnesota, and Illinois with 56% capacity increases planned. The manager emphasizes the complexity of capturing 280E benefits for hybrid operators and watches closely for potential medical interstate commerce opportunities. Private reinsurance investment LadderRe is positioned to capitalize on new psychedelic therapy insurance needs. The core thesis remains price normalization and operator quality rather than wholesale portfolio shifts around regulatory changes.
Focus on cannabis operators with genuine cost discipline and brand strength who can take market share as state programs mature and pricing normalizes, with rescheduling providing some financial relief but not changing fundamental investment approach.
The manager maintains focus on price normalization thesis and operator quality rather than betting on regulatory changes. They view rescheduling as constructive but not transformative, emphasizing the importance of identifying operators who can win in normalizing pricing environments. The key question is whether medical interstate commerce opens up meaningfully, which could reshape competitive dynamics.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| May 7 2026 | 2026 Q1 | BAMM, GRWG | 280E, Cannabis, growth, regulation, Rescheduling, small caps | GRUSF | Bengal Capital maintains focus on cannabis operators with cost discipline despite historic Schedule III rescheduling providing 280E tax relief. The fund sees rescheduling as constructive but not transformative, emphasizing price normalization thesis over regulatory betting. Key holding Grown Rogue shows strong execution with 22% revenue growth and multi-state expansion. Medical interstate commerce potential represents the most interesting structural development to monitor. |
| Dec 9 2025 | 2025 Q3 | BAMM, GRWG | Cannabis, operations, Regulatory, retail, value | GRIN CN | Bengal Capital advocates for cannabis companies with operational competence over regulatory capture advantages, believing superior operations drive sustainable competitive moats. The concentrated portfolio focuses on Grown Rogue's cost leadership capabilities and LadderRe's reinsurance opportunity, while expecting Body and Mind debt recovery through pending regulatory approvals generating anticipated payments. |
| Aug 28 2025 | 2025 Q2 | BAMM, GRUSF, TCNNF | Brand, Cannabis, consumer, Quality, Rescheduling, Scale | - | Bengal Capital's cannabis-focused fund underperformed in Q2 2025 due to Grown Rogue's stock decline but maintains conviction in quality operators. The manager expects Schedule 3 rescheduling in 2026-2027 but believes consumer pricing pressure will persist. They emphasize that consistent quality cannabis production at scale creates sustainable competitive advantages for customer-centric operators. |
| May 1 2025 | 2025 Q1 | CURLF, GRUSF, GTBIF, TCNNF, VRNOF | Cannabis, Capital Allocation, distressed, MSOs, small cap, value | GRUSF | Bengal Capital's Q1 decline reflects temporary Grown Rogue volatility following poor earnings communication. The manager maintains conviction in disciplined cannabis operators while extensively criticizing large MSOs' poor capital allocation and structural challenges. Only GTI generates acceptable returns among major players. Strategy focuses on operators who can profitably expand through organic growth or distressed acquisitions in the growing regulated market. |
| Feb 28 2025 | 2024 Q4 | BAMM.TO, CL.TO, CURA.TO, GRIN.TO, GTII.TO, TIUM.TO, TRUL.TO, TSND.TO, VREO.TO, VRNO.TO | Cannabis, Credit Stress, distressed, private equity, small caps, value |
GRIN.TO VREO.TO |
Bengal Capital argues large cannabis MSOs are overvalued despite low multiples due to poor fundamentals and upcoming debt maturities. The fund concentrates on quality operators like Grown Rogue and shifts toward private equity opportunities. Florida adult use failure combined with capacity expansion will intensify price competition. Increasing industry distress creates acquisition opportunities for well-capitalized players. |
| Oct 29 2024 | 2024 Q3 | GTI, MSOS, TRUL | Cannabis, Operational Rigor, private credit, SmallCap, value |
VREOF GRUSF BAMM |
Bengal Capital's cannabis fund stayed flat in Q3, backing operationally rigorous companies like Grown Rogue that demonstrate sustainable profitability in competitive markets. The manager argues operational excellence creates lasting competitive advantages worth premium valuations, while remaining skeptical of large MSOs facing terminal value challenges. Key catalysts include Minnesota adult-use launch and New Jersey market dynamics. |
| Jul 15 2024 | 2024 Q2 | BAMM, BUD, GDNSF, GRUSF, GTI, SAM, XSF.TO | Cannabis, Capital markets, growth, MSOs, undervalued, value | - | Bengal Capital argues cannabis is rapid market absorption, not high growth, requiring focus on companies profitable in normalized pricing. The fund holds concentrated positions in four cannabis names, with Grown Rogue showing strong performance while XS Financial faces take-private losses. They expect market bifurcation between quality operators and struggling companies, viewing cannabis as an emergent consumer staple. |
