Cuomo Teases Legal Recreational Marijuana for New York

Matthew Carr By Matthew Carr
Chief Trends Strategist

Beyond the Bong
This is individual research and does not constitute investment advice.

In the cannabis industry, the passage of time is akin to dog years.

A day isn’t a day. It can feel like a week, sometimes even a month.

It’s all about how rapidly the industry is changing and the sheer quantity of changes from one week to the next.

It’s not just corporate news either. It’s state regulations, new markets, changes to regulations, changes to packaging, supply chain disruptions, tweaks to regulations and more.

A week in cannabis is almost like nothing else in this world. And that’s exactly why we launched this dedicated mailing.

Because true to their nature, pot stocks were rocked by headlines last week…

Thankfully, the majority of the news was positive!

Finally… a Splash in the U.S.

Canopy Growth Corp. (NYSE: CGC) CEO Bruce Linton has long had a view that I appreciate.

The company operates only in countries where it’s legally allowed to function at the federal level – either recreationally or medicinally.

That’s why it’s steered clear of the U.S.

With pot legal only at the state level, entering the U.S. market would put undue risk on shareholders. That’s something Canopy has always sought to avoid. And it’s why the company has been my No. 1 pot stock to own for several years.

Now, in December, when Congress passed the 2018 Farm Bill – legalizing hemp production countrywide – Canopy had the opportunity it needed to enter the U.S. market.

As we’ve covered here before, the hemp-derived cannabidiol market is projected to be huge! Particularly in terms of infused beverages. I’ve found myself covering it or answering questions about it for months.

This is why Canopy’s share price bounced more than 10% higher last week after the company received its New York hemp license.

The world’s largest cannabis company will drop between $100 million and $150 million to establish a hemp industrial park somewhere in the state. From there, Canopy plans to begin large-scale hemp extraction and product manufacturing in New York.

Now, it also just happens that Constellation Brands (NYSE: STZ), which has poured billions into Canopy, is headquartered in New York. I covered last week that CEO Rob Sands will officially step down on March 1 to focus on the alcohol company’s cannabis investment.

Welcome to the Big Show

Cannabis stocks are gaining more and more credibility. And they’re becoming mainstream investments.

Last year, we saw the first marijuana companies listed on major U.S. exchanges. The first was Cronos Group (Nasdaq: CRON), followed by Canopy Growth Corp., Tilray (Nasdaq: TLRY), Aurora Cannabis (NYSE: ACB) and Aphria (NYSE: APHA).

And they’ll be joined by an increasing number of fellow Canadian producers this year.

The most recent is HEXO Corp. (OTC: HYYDF). Shares will begin trading on the New York Stock Exchange on Wednesday, January 23, under the ticker “HEXO.”

January Applications for U.S. Listing Approval

  • CannTrust (OTC: CNTTF): applied to list on the NYSE
  • Invictus MD Strategies (OTC: IVITF): submitted an application to list on the Nasdaq

Bonus: Due to overwhelming demand, the ticker symbol “POT” is being awarded via lottery by the Canadian Securities Exchange, Toronto Stock Exchange, TSX Venture Exchange and Aequitas NEO Exchange. The winner of the collective lottery process will be assigned “POT” on January 30. 

Northeast Pot Is Hot Despite Cold Blast

In last week’s episode of CannaBiz Now! I talked about how the Northeast marijuana market was heating up.

In fact, adult-use sales in Massachusetts topped $9.3 million in their first four weeks.

That was an amazing accomplishment. Especially when you realize that for most of that time, there were only two dispensaries in operation.

Yet it wasn’t the biggest first month of sales…

But considering the obstacles the state’s industry has faced, it’s quite a remarkable performance.

At the moment, adult-use is also allowed in Maine and Vermont.

Though we might soon be getting another big East Coast state to join their ranks.

Last week, New York Gov. Andrew Cuomo introduced his plan to legalize recreational pot. The proposed Marijuana Regulation and Taxation Act aims to bring $300 million in tax revenue from pot sales over the next three years.

Under the plan, there would be no retail tax. But there would be a 20% tax on wholesalers to dispensaries. On top of this, there would be a cultivation tax of $1 per gram on dried flower and $0.25 on cannabis trim.

New York is the fourth most populous state behind California, Texas and Florida. And a legal cannabis market there is projected to be worth more than $3.1 billion. That would be twice the size of Colorado’s market.

Empire State Opportunity

Innovative Industrial Properties (NYSE: IIPR): This real estate investment trust is my favorite play on urban pot. It pays a 2.5% dividend, and shares have surged to 52-week highs on all the New York news last week.

The number of U.S.-listed pot stocks continues to grow. As does the number of U.S. states legalizing recreational use.

Both are great for early investors. They increase the industry’s exposure to a whole new world of investment dollars, not to mention billions in market opportunities.

Now, it’s possible this could increase volatility. But I wouldn’t expect any more than what cannabis shareholders are already used to.

If you have a pot stock in mind that you’d like me to discuss here, leave the ticker symbol in the comments section.

Until next week!

Good investing,

Matthew