Cannabis Wins Big With Voters — What’s Next for Stocks

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Well, last week was monumental for legal cannabis!

Voters in five states approved legalization measures on the ballots.

In today’s Marijuana Market Update, I looked at what this means for cannabis stocks and the industry.

U.S. Legal Cannabis Landscape

Here are the results in the five states I told you about in my October 28 update:

  • New Jersey, Arizona and Montana: Voters approved recreational cannabis use.
  • South Dakota: Voters in this staunchly conservative state did the unthinkable: They approved legalizing medical and recreational cannabis use on the same ballot. However, the governor of the state and lawmakers could look to challenge the results.
  • Mississippi: In an interesting case, two measures to legalize medical cannabis were on the ballot. The state legislature put a question on the ballot that was fairly stringent on medical marijuana use while organizations posed a question that was a little looser. Voters approved the looser question. There is a challenge in the Mississippi State Supreme Court to overturn the results, but Mississippi’s Secretary of State and Attorney General have both condemned the suit.

Now that those results are in, here’s a look at the cannabis landscape in the U.S.:

cannabis legality map

As you can see, 70% of the U.S. population lives in an area where cannabis is legal in some form.

I explain how those votes will affect the cannabis business in our latest video.

MORE Act: Federal Legal Cannabis

I also look in the crystal ball to see what it means on the federal level.

House leadership in Washington, D.C., plans to vote on a bill to legalize marijuana in all 50 states in December.

The Marijuana Opportunity, Reinvestment and Expungement (MORE) Act will decriminalize cannabis and expunge convictions for nonviolent offenses.

The bill, which has cleared the House Judiciary Committee, will also impose a 5% federal tax on the sale of cannabis.

Be sure to watch the Marijuana Market Update to find out the likely result.

Cannabis Revenues to Increase Through 2025

Election Day was fantastic for cannabis businesses.

I first shared this chart with you in late October.

New Frontier Data, a cannabis research firm, found that if all five ballot measures passed, it would add $9.3 billion in revenue to the legal cannabis market through 2025.

And they all passed.

cannabis legality revenue

Projections found that the cannabis industry could see revenue of $38.3 billion by 2025. For perspective, the industry is looking at revenue of around $19.1 billion in 2020.

That’s 100% growth in revenue in just five years.

Big Cannabis Stock Earnings

The election results also resonated with cannabis stocks.

On Monday, Canopy Growth Corp. (NYSE: CGC) and Aurora Cannabis Inc. (NYSE: ACB) both rallied 20% after both companies reported strong quarterly sales and less-than-expected losses.

Tilray Inc. (Nasdaq: TLRY) reported flat sales growth (a loss of $0.02 per share) for the quarter on Monday afternoon, but management said it was close to being profitable.

Cannabis companies are optimistic that even more conservative state voters are in favor of legalization, and they think a Joe Biden White House will push for federal legalization and decriminalization across the country.

After Election Day, that’s become a safer bet than it was just a month ago.

Cannabis Watchlist Update

Now, I want to turn to our Cannabis Watchlist.

A month ago, I added a traditional tobacco company that’s making a turn into the cannabis market:

cannabis watchlist Oct 2020

Our watchlist benefited from the post-election bullishness.

If you invested when I wrote about those stocks, congratulations on your gains!

As always, my team and I love the feedback we’re getting on our YouTube channel and through email.

Feel free to send comments, questions and stocks you want us to examine to feedback@moneyandmarkets.com — or leave a comment on YouTube!

Where to Find Us

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Coming up this week, we’ll have more on The Bull & The Bear podcast and our Money & Markets Week Ahead, so stay tuned.

Until next time…

Safe trading,

Matt Clark signature

 

 

 

 

Matt Clark

Research Analyst, Money & Markets

Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.

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