| May 18 2024 | 2024 Q1 | AAPL, AMZN, AYRWF, CBST, CURA, GRUSF, MSFT, MSOS | Cannabis, MSO, Rescheduling, value, Vertical Integration | - | Bengal Capital argues cannabis market maturation will favor low-cost producers over large MSOs using vertical integration to protect margins. Fund outperformed in Q1 and remains positive since inception. Manager believes large MSOs destroy value by forcing customers toward subpar internal products rather than market alternatives, creating opportunities for customer-focused smaller players like Grown Rogue. |
| Aug 2 2024 | 2023 Q4 | BMMJ, GDNSF, GRUSF, XSHLF | Cannabis, Concentration, MSO, Rescheduling, small caps, value | - | Bengal Capital's concentrated cannabis strategy delivered strong 2023 performance through four quality holdings trading at significant discounts. While bullish on industry growth and Schedule III rescheduling prospects, the manager believes large MSOs are fundamentally flawed locust-like businesses. Focus remains on smaller, operationally excellent companies with sustainable competitive advantages and disciplined capital allocation for superior long-term value creation. |
| Jun 2 2023 | 2022 Q4 | BAMM CN, GRIN CN, UGRO, XSF CN | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
CannabisThe DOJ announced rescheduling marijuana from Schedule I to Schedule III, with immediate relief for medical operations and broader rulemaking for adult-use. This provides 280E tax relief for medical operations but requires complex segmentation work for hybrid operators. The manager views this as constructive but not transformative, maintaining focus on price normalization and operator quality rather than wholesale portfolio shifts. |
Cannabis Rescheduling 280E Medical Regulation |
RegulationFederal cannabis policy changes represent the most meaningful action in fifty-five years, with Schedule III rescheduling creating new compliance requirements and potential interstate commerce opportunities. The manager emphasizes the complexity of implementation and ongoing litigation risks while noting the structural advantages for operators who can navigate the new regulatory environment effectively. |
Federal Policy Compliance DEA Interstate Commerce Legal | |
| 2025 Q3 |
CannabisBengal focuses on cannabis investments through three profit buckets: regulatory capture (least sustainable), geographic hustle (moderate sustainability), and operational competence (most sustainable and preferred). The fund emphasizes operational competence as the main source of long-term advantage in the industry, believing it deserves higher multiples due to greater sustainability and resilience. |
Cannabis Regulatory Operations Retail MSO |
ValueBengal employs a value investing approach, seeking to buy assets at a discount to intrinsic value defined as present value of future cash flows. The firm emphasizes being generally right rather than precisely mathematical, focusing on understanding how companies make money now and in the future. |
Value Intrinsic Discount Cash flows | |
| 2025 Q2 |
CannabisThe fund focuses on cannabis investments including publicly traded equity, convertible debt, term debt, and preferred equity in private companies. The manager discusses rescheduling expectations for 2026-2027 and believes most 280E savings will benefit consumers rather than companies. Quality cannabis production at scale remains difficult and creates sustainable competitive advantages. |
Cannabis Rescheduling 280E Quality Scale |
QualityThe manager emphasizes that growing good cannabis consistently at scale is hard and represents a sustainable competitive advantage. Quality-focused operators like Alien Labs build consumer trust and brand loyalty by prioritizing what consumers want rather than working backwards from production capabilities. |
Quality Scale Consistency Brand Consumer | |
| 2025 Q1 |
CannabisThe fund focuses on cannabis investments, particularly criticizing large MSOs for poor capital allocation while favoring disciplined operators like Grown Rogue. The manager believes the regulated cannabis industry offers volume growth opportunities for strong operators despite widespread challenges. |
Cannabis MSOs Regulation Operators Growth |
Capital AllocationExtensive analysis of MSO capital allocation failures, particularly highlighting poor acquisitions by companies like Verano and Terrascend. The manager emphasizes that past capital allocation performance predicts future results and criticizes asset impairments being dismissed as noncash charges. |
Capital Allocation Acquisitions ROA Impairments Returns | |
ValueThe manager focuses on identifying undervalued opportunities in cannabis, particularly companies with strong operating performance in mature markets that can generate cash in tough pricing environments. Emphasizes looking at future profit generation rather than quarterly fluctuations. |
Value Undervalued Profits Cash Generation Pricing | |
| 2024 Q4 |
