Joe Biden has been sworn in as the 46th President of the United States. There are few groups more excited than cannabis investors. The Joe Biden presidency is likely to fuel even better growth in the U.S. cannabis industry.
While I expect many cannabis stocks to benefit, I believe that one is in the best position to benefit from a cannabis-friendly administration.
Biden isn’t a huge cannabis advocate himself, but he does support decriminalization, and more importantly, he will be surrounded by pro-cannabis allies.
Biden’s Pro-Cannabis Allies
Democrats will control both chambers of Congress. This lean in power will likely lead to major cannabis reform, including the potential for federal legalization.
Biden’s cabinet is also being filled with pot-friendly members. In December, Biden announced that California Attorney General Xavier Becerra would be his nomination to lead the Department of Health and Human Services (HHS). Becerra is a strong advocate of legalization and has a clear history of supporting the movement.
Rachel Levine is nominated as the Assistant Secretary of HHS. Levine is Pennsylvania’s Health Secretary and has been instrumental in reforming Pennsylvania’s booming medical cannabis market.
With a Democrat-controlled Senate and friends of cannabis serving in high positions, I see a high probability of major cannabis reform in 2021 and beyond. In fact, I see a high probability that cannabis will be legal at the federal level within two years.
Federal legalization would be game-changing for many cannabis companies, but if it happens, I see an early industry leader that could benefit the most.
This Cannabis Stock Could Explode Under the Biden/Harris Administration
Acreage Holdings (ACRHF) is an early leader in the high-growth U.S. cannabis industry. Headquartered in New York, New York, Acreage has a market cap of $650 million. As an industry leader, Acreage has an impressive profile.
- operates in 15 states
- owns 28 operating dispensaries
- holds 71 dispensary licenses and 24 cultivation and processing licenses
- owns 500,000 square feet of cultivation and processing space
- has 7 brands launched or in development
- boasts more than 250 product SKUs
These assets are helping Acreage deliver big-time revenue growth.
Third-quarter sales jumped 42% from the same period last year. Looking forward, I expect that pace of growth to accelerate because of the Biden presidency.
Back in 2019, Canopy Growth Corp (CGC), the largest cannabis company in the world, announced a $3.4 billion deal to acquire Acreage – under one important condition – that cannabis become legal at the federal level in the U.S.
If the U.S. legalizes and triggers the deal, I see three things happening to Acreage shares:
1. Acreage shareholders would receive a cash payment of $2.55 per share
2. Acreage fixed shares would be cashed out at $0.30 Canopy shares per Acreage share
3. Acreage floating shares would likely surge higher
All three of these potential reactions would be very good for shareholders. That’s why shares of Acreage have been rallying. Despite the gain, I still see plenty of upside for these shares in the next 12 months.
The Big Picture on Acreage and 2021
2021 is shaping up to be a very good year for the U.S. cannabis industry.
A new president, cannabis-friendly Congress, and cannabis-friendly cabinet members should help advance significant cannabis reform in the next 12 months. While that should be a strong catalyst for many U.S. cannabis stocks, Acreage investors could see the biggest benefits.
If the U.S. legalizes cannabis at the federal level, it would enable Canopy to purchase shares of Acreage and that should give Acreage shares a big pop.
About the Author & Cannabis Stock Trades
Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.
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