Cannabis Company Curaleaf Holdings is set to benefit if more U.S. states expand recreational marijuana sales soon. This is based on the outcome of the impending election, which could see more states legalizing medicinal marijuana, adult-use cannabis, or even both.
Curaleaf stock upgrade
According to an analysis done by MKM Partners analyst Bill Kirk, Curaleaf shares (ticker: CURLF) listed on Canadian Securities Exchange are expected to increase from 10 Canadian dollars to 14 Canadian dollars (approx USD$10.48).
Curaleaf is poised to inflect operationally at the same time legislative opportunities may come to fruition. While Senate and Presidential polling momentum continues in favor of pro-cannabis candidates, Curaleaf has strong exposure to even more salient state-specific legislation (recreational cannabis ballot initiatives in New Jersey and Arizona).
Kirk opines that New Jersey’s ballot proposal is most promising. However, if approved by voters, state lawmakers would still need to develop a framework for recreational sales. Even so, progress in New Jersey could motivate legislators in New York and Pennsylvania to endorse recreational sales.
Curaleaf has growing operation in major states
According to Kirk, if New York, New Jersey, and Pennsylvania all approve recreational sales, then 80% of the U.S. population will be in states where recreational weed is legal.
With already meaningful assets in PA, Curaleaf is doubling local capacity. [The company] also has the largest growing operation in NJ, a differentiator that is not reliant on legislation but exacerbated when recreational sales begin. Finally, Curaleaf has the largest growing operation in NY, Kirk wrote.
Kirk also noted that Arizona equally has its ballot measure, but its chances are lower than in New Jersey. According to the analyst, most outcomes for 2021 “point to a more favorable cannabis landscape.”
Former Vice President Joe Biden camp is pushing for cannabis decriminalization and expungement of cannabis-use convictions. However, the team is leaving recreational sales legislation to the states. According to Kirk, a Biden win with a Republican majority in the Senate is likely to pave the way for bipartisan legislation.
Kirk says this could improve growers’ access to capital markets and listings on major U.S. exchanges. He also suggests Curaleaf’s increased production capacity in Florida could meet current demand and double its sales.
In recent trading, Curaleaf stock was up 3.9% at $8.92 per share, as the S&P 500 index rose 1%. Cannabis companies in both the US and Canada have experienced a spike in sales during the pandemic.
According to Viridian Capital Advisors, shares of the 10 largest cannabis firms in the US and Canada have increased by at least 20 percent since August. If the Democrats sweep the elections, then cannabis sales are expected to rise even more in 2020.
