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Cannabis stocks in the United States soared on Wednesday after a Jefferies analyst dubbed them “a generational wealth potential.” With Buy ratings, analyst Owen Bennett has initiated coverage on seven U.S. growers:
Curaleaf
(CURLF),
Green Thumb Industries is a company that specializes in environmentally friendly products
(GTBIF),
Cannabis is truly amazing.
(TCNNF),
Cresco Labs is a company that specializes in research and development
(CRLBF),
Columbia Care is a non-profit organization dedicated to
(CCHWF),
TerrAscend
(TRSSF), as well as
Wellness in Ayr
(AYRWF).
The stock of Columbia Care increased by 5.6 percent on Wednesday.
Cresco
Ayr Wellness stock was up 1.2 percent, Trulieve stock was up 1.7 percent, and shares of Ayr were up 2.7 percent. Green Thumb stock was up 0.1 percent, while Curaleaf stock was up 0.3 percent. TerrAscend stock was the only one in the group to fall, closing down 5.8%. The
Pure US Cannabis AdvisorShares
MSOS, an exchange-traded fund that invests in U.S. growers, was up 0.6 percent. Bennett estimates that yearly retail sales in the United States will increase from $17.2 billion in 2020 to $36 billion in 2025 and $64 billion in 2030. Conversion from the illicit to the legal market, rising normalization of cannabis usage, and disruption of the alcohol and pharmaceutical industries, he believes, will drive growth. He estimates that national penetration will reach 30%, with annual spending per user of $1,750, compared to $2,683 in Colorado and $1,378 for alcohol. According to Bennett, such assumptions equate to a $172 billion market. Bennett believes that investors should concentrate their efforts on companies with the broadest geographic reach in key U.S. states, a significant presence in California, growing national brands, a diverse product portfolio, and existing market share strength, as well as a significant share of wholesale business. With all of this in mind, Cresco Labs is his first choice. Curaleaf and Green Thumb, he believes, also deserve top marks. Bennett commented, “The name we would be most cautious on over the next 12 months is Trulieve.” “Despite its low ranking, its valuation is comparable to, and in some cases better than, that of higher-ranked peers.” Because cannabis is illegal on the federal level, institutional investors have mostly avoided U.S. farmers, according to Bennett. He expects lawmakers to provide legal protection in the next 12 months, citing bipartisan efforts in Congress. Senate Majority Leader Chuck Schumer is the most well-known of these senators, having mentioned efforts to de-schedule cannabis as a restricted narcotic. Bennett isn’t the only one who feels this way. On April 30, Barron’s predicted growth for Curaleaf, Green Thumb, and Trulieve, all of which are based in the United States. Curaleaf stock has increased by 4% since publication, while Green Thumb stock has increased by roughly 11%. Trulieve’s stock is down 3.7 percent. Connor Smith can be reached at connor.smith@barrons.com./n
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