LEGALIZATION COVERAGE

Canada’s decision to legalize the recreational use of cannabis has allowed the rise of an emerging investment market. The cannabis public sector has become one of the most followed industries for investors. 

As such, the Investing News Network brings investors a collection of stories on the critical transition and its impact on the public markets.


A lot of predictions have been made for how exactly the market will react to the legalization of adult-use cannabis and where the money will be moving.

A massive sell-off has gained steam as the popular prediction for what investors are thinking as the Canadian market is set to enjoy a boost from interest all around the world.

The Investing News Network (INN) asked a round of experts for their opinions on whether the sentiment is moving towards buying, selling or holding these pot stocks.

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

Charles Taerk, president and CEO of Faircourt Asset Management

Taerk, who also acts as a sub-advisor to the Ninepoint Alternative Health Fund, told INN the market has had investors getting cold feet regularly and selling early. He predicted this again could happen the month after legalization.

The executive said he views those selling times as an opportunity for their fund to add for a long term play.

“We’re long term focussed and we use any opportunity for weakness as a buying opportunity. We see this market as a growth story for the next five to 10 years, so our focus is on those companies that are going to be producing successfully over a long period of time,” Taerk said.

Taerk expressed concern for the breakdown of companies able to meet the demands of supply agreements with provinces.

He expects some companies to incur the services of fellow licensed producers (LPs) to purchase additional product.

“Which means that their costs of production are higher than others and this is where we are starting to see a real separation with those companies that do have inventory and do have efficient production are gonna start to move to the fore,” Taerk said.

It’s going to increasingly become a discussion about earnings, so there is going to be a lot of separation we see in the next four to six months.”

Like his fund, Taerk sees the cannabis play as a long term one with plenty of catalysts still to come for the space.

Everett Knight, portfolio manager with Matco Financial

Knight said he expects to see a lot of retail money selling on legalization day on Wednesday (October 17). The manager cautioned investors need to remember, despite the rush and excitement, this is still an emerging market early in its process.

“Just like any industry, we see companies that are overvalued and lots of companies that are still undervalued,” Knight said. “Cannabis investors will have to become more sophisticated and not paint the whole industry with same brush to make better returns.”

Knight said most of the questions he’s getting from potential investors in the cannabis space is whether or not they have missed out.

“My answer is a definite no! However, investors have to be careful of just buying a handful of the highest valued names in the space,” Knight said.

He expects the next three quarters to deliver the results investors need in order to start separating meaningful revenue in the space.

Knight is also concerned about how much actual cannabis will be available for the legal market.

A new joint report from the University of Waterloo and the C.D. Howe Institute shows the supply of cannabis in Canada will reach 210,000 kilograms in the first year of legalization, well short of the estimated demand of 610,000 kilograms the data puts forward.

“People aren’t paying enough attention to the undersupply in the industry day one. LPs are already behind on their provincial contracts and it is far worse than we expected,” Knight said.

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

Greg Taylor, portfolio manager with Purpose Investments

Taylor also acts as the active manager of the Purpose Marijuana Opportunities Fund (NEO:MJJ). His fund has found success in the pockets of volatility through its active management.

When asked about the potential for a rush come legalization, Taylor said he viewed the blitz following Constellation Brands’ (NYSE:STZ) second investment deal into Canopy Growth (NYSE:CGC,TSX:WEED) as that euphoric move.

“That’s what really woke up the US retail investors… I think that last move we had in September was all US retail and some global investors coming in,” Taylor said.

It almost feels like we got that euphoric move already, it almost feels like [October] 17th is going to be more of a non-event.”

Taylor expressed concern for how much attention the legalization effect will get on day one by way of showing lines of people eager to buy product, since Ontario, arguably the biggest Canadian cannabis market, will have no physical retail shops until 2019.

“I think we can see another wind of excitement come once we can actually start to get some numbers and figure out who actually is making some money,” Taylor said.

Mark Noble, senior vice president of exchange traded fund (ETF) strategy with Horizons ETFs

Noble said investors should get ready for a depression period right after legalization. The ETF executive said investors need to “brace themselves for a little bit of disappointment,” following legalization.

Still, Noble did also express a bullish sentiment for where these stocks are headed.

“What’s occurred is we are betting on potential… within let’s say six to nine months, we’re going to start actually seeing revenues of who’s being successful at selling marijuana to the recreational public. [N]ot everyone is going to be a winner.”

The promise of cannabis companies becoming global players with entries into several markets beyond the adult-use sales is enticing to Noble, who said in the long term those gains could be “exponential.”

Noble suggested the Canada recreational market is already accounted into the price of the stocks, but he sees potential for increases as companies gain options on the global scale.

