Cannabis Execs Cheer ‘Green Landslide’ of Votes for Legal Pot
(Bloomberg) -- Despite all the uncertainty surrounding the U.S. election, there’s a clear victor already: domestic cannabis companies.
“Cannabis won, and won big,” said Boris Jordan, chairman of Curaleaf Holdings Inc., one of the largest cannabis companies. “It’s a green landslide.”
The latest results make recreational marijuana legal in 15 states and approved for medical purposes nearly nationwide, pushing the once-taboo topic of legalization firmly into the U.S. mainstream. Voter support in New Jersey passed by a wide margin, while Mississippi voted for the more liberal of two options to legalize medical use. South Dakota was also the first state to vote in recreational and medical use at the same time.
“We think that is a big signal to Washington and other states,” Jordan said in a phone interview. “Cannabis has won much bigger than anyone thought.”
Green Thumb Industries Inc. jumped 5.3% Wednesday in New York, while Harvest Health & Recreation Inc. and Cresco Labs Inc. each rose less than 1%. Curaleaf shares slipped 1.5% after giving up earlier gains.
Like many of his contemporaries, Cresco Chief Executive Officer Charlie Bachtell was thrilled by the election news pinging his phone all night, waking him after he tried a glass of wine to get to sleep late. Soon after gave up and had a cup of coffee.
“We may not know the results of the presidential election, but it’s safe to say cannabis was victorious,” Bachtell said in a phone interview.
Trulieve Cannabis Corp. CEO Kim Rivers said she indulged in one of the company’s products -- a CBN sleep aid, with no THC -- to help her get through the election uncertainty. After eight hours of shut-eye, she woke up to the industry’s big victory.
“The election is solidifying what we already know: Cannabis isn’t a partisan issue, it’s a human issue,” she said. Rivers added that the industry could also benefit from a possible stimulus bill, if one can be passed after the election.
Despite growing support for cannabis in the U.S., prospects for federal legalization took a hit, at least in the short term, with the likely possibility that Republicans retain control of the Senate.
That weighed on Canadian cannabis companies, which are missing out on the U.S. market strength. Dan Ahrens, chief operating officer at AdvisorShares, where he manages two cannabis ETFs, said some investors had also thought they might have had an easier time breaking into it under an all-blue scenario. Instead, a Republican senate would validate the model of the U.S. companies, which have already managed to “grow tremendously in the last four years during the Trump presidency.”
Shares of Canopy Growth Corp., the industry’s biggest Canadian company, slumped 7.1%, while Tilray Inc., once one of Canada’s hottest stocks, fell 9.4%.
The likelihood of a Republican Senate means that the MORE Act -- legislation which would de-schedule cannabis -- is now off the table, and legal change will more likely happen under the STATES Act, which defers legalization issues to states.
After the latest results led to legalization in New Jersey, Arizona, Montana and South Dakota, as well as medical legalization in Mississippi, the total addressable market for cannabis producers has grown by more than $3 billion, Cowen analyst Vivien Azer said in a note.
With recreational legalization passing in New Jersey, that could put pressure on neighboring markets such as New York, Pennsylvania and Connecticut to make a similar move soon.
The rapid acceptance isn’t exactly a surprise to many in the industry, but executives were still glad to see it actually play out.
“You wake up and you see a third of America is living in states where cannabis is legal for adults,” said Ben Kovler, CEO of Green Thumb Industries.
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