U.S. Cannabis Stocks That Could Pop After Legalization
It seems like almost every day the United States gets one tiny step closer to legalizing cannabis federally. Tilray (NASDAQ:TLRY) CEO Brendan Kennedy has guessed that 2021 will be the year the United States will legalize cannabis and that legal medical use will double by then to 70 other countries.
According to Arcview Market Research and BDS Analytics, legal cannabis in the United States could be worth $20.9 billion by then, which would make the U.S. the world’s largest cannabis market. At the state level cannabis has been legalized for medical use in 33 states (along with four territories and the District of Columbia) and for recreational use in ten states (Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington).
However, cannabis is still classified as a Schedule-1 drug under United States federal law (deemed the most harmful category, the same as heroin) which means that U.S. cannabis companies can’t bank at the four major banks in the United States: Bank of America (NYSE:BAC), JP Morgan (NYSE:JPM), Wells Fargo (NYSE:WFC), and Citibank (NYSE:C). That’s because these banks are all federally licensed and banned from offering services to the ‘illegal’ cannabis industry.
A positive sign towards federal legalization is that United States Attorney General William Barr recently circulated the States Act to the Department of Justice for review and comment noting that he’s open to the approach it outlines. The States Act would carve out an exemption in the federal Controlled Substances Act for state-legal cannabis programs. The bipartisan bill is supported by six Democrats and five Republicans. Despite current federal restrictions many cannabis companies are thriving in the United States and will be in a unique and favorable position to expand when cannabis is finally legalized federally. Here are two United States-operating cannabis companies whose stock could pop on news of the eventual federal legalization of marijuana.
Curaleaf Holdings (CNSX:CURA)
Vancouver-based for its public listing in Canada but with operations in the United States, Curaleaf Holdings is a vertically-integrated medical and wellness cannabis operator. In January of this year the company had 42 dispensaries with operations in 13 states. Curaleaf offers vaporizers, concentrates, tinctures, lozenges, capsules, and edibles as methods of delivery for cannabis. The company had total revenue of $77.1 million in 2018.
One of the world’s largest institutional investors, BlackRock, has $11 million invested in Curaleaf across five of its funds. The company is also invested in hemp and recently announced a deal with the pharmacy chain CVS (NYSE:CVS) to sell hemp products in over 800 stores across ten different states.
Green Thumb Industries (CSE:GTII)
Chicago-based Green Thumb Industries (GTI) is a vertically-integrated national cannabis consumer packaged goods company and retailer operating in 11 states. GTI manufactures and sells a range of branded cannabis products including dried flower, concentrates, edibles and topical creams and lotions.
The company owns a national chain of retail stores and holds licences for 83 locations. GTI also has 13 production facilities and employs around 800 people. It was named Best Workplace 2018 by Crain’s Chicago Business. Since April 10, 2018 the stock has risen over 94%.
Read more – Going Green: An Investor’s Guide to Cannabis Stocks.
Featured image courtesy of Shutterstock.