Currently, marijuana stocks in the United States aren’t doing too well. The US stock exchange doesn’t list American companies that center around cannabis due to the drug still being illegal on the federal level for both medical and recreational use.
And banks are not the biggest fans of marijuana either with many of them not wanting to offer loans to marijuana-related businesses for the similar reason of a lack of federal regulation as well as laws relating to money laundering. However, experts are optimistic about the strong possibility that they will be able to bounce back next year.
The reasoning behind such an increase in positive expectations are the recent discussions at the White House that could potentially change how cannabis is presented at the federal level.
In October, the president announced his current plan of having Attorney General Merrick Garland and Secretary of Health and Human Services Xavier Becerra review how cannabis should be scheduled through the Controlled Substances Act and even pardoning individuals with federal possession charges.
While it is still unlikely that congress will pass the SAFE Banking Act in the immediate future, that could very easily change two years from now after the next election cycle.
Meanwhile, on the state level, the legalization of recreational marijuana was on the ballot in five states that have previously legalized medical marijuana. And while legalization for recreational cannabis, unfortunately, came up short in Arkansas and the Dakotas, it passed in both Missouri and Maryland, bringing the total up to 21 states and the capitol.
Experts, such as Seabreeze Partners president Doug Kass, feel that these discussions and policy changes could result in an increase in profitability for marijuana companies and are the next step towards institutional investments in cannabis brands.
One of the companies that could benefit the most from this change in policy would be Canadian company, the Canopy Growth Corporation. The Ontario-based corporation is currently one of the world’s largest cannabis companies and is actually listed on Nasdaq, unlike their American counterparts, due to recreational marijuana being legal countrywide in Canada rather than being decided on the state level.
They recently announced their plan to purchase three American cannabis companies, Acreage Holdings, Jetty Extracts, and Wana Brands, in order to create Canopy USA and have access to the American marijuana market.
Back on October 25th, when this deal was officially announced, Canopy saw their stocks rise to their highest since recreational marijuana was legalized country-wide in Canada back in 2018.
Canadian marijuana companies are currently facing overstock issues with weed due to having a limited number of dispensaries where they can sell their products and being able to tap into the American market might be what these companies need to see growth in the near future.
But Canopy still faces an uphill battle with Nasdaq of approving their American plans due to the American stock exchange still being reluctant to list American cannabis companies and might remove the company from the stock exchange as a result, despite Canopy already receiving approval from TSX (Toronto Stock Exchange). Though, if the federal government ends up changing the current status of cannabis in the US, then Nasdaq could likely change its mind as well.
Another company that has the potential to see its stock increase in value over the next year is Cresco Labs, which was one of the cannabis companies that were able to gain ground on its stock on the Canadian Securities Exchange after the recent election results.
Currently one of the largest producers and sellers of weed in the United States, Cresco’s stock is currently not in the best place right now after it reached its current height last year. But investors are optimistic about the future and it is currently bouncing back and even has the potential to rise even higher due to not only changes in government policy, but their current plans to purchase fellow cannabis manufacturer, Columbia Care, which also saw a stock increase after the election. If their acquisition of Columbia goes through, then they could potentially be the largest cannabis company in multiple markets in the US and draw in more potential investors as a result.
Trulieve Cannabis Corp made history back in 2015 when it became the first company to receive a medical marijuana license in Florida. Since then, Trulieve has opened over a hundred dispensaries in Florida with another hundred and fifty across the country. They currently plan to not only lead the Medical Marijuana market in Florida, but Arizona, and Pennsylvania as well.
Unlike many other cannabis companies, Trulieve has been able to grow continuously since 2019 with their revenue going from $521.5 million in 2020 to $938.4 million in 2021 and the only dips in their stock being in the latest quarter but is still expected to recover by about 273% in 2023.
Despite cannabis companies having to face the massive roadblocks currently in place against them due to their stocks not being allowed on the US stock exchange, they are still expected to see growth in the near future and some are even already on the rise.
Stocks tend to follow sales and earnings growth over time, and cannabis companies having access to three more markets could potentially mean more business and higher stock prices as result.
If the White House goes through with changes to how marijuana is classified at the federal level, with the Controlled Substances Act, we could see them finally being traded on the US stock market and being open to even more potential investors. While we don’t know for sure what the future will hold for the marijuana business with so many policy changes up in the air, investors are optimistic about the near future and feel that should be able to recover from any losses they’ve been facing recently.
AJ Favorito is a freelance writer, photographer, and filmmaker specializing in comedy and animation.
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