- January 20, 2022
- Posted by: Shane Dwyer
- Category: Legalization
Every year, new states are added to the “legalized” list in the United States. This list is divided into two categories – recreational and medical. The states that voted to legalize recreational cannabis during the 2020 elections were Arizona, New Jersey, South Dakota, and Montana. As proposals to legalize recreational cannabis in New York and Virginia come forward, it looks like two more states will be added to the recreational list soon. Mississippi and South Dakota voted for medical marijuana programs as well. Still undecided but moving in this direction states are Kentucky, Kansas, South Carolina, and Alabama.
From an investment standpoint, the widespread acceptance of cannabis gives the idea that a massive industry leap is possible. So, when 35 states allow medical marijuana and 14 states allow adult (recreational) cannabis use, different types of cannabis deficiencies are possible. This review will focus on the future of the marijuana industry in America.
What Will I Learn?
Cannabis “Inside the White House” and Beyond
One of the most optimistic signs for the cannabis industry as a whole is the Biden administration. On the campaign trail, the current US president said he would legalize cannabis during his term. Its vice president, Kamala Harris, is the protector of the Marijuana Reinvestment and Forfeiture Act, which would remove cannabis from the Controlled Substances Act. Moreover, the president has all the advantages for this since Congress and the Senate have a democratic majority.
Cannabis creates a wide political resonance outside of North America, which could go a long way towards increasing support for legal marijuana in the European Union. The United Nations (UN) recently removed cannabis from the most restrictive list under the Commission on Narcotic Drugs.
American Cannabis Corporations
U.S. cannabis corporations are moving into “neighboring regions” by acquiring other companies as it is illegal to ship marijuana across state lines. Here are some examples of the most significant deals in this niche:
- Curaleaf acquired Grassroots in 2020 for $875 million, so they now operate in 23 states (previously there were 18);
- Trulieve (CSE: TRUL) announced a major ($2.1 billion) cannabis deal in the US: their acquisition of Harvest Health & Recreation Inc (CSE: HARV) will create the most profitable operator in the vast legal marijuana market. Thus, the combined company will have access to the medical and adult markets in 11 states.
As a result, more cannabis companies will be considering additional mergers or acquisitions to increase their market share in the coming years.
SPACs and IPOs to Look out for
Let’s take a look at some of the highly anticipated SPACs and IPOs that are hitting the stock market.
- Weedmaps is one of the most notable cannabis companies as it was the first online platform to connect patients receiving medical marijuana with dispensaries. It is now a major corporation that recently announced that it will be listing on the Nasdaq following its merger with Silver Spike Acquisition Corp (NASDAQ: SSPK). Once trading in Weedmaps shares begins, the initial value is projected to be $1.5 billion.
- Verano Holdings (OTC: VRNOF) is a vertically integrated cannabis operator that operates in several states and is well known throughout the industry. With a good background, Verano Holdings is listed on the Canadian Stock Exchange after its successful reverse takeover of Majesta Minerals Inc. (Majesta). This acquisition not only placed Verano Holdings in a strategic position in Canada but also came after Verano and AltaMed teamed up to gain positions in the Florida and Arizona markets.
- Tuatara Capital (NASDAQ: TCACU) is a private equity firm that specializes in investing in and financing the growing cannabis industry. It is set to raise $150 million in an upcoming Nasdaq IPO. Tuatara Capital’s portfolio has great lucrative potential, especially since it is chaired by the former CEO of Curaleaf, meaning the company is formed from knowledgeable and capable people who understand the cannabis industry.
You need to understand that the cannabis market is in its infancy and will be quite volatile for a long time, so these promotions are not suitable for everyone. For example, investors who have dealt with technology stocks, cryptocurrencies, and electric vehicles in the past respond more easily to volatility in this market. Their forecasts for the further growth of cannabis are quite optimistic in light of the upcoming legalization in the US. Many investors view volatility and lower prices as an opportunity to buy stocks at a lower price and receive excess returns in the future.