“Canada is only really round one in the global legalization story and I think where people have not looked to the same degree is in the opportunities that exist outside of Canada,” Noble told INN.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

Multi-state cannabis leader highlights events, partnerships, and activities to coincide with Juneteenth holiday

Trulieve Cannabis Corp . (CSE: TRUL) (OTCQX: TCNNF), a leading and top-performing cannabis company in the United States and its dispensary group Solevo Wellness, today announced the sponsorship of expungement clinics in Pittsburgh, Pennsylvania as well as additional initiatives celebrating the Juneteenth holiday.

Keep reading... Show less

A summertime series of expungement events, employee volunteerism, documentary filmmaking, fundraising and more demonstrate the importance of commitment to reform and restorative justice to build an equitable, inclusive cannabis industry

Today, on the 50 th anniversary of when America started its longest war—the War on Drugs— Cresco Labs (CSE:CL) (OTCQX:CRLBF) (“Cresco” or “the Company”), a vertically integrated multistate operator and the number one U.S. wholesaler of branded cannabis products, announced the launch of a summer-long social justice campaign supported by its Sunnyside retail brand and flagship cannabis brand, Cresco . Through community expungement events, employee volunteerism, a film documenting the impact of unjust prosecution, and financial contributions from the Company and our third-party vendors, the “Summer of Social Justice” campaign aims to influence reform to help shape a future cannabis industry with limitless opportunities for everyone. The campaign will amplify the ongoing restorative justice, community business incubator and education and workforce development programming facilitated by the Company’s established SEED (Social Equity & Education Development) initiative.

Keep reading... Show less

Florida’s legal cannabis program has gained plenty of investor attention as the potential for this segment of the US cannabis market continues to expand.

The US cannabis industry is largely fragmented because the plant remains illegal at the federal level. Despite that obstacle, several states across the country have implemented medical and recreational cannabis legislation allowing for cultivation, processing, commercial sale and consumer use.

While this legislation differs greatly from state to state, one state’s medical cannabis industry has seen unprecedented growth: Florida.

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

The coastal state’s journey to cannabis legalization has been a challenging one. In 2016, over 70 percent of Floridians voted for a constitutional amendment to allow the use of cannabis for medical purposes.

However, in the 2017 legislation that created the state’s legal medical cannabis framework, then-Governor Rick Scott banned smoking medical cannabis. It wasn’t until March 2019 that Ron DeSantis, the current governor of Florida, lifted the ban on smokable marijuana.

In the face of those challenges, the Sunshine State has developed one of the most attractive medical cannabis markets in the country. In fact, Florida’s medical marijuana space is one of the fastest growing in the country.

Read on to learn more about the investing opportunities in Florida’s legal cannabis space and the top marijuana stocks to look out for.

Florida medical cannabis: High-growth market

Florida’s large population — the third biggest in the US — is a factor in the attractiveness of its cannabis market. The state is also the fourth largest economy in the US with a gross domestic product of just over US$1 billion in 2020.

A 2020 report from Arcview Market Research and BDS Analytics shows the US legal cannabis industry is expected to grow by 18.2 percent between 2019 and 2025 to reach US$33.9 billion. Florida ranks among the jurisdictions that will contribute the most to that growth.

“The Total Available Market, or TAM, is one of the most critical factors for any industry,” states Dustin Robinson, founding partner of Mr. Cannabis Law, in an article written for Green Entrepreneur. “Florida’s marijuana industry happens to have one of the strongest TAMs in the world.”

As of a June 2021 update from Florida Health’s Office of Medical Marijuana Use (OMMU), the state had 569,450 qualified medical marijuana patients and 2,542 qualified physicians.

Florida’s patient count is a small percentage of its population of 21 million, but it has been steadily growing since the drug was legalized in the state in 2016. In fact, the patient figure has more than doubled in the past two years.

According to Robinson, there are almost 300 retail locations in Florida, with another 500 locations expected by the end of 2022.

Beacon Securities analyst Russell Stanley has said Florida boasts a healthy list of addressable medical conditions that can be treated with cannabis, unlike the medical marijuana programs in other states.

“Some other states have had trouble expanding their programs, in part because it’s been very difficult for patients to get access to product,” Stanley told the Investing News Network. “Other states have had restrictions on which healthcare practitioners can recommend it and what they can recommend it for.”

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

Florida cannabis market: High barriers to entry

The 2017 Florida medical marijuana law established a cap on the number of medical marijuana dispensaries and required that each center be vertically integrated — they all had to manage their own operations, from cannabis cultivation and processing to distribution and sales.

The cap on the number of dispensaries expired in April 2020. While the vertical integration requirement portion of the law underwent a three year court battle, the Supreme Court of Florida recently upheld the legislation, meaning this requirement will continue to shape the Florida cannabis market for years to come.

During a panel discussion, Steve Hawkins, CEO of Horizons ETFs Management (Canada), said he views vertical integration as one of the key benefits for US companies compared to the Canadian cannabis market. Only players that have been able to develop cannabis production, manufacturing and distribution capabilities can compete in the marketplace.

