While the cannabis industry continues to wait for the legalization of recreational marijuana nationally in the US, analysts keep an eye on the next best thing: which states will be added to the growing list of jurisdictions that are choosing to use cannabis legitimize and take advantage of the sales tax benefits.
As this patchwork of legal acceptance unfolds, it offers strategic benefits to certain companies, something investors in the industry should keep an eye on.
Take the latest report from financial analysis company Cantor Fitzgerald as an example. Last week, it released a report suggesting that five more states are likely to legalize recreational cannabis in the next two years: Arizona, New Jersey, New York, Pennsylvania and Connecticut. Given the size of the population of these states, the report further estimated that these five will expand the U.S. cannabis market along with approximately $ 3.5 billion.
According to the Cantor analysis, this would have three footprint companies in those states a strategic advantage to take full advantage of the changes in the law – Curaleaf Holdings (OTC 🙂 (CSE :), Green Thumb Industries (OTC 🙂 (CSE 🙂 and Cresco Labs (OTC 🙂 (CSE:).
They wouldn't be the only beneficiaries. But let's take a look at them first.
According to reports from the Cantor study, Curaleaf is positioned to expand operations in all five states. Last week, the Massachusetts-based grower, the largest vertically integrated cannabis operator in the United States, announced that it has entered into a deal to acquire GR companies, also known as Grassroots, the largest privately-owned vertically integrated multi-state operator in the U.S. The deal makes Curaleaf the largest cannabis company in terms of sales in the United States.
Curaleaf Holding's stock hit about 2.5% on the news at the end of last week, but added yesterday, with an increase of 7.6% to close the day at $ 8.02
Curaleaf Holding OTC Shares
Curaleaf CEO Joseph Lusardi said the following in a statement about the acquisition:
"The successful acquisition of Grassroots marks the expansion of Curaleaf to new vertically integrated markets in the Midwest, solidifying our position as the market leader in the US."
The deal accelerates the expansion of Curaleaf to Illinois and Pennsylvania, which are among the largest and fastest-growing cannabis markets in the United States.
It also gives it a licensed presence in Arizona, Connecticut, Florida, Illinois, Pennsylvania, Maryland, Massachusetts, Maine, Nevada, New Jersey, New York, North Dakota, and Vermont.
As for Green Thumb Industries, the Cantor report predicts that extensive legalization could double sales.
The Chicago-based medical and recreational cannabis grower has seen a steady increase in its stock during the month of July, increasing by more than 33%. Yesterday, the shares were slightly above 5% on the day to close at $ 12.82.
While at Cresco Labs, which is already active in Pennsylvania, New York and Arizona, the Cantor Fitzgerald report claims it could see its sales double numbers, too.
Aphria sees share increase for results
Shares of Aphria (NASDAQ 🙂 (TSX 🙂 rose about 12% in both Toronto and New York on Monday. The performance on the Canadian stock exchange earned it the title of the best performing of the day. The boost comes just two days before the Ontario-based cannabis grower reports its fourth quarter.
In the previous quarter, Aphria reported that it approximately doubled net earnings for the same period of the previous year, reaching just over C $ 144 million ($ 107.6 million) compared to C $ 73. 6 million the year before.
Aside from the fiscal performance during the onset of the pandemic, business executives are likely to be questioned about future plans, following reports earlier this month talking to Aurora Cannabis (NYSE 🙂 (TSX :).
Aphria shares were 12.33% yesterday to close at $ 5.74 on the stock, while they added 11.95% on the Toronto Stock Exchange to close at C $ 7.68.