CannabisManager provides extensive analysis of cannabis industry fundamentals, arguing that large MSOs are overvalued despite low multiples due to poor capital allocation, missed forecasts, and deteriorating market conditions. Focuses on price compression across multiple states and structural challenges facing the industry. |
Cannabis MSO Regulation Pricing Cultivation |
Credit StressHighlights significant debt refinancing challenges facing major cannabis companies with over $1.1B in debt due in 2026. Discusses how deteriorating cash flows combined with refinancing needs will pressure equity holders, using Pharmacann's default as an example of industry stress. |
Debt Refinancing Default Leverage Distress | |
ValueAdvocates for concentrated investments in undervalued, well-operated smaller companies like Grown Rogue rather than large MSOs trading at seemingly attractive multiples. Emphasizes importance of quality management and efficient operations over size and scale. |
Valuation Quality Management Efficiency Concentration | |
| 2024 Q3 |
CannabisFund focuses exclusively on cannabis investments including public equity positions in Grown Rogue, Vireo, and Body and Mind, plus private debt investments. Manager emphasizes operational rigor as key competitive advantage in cannabis sector, particularly for companies that can demonstrate profitability in mature, competitive markets like Oregon. |
Cannabis MSOs Operational Rigor Adult Use Cultivation |
| 2024 Q2 |
CannabisThe fund focuses exclusively on cannabis investments, holding positions in Grown Rogue, XS Financial, Goodness Growth, and Body and Mind. The manager argues that cannabis is not truly high growth but rather rapid absorption of illicit markets by regulated markets, with consistent patterns of increased units and decreased prices. |
Cannabis MSOs Regulation Absorption Pricing |
ValueThe fund seeks undervalued cannabis companies that can generate profits in normalized price environments. The manager emphasizes focusing on companies with solid underlying economics rather than chasing growth narratives, believing well-run cannabis companies will demonstrate consistency and reliability of future profits. |
Undervalued Fundamentals Profitability Economics Quality | |
Capital MarketsThe manager discusses the challenging capital markets environment for cannabis companies, noting how the capital markets winter affected both demand for XS Financial's products and XSF's access to attractive capital. This led to XSF pursuing a strategic transaction and being taken private. |
Capital Liquidity Financing Credit Access | |
| 2024 Q1 |
CannabisFund focuses on US cannabis industry with discussion of rescheduling timeline, market maturation dynamics, and vertical integration strategies. Manager analyzes how falling prices and rising unit sales affect MSO profitability and positioning. |
Cannabis Rescheduling MSO Vertical Integration Regulation |
| 2023 Q4 |
CannabisFund focuses exclusively on cannabis industry investments with concentrated portfolio of four holdings. Manager believes in long-term growth opportunity but criticizes large MSOs as fundamentally flawed businesses that strip high prices in limited license markets without building enduring value. |
Cannabis MSO Cultivation Dispensaries Rescheduling |
ValuePortfolio trades at approximately 50% of conservative fair value estimates. Manager prioritizes fundamentally-driven investing over trading momentum, focusing on companies with sustainable competitive advantages and disciplined capital allocation. |
Undervalued Fair Value Fundamentals Capital Allocation Quality | |
Small CapsStrategy focuses on smaller, nimble cannabis operators rather than large MSOs. Believes small companies with operational expertise can build enduring value while large MSOs act like locust swarms that strip vegetation and move on. |
Small Ball Nimble Operational Concentration Quality |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| May 7, 2026 | Fund Letters | Bengal Capital | GRUSF | Grown Rogue International Inc. | Drug Manufacturers - Specialty & Generic | Agricultural Products | Bull | Dubai Financial Market | Agricultural Products, Branded Products, Cannabis, capacity expansion, Cultivation, growth, indoor farming, Multi-State Operator, small-cap | Login |
| Dec 9, 2025 | Fund Letters | Jerry Derevyanny | GRIN CN | Grown Rogue International Inc. | Consumer Staples | Agricultural Products | Bull | Canada (CN) | Cannabis, Costs, Margins, Operations, Pricing, Yields | Login |
| May 1, 2025 | Fund Letters | Bengal Capital | GRUSF | Grown Rogue International Inc. | Consumer Staples | Agricultural Products | Bull | OTC | Cannabis, cash generation, Distressed assets, Michigan, Multi-State Operator, New Jersey, Oregon, Pricing Cycles, value creation, vertically integrated | Login |
| Feb 28, 2025 | Fund Letters | Bengal Capital | GRIN.TO | Grown Rogue International Inc. | Consumer Staples | Agricultural Products | Bull | Canadian Securities Exchange | Agricultural Products, Cannabis, capital allocation, Craft Cannabis, Cultivation, Distressed assets, growth, Multi-State Operator, Value Compounding | Login |
