Photographer: Ivan Valencia / Bloomberg
Photographer: Ivan Valencia / Bloomberg
A double dose of good news last week provoked a rapid response from the marijuana industry, with multi-state operators on the move to grow their business quickly.
On the morning of January 6, when the results of the Georgia Senate race were turning in favor of Democrats and New York Governor Andrew Cuomo proposed to legalize marijuana in his state, Curaleaf Holdings Inc. executives suddenly realized that the company could benefit from some extra money. They approached bankers and lawyers around 11 am, and in less than 24 hours, the company raised more than $ 200 million in offering more shares on the Canadian Securities Exchange.
“It was very unexpected in Georgia. That’s why we pulled the trigger so fast, to prepare for what we think will be a very dynamic 2021, ”said President Boris Jordan in a telephone interview.
He anticipates that 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 nation’s move towards the Democratic Party. In New York alone, Jordan said that Curaleaf needs to quadruple in size to meet demand.
While the industry was expected to gain momentum this year, developments took place faster than expected. For now, the The STATES Act, which would give states more legal authority to determine their own rules on marijuana, is seen as the most likely federal regulation to pass soon – unlike the MORE Act, which would completely decriminalize cannabis. The STATES Act can be passed in the second half of 2021 or in the first half of 2022, according to analyst Vivien Azer, from Cowen.
Jordan, meanwhile, said he did not expect the MORE Act to be passed until the next government, but now he thinks it could happen until the end of President-elect Joe Biden’s four-year term.
Cannabis stocks increased with better prospects. An industry index rose 16% last week.
Green Thumb Industries Inc., one of the largest in the USA multi-State operators also see expansion accelerating as a result of recent news, CEO Ben Kovler said in a telephone interview. With potential access to the capital markets arriving earlier than expected, Kovler said the company is considering refinancing its current $ 100 million debt, which has an interest rate of 12%.
“We could create an extra $ 100 million out of nowhere by refinancing at 6%,” he said. This could then be invested back into the business and potentially increase the stock price. Recruitment is also on the agenda. “We hired more than 1,300 people in 2020 and we expect it to be bigger in 2021,” said Kovler.
Green Thumb is also stepping up efforts to register on US stock exchanges, Kovler said. The companies have largely explored Canada’s markets, rather than the US, where they have been rejected for concerns about legal risks due to the federal ban. But Kovler said that opinions are changing about that.
“I don’t believe there is a legal issue that would prevent this,” he said. “I think the NYSE and Nasdaq should list cannabis companies. Otherwise, it is a massive transfer of wealth to Canada. “
QUOTE OF THE WEEK
“I think that now, after Covid, and with that Democratic dominance in the US government, we’ll start to see a positive movement in addressing US legalization – and that’s something that will support global legalization,” Oren Shuster, CEO and co- founder of IM Cannabis Corp., said in a telephone interview. IM Cannabis operates in Germany, Israel and Canada.
NUMBER OF THE WEEK
- $ 300 million: The amount of annualized tax revenue New York is expected to generate from recreational cannabis use, according to Cowen’s Azer.
WHAT DO YOU NEED TO KNOW
- Amsterdam wants restrict tourists from its coffee shops selling marijuana as part of a plan to combat the flow of hard drugs and organized crime linked to the marijuana trade.
- Cuomo goes announce its plan to legalize marijuana as part of the State of the State of 2021.
- A Democratic Senate is seen as raising the prospects for legal cannabis and accelerating bank approval for the sector.
EVENTS
Monday 11/1
Tuesday, 1/12
Thursday, 1/14
- Aphria Inc. reports second quarter earnings before the market opens.