A Massachusetts town just gave the go-ahead for recreational marijuana dispensaries, a move that, not surprisingly, could be good news for cannabis firms with ties to the area, writes Canaccord Genuity.
The Back Story. Obtaining cannabis in the U.S. legally today is easier than in the past, but it looks like a long road ahead for federal approval. That contrasts with Canada, which has a single, cohesive national law governing sales to adults—hence so many pot companies blossoming north of the border. However, individual states and towns are forging ahead with their own laws, and voters in general are supporting a more liberal approach to regulation.
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Looking Ahead. Canaccord’s Bobby Burleson reiterated Speculative Buy ratings on Canadian firms Tilt Holdings and CLS Holdings on Friday, writing that both companies have promising footholds in the town, Tilt directly, and CLS through the upcoming acquisition of Good Health. He thinks there’s a good chance both companies could be priority candidates for some of the new licenses, and could be open for recreational sales by the start of the summer.
The new stores should certainly see swift sales due to unmet demand in the state , as well. Thus, even more important than the licenses, Burleson writes that “ongoing efforts to build out cultivation and production capacity will enable both companies to capitalize on the pent-up demand for recreational product in Massachusetts.” While the state’s rollout of recreational approvals has been lumpy, the analyst ultimately forecasts the market to grow to $580 million this year, and then jump to $1.
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