Aurora Cannabis led a strong rally in the cannabis sector on Thursday, spurred by Democrat Joe Biden leading in the presidential run and expected his administration to reach reformed banks sooner than later.
The sector is also celebrating the green wave of election night as four states – Arizona, New Jersey, Montana and South Dakota – vote to legalize adult marijuana, and a fifth, Mississippi, has Approved medical marijuana. More than 111 million Americans, or 33.8% of the population, currently live in states where the pot has been legally purchased by all adults.
“I can say this is one of the best scenarios for cannabis investors,” said Korey Bauer, the Cannabis Growth Fund investment and portfolio manager at Foothill Capital Management. “A pure green wave would be the ̵6;best-case’ but I guess we’ll find out soon considering the Senate.”
Pablo Zuanic, cannabis research analyst at Cantor Fitzgerald, said a seminar he hosted on Wednesday with senior government affairs executives from Curaleaf Holdings Inc. CURLF,
and Green Thumb Industries Inc. GTBIF,
was very positive about the votes and believed it would help the industry gain more supporters in the US Senate, while increasing pressure on the federal government to push reform.
“Both speakers believe that under the White House in Biden and the Republican-controlled Senate, banking reform will pass in early 2021 and will be included in the COVID bailout package (Sen. Toomey from PA will chair the Senate Banking Committee, and this is seen as a positive change from Sen. Crapo from Idaho), ”Zuanic wrote in a note to the client.
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“Overall, both speakers believe that measured progress in legislation is the best pathway at the federal level and expect a version of the STATES Act (making cannabis federally permitted) to pass the Senate position in the middle of the next term (this could happen earlier than the 50-50 split event between the Senate and Biden WH). “
However, full federal weed destruction – cannabis remains a Class I drug, the same type as heroin – is expected to take longer.
Panelists agreed that New Jersey’s vote is likely to encourage neighboring states, New York, Connecticut, Maryland and Pennsylvania, to comply with legalization of adult use rights and avoid potential tax losses. for Garden State. All states currently have huge budget deficits because the coronavirus pandemic has reduced revenue.
In case you lose it:Cannabis experts hope 2020 will be the year when New York finally legalizes weeds
MKM Partners analyst Bill Kirk wrote in a note: “Although it changes minute by minute, the US is more poised for federal changes on Thursday morning than Wednesday morning.”
Aurora Cannabis Inc. ACB,
the most widely held stock on trading app Robinhood, leading the gain with a 34% gain in early afternoon trading. Tilray Inc. TLRY,
29% increase and Cronos Group Inc. CRON,
16% increase after the release of better-than-expected earnings.
Read: Inside the Aurora Cannabis moves into the US CBD
Canopy Growth Corp. CGC,
the largest of Canada’s licensed producers by market capitalization, has increased 12.2%, ahead of expected quarterly earnings next Monday.
“We still have trouble imagining Canopy’s gross margin in Canada rebound 40%: the drink isn’t contributing enough and flower growth comes from the low segment,” Kirk wrote in the preview. pre-income. “Canopy is still developing more products than it can sell,” he wrote.
MKM estimates that Canopy produced 22,990 kg in its most recent quarter and sold 13,500 kg. “Similar large companies are growing more weeds than they are currently needing,” he said. Kirk rated Canopy as neutral.
Aphria Inc. share APHA,
up 13%, a day after announcing plans to acquire Atlanta’s Brewing Company for at least $ 300 million, marrying a longtime craft brewer known for its branded beer “420” with the pot industry.
Although Sweetwater has not yet produced a drink with cannabis, the companies appear to assume that may be happening as the two sides seek to leverage Sweetwater’s US relationship and Aphria’s cannabis relationship to Seeking potential benefits for this partnership.
Alliance Global Partners analyst Aaron Gray says the deal gives Aphria a foothold in the US that it can exploit when legalization occurs.
“With Sweetwater competing in the growing and profitable craft beer segment, we don’t expect the business to be a drag for APHA as it awaits legalization, a chance to introduce health. and health as well as CBD products, ”Gray writes in a Note. The Alliance evaluates Aphria to buy with a target price of C $ 9 stock.
Elsewhere in the industry, Akerna Corp. KERN,
a software supplier to cannabis companies, up 25%, while the Curaleaf rose 4%. Cresco Labs Inc. CL,
2.4% increase, OrganiGram Holdings Inc. OGI,
up 13% and Hexo Corp. HEXO,
has increased 17%.
Cannabis ETF THCX,
has increased 13% but has declined 17% for the year to date, while the S&P 500 SPX,
rose 8.8% and the Dow Jones Industrial Average DJIA,