As of March 2021, the state had 22 licensed medical marijuana treatment centers (MMTCs) and five laboratories licensed for third party testing. The low number of licenses currently awarded creates high entry barriers, which is a big plus for the currently operating companies that have already established a strong foothold in the market.

Robinson believes that “the 22 Licensees are in a great position to build multi-billion-dollar companies in Florida’s growing marijuana industry.”

These 22 established licensees will also have an advantage if and when recreational cannabis becomes legal in the state. “In Florida, the medical marijuana license allows the current MMTCs to build out as big of a footprint as possible in preparation for adult use (recreational) legalization,” he said.

Florida cannabis market: Top Florida cannabis stocks

As the legal cannabis industry grows in Florida, some players have begun to stand out in the state.

Florida native Trulieve Cannabis (CSE:TRUL,OTC Pink:TCNNF) holds the lion’s share of the market and has continually been a top-performing stock in the state.

Trulieve opened Florida’s first medical marijuana dispensary back in 2016, and since then it’s grown into a force in the industry, with a current market capitalization of US$5.52 billion.

As of June 4, 2021, Trulieve had 82 dispensing locations in the state, according to data released by the OMMU. In one week’s time it sold more than 76.5 million milligrams of tetrahydrocannabinol (THC) products and 1.6 million milligrams of cannabidiol (CBD) products, in addition to 32,295 ounces of dried flower.

Shortly after smokable marijuana was legalized, Trulieve began selling flower and was the first in the state to do so. Trulieve has also benefited from a vertically integrated structure that includes cannabis cultivation, production and distribution, which is essential since cannabis cannot be moved across states lines just yet.

Surterra Wellness comes in at a distant second place with 39 dispensing locations and sales of over 22.2 million milligrams of THC products and 1.6 million milligrams of CBD products, in addition to 6,911 ounces of dried flower. Surterra is owned by Parallel, one of the largest privately held multi-state cannabis operators (MSOs) in the country.

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

Parallel recently announced its intentions to go public through a definitive business combination agreement with Ceres Acquisition (NEO:CERE,OTCQX:CERAF), a special purpose acquisition company.

Another big player in the state is Massachusetts-based Curaleaf Holdings (CSE:CURA,OTCQX:CURLF). Though not native to Florida, Curaleaf’s presence in the state’s cannabis business is substantial. Of the MSO’s total 101 dispensaries, 37 are in Florida, putting it in third place behind Trulieve and Surterra.

The vertically integrated company also launched the state’s first medical cannabis tablets in September 2019, followed by the first sublingual tablets in July 2020.

Curaleaf put up impressive revenue numbers for 2020, reporting retail revenue of US$423.2 million compared to US$138.7 million in 2019. The company attributed the 205 percent increase to new store openings in its operating states, including five opened in Florida in 2020.

Liberty Health Sciences, which was acquired by Ayr Wellness (CSE:AYR.A,OTCQX:AYRWF) in February 2021 in all-stock transaction, also has a considerable stake in Florida. According to the OMMU, Liberty currently has 36 dispensing locations in the state.

Ayr Wellness plans to increase that footprint to 42 dispensaries by the end of 2021, and has a target of roughly US$4 million in annual retail revenues per store for 2022. In May 2021, the company announced the launch of its Origyn premium concentrate line in the state. The product line includes wax, crumble, Rick Simpson oil and shatter. Ayr has also begun construction of a 10 acre outdoor cultivation expected to be completed in Q3 2021.

Florida cannabis market: Investor takeaway

As its medical marijuana industry continues to grow, Florida has a lot to offer in terms of investment opportunities. BDS Analytics projects that Florida’s medical cannabis market will hit US$1.5 billion in sales in 2021, up 53 percent over 2020 sales.

The research firms predicts that recreational cannabis could be legal by 2023, which would set Florida on a path to become the third largest US legal cannabis market by 2026. Regardless of whether adult use gets the green light that soon, investors should still consider the Sunshine State as a premier cannabis jurisdiction.

Keep reading... Show less

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) (“Trulieve” or “the Company”), a leading and top-performing cannabis company based in the United States announced today the opening of a new Florida dispensary, the Company’s 90th nationwide.

The latest dispensary, located in the Florida Keys, supports Trulieve’s goal of ensuring medical cannabis patients across Florida have safe, reliable access to the medications they rely on. The Tavernier dispensary joins the nearby Key West dispensary, as well as several others throughout the Miami area.

Keep reading... Show less

Company to Donate: $30,000 to Assist with Elk Grove Village’s Community Events and Outreach Programs; Additional $15,000 to Go Towards Supporting Alexian Brothers Medical Center’s Foundation, Elk Grove Village Police Drug Education Program and Kenneth Young Youth Center

Keep reading... Show less