For those wondering if the cannabis sector will ever see the kind of growth it generated when the industry exploded onto the investment radar in 2018, after Canada became the first G7 country to legalize marijuana, they got a clear indication last week .
The source was a prominent Jefferies analyst who described the future of the cannabis industry as a "generational opportunity for wealth" for investors. The comment was part of a note announcing the start of coverage for seven US-based marijuana companies. Jefferies analyst Owen Bennett set a 'buy' rating for all seven companies now covered: AYR Strategies (OTC) :), Columbia Care (OTC:), Curaleaf Holdings (OTC:), Cresco Labs (OTC:), Green Thumb Industries (OTC:), Terrascend Corp (OTC:) and Trulieve Cannabis (OTC:) Corp.
Bennett said he expects the share price of each of these companies to double over the course of the next 12 months, with the increase reportedly fueled by industry growth as the US draws closer to federal legalization
According to a report by BNN Bloomberg, Jefferies expects US cannabis sales to grow dramatically over the next decade – from $17 billion, where it stood in 2020, to about $64 billion by 2030. Most of that growth will be the result of legalization moves at both state and federal levels, and regulatory changes that will ease access to institutional investment. He seized federal legal acceptance by 2026. Bennett also pointed out that US cannabis companies' valuations are well below Canadian operators, whom he described as valued at a premium despite having no direct exposure. to the US market and operate in a relatively smaller market. If Bennett's expectations come true, stocks like Trulieve, which closed Monday at $37, could hit a price target north of $62, setting a record high for the Florida-based grower that has had an impressive trajectory so far.
Another stock on Bennett's list, Green Thumb Industries, closed Monday at $33.03. Jeffrie's target price would bring that to about $70. Green Thumb has gained nearly 227% in the past 12 months.
Mexico Next Big Market In North America
Skip the conversation about US federal legalization to the prospect of Mexico legalizing the weed, the topic has prompted that country's former president to say that cannabis should be included in the Canada-Mexico-US free trade agreement.
Mexico has legalized the medical use of cannabis and will take the next step in September and extend the recreational legalize use.
Vincente Fox made the statement following Mexico's Supreme Court ruling that it will allow the country to reverse all recreational use bans, paving the way for further legalization. Fox also serves on the board of directors of a private Canadian-based marijuana grower, Khiron Live Sciences Corp. He said the company will be selling cannabis products to Mexican consumers in the coming weeks.
Mexico, with a population of approximately 130 million, would be the largest legal cannabis market if it legalizes recreational use of the substance, but analysts predict it will be smaller than the Canadian market. In 2020, the US cannabis market was worth $17.2 billion, while the Canadian market is still expected to reach only about $9 billion when it peaks.
