Adult-use marijuana is on the ballot in 4 states, and a top Wall Street analyst lays out which cannabis stocks could get the biggest boost from legalization


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Voters in four states—Arizona, Montana, New Jersey, and South Dakota—will decide in November whether to make it legal for all adults to use cannabis.

Arizona and New Jersey are most likely to legalize the drug, according to Cowen analyst Vivien Azer. Those states have the biggest potential markets, which could be a boon for some of the largest US cannabis companies.

The potential legalization of adult-use cannabis in New Jersey and Arizona “should have overarching positive implications” for the legal cannabis market, according to Azer. She wrote in a Sept. 10 note that the two states “represent by far the biggest revenue opportunity” among states with ballot referendums in November.

Curaleaf, Green Thumb Industries, Acreage Holdings, and Cresco Labs, all of which have operations in New Jersey and/or Arizona, are well positioned to benefit if adult-use passes in the two states. 

Read more: The CEO of Canopy Growth lays out 3 reasons he’s ‘never been more bullish’ on the cannabis industry

Curaleaf, which has operations in both New Jersey and Arizona, stands to do the best. Azer projects legalized cannabis in New Jersey and Arizona would increase its revenue by $64 million in 2021, $201 million in 2022, and $237 million in 2023.

Green Thumb Industries and Acreage Holdings would also gain hundreds of millions of dollars of additional revenue between 2021 and 2023 if New Jersey legalizes, and Cresco Labs is expected to gain more than $150 million in revenue, Azer estimated.

In Mississippi and South Dakota, voters will decide whether to make cannabis more widely accessible for medical use. If those votes pass in addition to the New Jersey and Arizona measures, Cowen estimates that US cannabis revenue would increase by $284 million in 2021 and $1.7 billion in 2022, assuming the programs roll out quickly. By 2025, total revenue would stand at $33.9 billion, up from the current estimate of $30.9 billion.

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“Among the adult-use states, we remain the most optimistic on NJ, which has demonstrated steady favorable polling and grade the state an A,” wrote Azer. “We also remain constructive on AZ, though we grade the state a B based on less convincing polling data than NJ.”

Read more: Top Wall Street analysts say these are the 7 cannabis stocks to bet on now that will benefit investors if Biden defeats Trump in November

On the national level, the presidential, Senate, and House elections could all have big implications for the pace of cannabis legalization in the US. The substance is federally illegal, but legal for recreational use in 11 states, and for medical use in more than 30. Cowen predicts that Democrat Joe Biden will win the presidential election, and that Democrats will also take the Senate.

Biden’s polling lead is a “positive sign for the industry,” wrote Azer in a note published on September 7. She added that the real potential for cannabis reform depends on the Senate as opposed to the White House.

“A Democratic sweep means 2021 legalization,” she continued.

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Source:: Business Insider


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