Photographer: Ivan Valencia / Bloomberg
Photographer: Ivan Valencia / Bloomberg
A double dose of good news over the past week sparked a rapid response from the marijuana industry, with multi-state operators are moving to ramp up their businesses, and fast.
On the morning of January 6, when the results of the Georgian Senate race in favor of the Democrats and New York Governor Andrew Cuomo suggested legalizing marijuana in his state, The executives of Curaleaf Holdings Inc. suddenly realized that the company could benefit from some extra cash. They went to bankers and lawyers around 11 a.m., and in less than 24 hours, the company had raised more than $ 200 million by offer more shares on the Canadian Securities Exchange.
“It was very unexpected in Georgia. That’s why we pulled the trigger as quickly as we did, to prepare for what we believe will be a very dynamic 2021, ”said President Boris Jordan in a telephone interview.
He expects Curaleaf will want money for acquisitions as the industry consolidates faster than expected. He also sees states under more pressure to allow medical and adult use after the drug shift from the nation to the democratic party. In New York alone, Jordan said Curaleaf would need to quadruple in size to meet demand.
Although the sector was expected to gain momentum this year, developments have moved faster than expected. For now it is STATES Act, which would give states more legal power to set their own marijuana rules, is seen as the most likely federal ordinance to pass soon – unlike the MORE Act, which would decriminalize cannabis completely. According to Cowen analyst Vivien Azer, the STATES Act could be passed in the second half of 2021 or the first half of 2022.
Jordan, meanwhile, said he previously did not expect the MORE Act to be passed until the next administration, but he now thinks it could happen by the end of President-elect Joe Biden’s four-year term.
Cannabis stocks have risen as the outlook is brighter. An industry index rose 16% last week.
Green Thumb Industries Inc., one of the largest USA. multi-State operators are also seeing expansion accelerating as a result of the recent news, Chief Executive Officer Ben Kovler said in a phone interview. With potential access to capital markets coming sooner than expected, Kovler said the company is considering refinancing its current $ 100 million in debt, which has an interest rate of 12%.
“We could create an extra $ 100 million out of the blue by refinancing 6%,” he said. This can then be reinvested in the company and potentially increase the stock price. Occupancy is also on the agenda. “We will have hired more than 1,300 people by 2020, and we expect that number to be greater by 2021,” said Kovler.
Green Thumb is also stepping up efforts to register on U.S. exchanges, Kovler said. Companies have mainly tapped into markets in Canada rather than the US, where they have been shunned over concerns about legal risks posed by a federal ban. But Kovler said views on this are changing.
“I don’t believe there is any legal issue preventing this,” he said. “I think the NYSE and the Nasdaq should list cannabis companies. Otherwise, it’s a massive asset transfer to Canada. “
QUOTE OF THE WEEK
“I think now, after Covid, and with this democratic dominance in the US administration, we are going to see a positive movement in the approach to US legalization – and that is something that will support global legalization,” said Oren Shuster. and co-founder of IM Cannabis Corp., said in a telephone interview. IM Cannabis is active in Germany, Israel and Canada.
NUMBER OF THE WEEK
- $ 300 million: The amount of annual tax revenue New York is expected to generate from recreational cannabis use, according to Cowen’s Azer.
WHAT YOU NEED TO KNOW
- Amsterdam wants keep tourists out of coffee shops selling cannabis as part of a plan to tackle the flood of hard drugs and organized crime related to the marijuana trade.
- Cuomo will announces its plan to legalize marijuana as part of the state of the state 2021.
- A democratic senate is seen as increasing the prospects for legal cannabis and faster approval of banks for the industry.
EVENTS
Monday 1/11
Tuesday 1/12
Thursday 1/14
- Aphria Inc. reports second quarter earnings before the market opens.