Cannabis and Hemp Sector Ideas

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>>> Marijuana Is on the Ballot in 5 States. These Stocks Could Benefit From a Green Wave.


Barron's

By Connor Smith

Nov. 3, 2020


https://www.barrons.com/articles/marijuana-is-on-the-ballot-in-5-states-these-stocks-could-benefit-from-a-green-wave-51604428536?siteid=yhoof2


Election Day is here. In several ways, marijuana is on the ballot this year.

New Jersey, Arizona, and Montana will vote on recreational cannabis initiatives Tuesday, while South Dakota will vote on pathways to both recreational and medical pot. Mississippi will vote on medical marijuana, but not recreational marijuana.

“Of these initiatives, Arizona and New Jersey represent the most significant market opportunities given their large populations,” Canaccord Genuity analyst Bobby Burleson wrote in a note last month.

New Jersey is likely to approve legalization of recreational cannabis sales through New Jersey Public Question 1. Cannabis has broader support from Democratic lawmakers in the state. Among them are Gov. Phil Murphy and Sen. Cory Booker, who have both posted support of the measure on social media. Efforts by state lawmakers to approve legislation fell through last year.

The initiative would legalize recreational use for people age 21 and older in New Jersey, as well as the cultivation, processing, and sale of retail pot. The state would apply a 6.625% sales tax to recreational cannabis sales.

Budget shortfalls due to Covid-19 have led pot analysts to speculate states that have dragged their feet on legalization may have more of an incentive to move forward with it now. Canaccord’s Burleson wrote that the approval of recreational sales in New Jersey could also push neighboring states like Pennsylvania and New York to follow suit.

“The governors of both New York and Pennsylvania attempted to pass cannabis legislation earlier this year, failing in part due to a priority shift in light of COVID-19,” Burleson wrote. “Nevertheless, both governors have remained outspoken in support of recreational sales, recently discussing programs for [recreational use] that would commence sales ahead of New Jersey.”

Acreage Holdings (ticker: ACRHF), Curaleaf Holdings (CURLF), Cresco Labs (CRLBF), Columbia Care (CCHWF), Green Thumb Industries (GTBIF), Harvest Health & Recreation (HRVSF), and Trulieve Cannabis (TCNNF) are among the public companies with a retail presence in New Jersey’s medical cannabis market.

Burleson notes that Arizona “has been the fastest growing state market,” of those covered by cannabis research firm BDS Analytics. Harvest is the leader in Arizona’s medical market, followed by Curaleaf, according to the folks at Canaccord.

If Democrats take over the Senate, it could provide a pathway for federal cannabis legislation. The Safe Banking Act, which passed the House of Representatives last year with bipartisan support, was stalled when it reached the Senate. The bill would protect banks that service the pot business in states where it’s legal. Senate Majority Leader Mitch McConnell opposed the effort. FiveThirtyEight forecasts Democrats have a 75 in 100 chance of winning control in the Senate.

Former Vice President Joe Biden has also voiced support for the decriminalization of marijuana. But Biden’s platform would leave legal recreational sales to individual states.

“The Biden/Harris ticket has been outspoken about decriminalizing cannabis and legalizing medical cannabis while being in support of letting states set their own policies regarding recreational cannabis,” Burleson wrote. “This represents a significant shift from President Trump’s position, which has been dramatically more hostile toward cannabis expansion.”

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