| Feb 28, 2025 | Fund Letters | Bengal Capital | VREO.TO | Vireo Health International Inc. | Health Care | Pharmaceuticals | Neutral | Canadian Securities Exchange | balance sheet, Cannabis, Capital Raise, execution risk, Litigation Asset, medical cannabis, Multi-State Operator, Rollup Strategy | Login |
| Oct 29, 2024 | Fund Letters | Bengal Capital | BAMM | Body and Mind Inc | Consumer Staples | Personal Products | Neutral | CSE | Asset Coverage, Cannabis, Convertible debentures, Dispensaries, Distressed debt, Illinois, New Jersey, Senior secured, Term Loan | Login |
| Oct 29, 2024 | Fund Letters | Bengal Capital | VREOF | Vireo Health International Inc | Consumer Staples | Personal Products | Neutral | OTC | Adult-use, Cannabis, Cultivation, manufacturing, Medical marijuana, Minnesota, retail | Login |
| Oct 29, 2024 | Fund Letters | Bengal Capital | GRUSF | Grown Rogue International Inc | Consumer Staples | Personal Products | Bull | OTC | Adult-use, Cannabis, Craft Cannabis, Indoor-Cultivation, Michigan, New Jersey, operational efficiency, Oregon, Premium flower, Wholesale | Login |
| TICKER | COMMENTARY |
|---|---|
| GRWG | Grown Rogue recently announced its full year 2025 results, now fully consolidating New Jersey operations, and also provided forward-looking guidance for the first time, as it also transitioned from IFRS to U.S. GAAP accounting standards. The company posted solid headline growth with annual revenue increasing 22% and adjusted EBITDA up 43%, but more importantly in our view, the company's press release contains ample disclosure to underwrite the sustained growth rates they guided to. The core of our investment thesis is that Grown Rogue is a true small cap growth platform and it is refreshing to see a company paint a fundamentally-driven quantifiable growth picture. We think comparing Grown Rogue across the publicly-traded landscape of cannabis companies is comparing apples and oranges. The annual growth cited above came despite price normalization-driven revenue declines of 8% and 22% in Oregon and Michigan, respectively, with New Jersey more than making up the difference with $11.3 million in sales in its first full year of operations. Grown Rogue confirmed that it has begun construction on its Phase II expansion to incrementally double capacity in New Jersey, with an initial harvest expected in May from the first of four additional rooms anticipated to come online over the course of 2026. Grown Rogue's expansion from Oregon to Michigan showed that its model can travel. New Jersey added a few more data points: (1) Grown Rogue can find shelf space in large MSO stores; and (2) Grown Rogue can be trusted to deploy a larger amount of capital than they had before (>$10 million) while generating significant returns and what looks to be an <3 year payback period; (3) Grown Rogue has a significant opportunity to continue to push more sales into its branded products, increasing ASPs even potentially in Oregon and Michigan. Our main concern with Grown Rogue's mature markets, like Oregon and Michigan, is that they continue to generate cash even as prices normalize - and this is still what is happening. We expect cashflows to bounce around and be somewhat cyclical, so we are not overly concerned with percentage changes so long as we are confident that these operations continue to be cash flowing on a four wall basis. This year, the company has two new markets coming online: Minnesota and Illinois. Having shown the model can travel, Grown Rogue must now show that they can do two major projects at once. Simply put: a growth company that can open one really profitable operation per year is worth much less than a growth company that can open two. New Jersey's startup was fast by cannabis standards but still slipped a bit from Grown Rogue's initial estimates - Minnesota and Illinois give Grown Rogue the chance to show they can grow more quickly than before. And, demonstrating that should hopefully undergird investors' increased trust in Grown Rogue's future growth projections. That's a 56% increase in capacity happening this year with a lot more waiting to be brought online as market conditions allow. Furthermore, the geographic mix of this new capacity should materially increase Grown Rogue's blended average selling price. But ultimately, we don't own Grown Rogue because they have the most capacity or operate in the markets with the best pricing; we own them because they are laser-focused on growing high-quality weed as efficiently as humanly possible and have been delivering against that priority. Despite the revenue contraction mentioned above in the company's legacy markets of Oregon and Michigan, Grown Rogue managed ~15% increases in flower yield and ~12% decreases in flower COGS per pound in both markets. Grown Rogue's long-term guidance is 25% revenue growth and 35% adjusted EBITDA growth per year. Continuing to execute this year in Minnesota and Illinois will put powerful proof to these numbers. |
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