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Photographer: Ivan Valencia / Bloomberg
Photographer: Ivan Valencia / Bloomberg
A double dose of good news last week sparked a rapid response from the marijuana industry, with multi-state operators are moving to develop their activities, and quickly.
On the morning of January 6, as the results of the Georgia Senate race turned in favor of Democrats and New York Gov. Andrew Cuomo proposed to legalize marijuana in his state, Curaleaf Holdings Inc. executives suddenly realized that the company could benefit from additional liquidity. They went to see bankers and lawyers around 11 a.m., and in less than 24 hours the company had raised more than $ 200 million in offering more shares to the Canadian Securities Exchange.
“It was very unexpected in Georgia. That’s why we pulled the trigger as fast as we did, to prepare for what we think will be a very dynamic 2021, ”President Boris Jordan said in a telephone interview.
He predicts that Curaleaf will want liquidity for acquisitions as the industry consolidates faster than expected. He also sees states under more pressure to allow medical and adult use after the change from nation to democratic party. In New York City alone, Jordan said Curaleaf needed to quadruple to meet demand.
While the industry was expected to gain momentum this year, developments have moved faster than expected. For now, the The state law, which would give states more legal authority to determine their own marijuana rules, is seen as the federal regulation most likely to be passed soon – as opposed to the MORE Act, which would totally decriminalize cannabis. The state law could be approved in the second half of 2021 or the first half of 2022, according to Cowen analyst Vivien Azer.
Jordan, meanwhile, said he didn’t expect the MORE law to be passed until the next administration, but now believes it could happen by the end of the president-elect’s four-year term. Joe Biden.
Cannabis stocks jumped on the brighter outlook. An industry index rose 16% last week.
Green Thumb Industries Inc., one of the largest multi-State operators are also seeing their expansion accelerate following recent news, CEO Ben Kovler said in a telephone interview. With potential access to financial markets sooner than expected, Kovler said the company plans to refinance its current $ 100 million debt, which carries an interest rate of 12%.
“We could create another $ 100 million from scratch by refinancing at 6%,” he said. This could then be reinvested in the business and potentially increase the share price. Staffing is also on the agenda. “We hired more than 1,300 people in 2020, and we expect this to be more significant in 2021,” Kovler said.
Green Thumb is also stepping up its efforts to list on U.S. exchanges, Kovler said. The companies largely exploited markets in Canada rather than the United States, where they were shunned due to concerns about legal risks due to the federal ban. But Kovler said opinions are changing on this.
“I don’t think there is a legal problem preventing this,” he said. “I think the NYSE and the Nasdaq should list the cannabis companies. Otherwise, it is a massive transfer of wealth to Canada.
QUOTE OF THE WEEK
“I think now, after Covid, and with this Democratic dominance in the US government, we’ll start to see a positive movement in the approach to US legalization – and that’s something that will support global legalization,” Oren Shuster, CEO and co-founder of IM Cannabis Corp., said in a phone 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 WOULD YOU LIKE TO KNOW
- Amsterdam wants restrict tourists from its cafes that sell cannabis as part of a plan to fight the flow of hard drugs and organized crime linked to the marijuana trade.
- Cuomo will be announces its 2021 state-of-the-state marijuana legalization plan.
- A democratic Senate is seen as increase the prospects for legal cannabis and accelerate bank approval for industry.
EVENTS
Monday 1/11
Tuesday 1/12
Thursday 1/14
- Aphria Inc. reports second quarter results ahead of market opening.
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