Arizona just successfully passed a ballot initiative (Prop 207) that will have the state voting on legalizing recreational cannabis on November 7.
If Prop 207 passes, annual cannabis sales in Arizona would quickly jump above $1 billion. Today, I am going to reveal two early industry leaders that are in position to benefit if Arizona goes legal.
Arizona already has a thriving medical cannabis market. According to mjbizdaily.com:
- The state is one of the largest medical cannabis markets in the country, with projected 2020 sales of $770 million-$910 million, according to the new Marijuana Business Factbook.
- Retail sales of MMJ products in the state rose nearly 20% from 15,302 pounds in January to 18,083 pounds in May, according to the Arizona health department’s monthly reports.
- Like many states, Arizona determined MMJ businesses were essential during the coronavirus pandemic.
Adding recreational cannabis to the menu would be like pouring gasoline on a bonfire. Annual cannabis sales in Arizona would quickly jump above $1 billion.
Arizona voted on recreational cannabis back in 2016. The ballot measure narrowly failed 48.7% to 51.3%. Four years later, it’s likely that this new measure will pass. Legalization has widespread support from both parties.
Here are some more details from mjbizdaily.com.
Roughly 65% of likely voters favor the initiative, according to a May poll by High Ground Public Affairs Consultants.
More specifically, 47% of the respondents said they “definitely” would vote for legalization, while 18% said they “probably” would.
“We’re very confident (of passage),” Smart and Safe spokeswoman Stacy Pearson told Marijuana Business Daily.
“What our polling has consistently shown is that a significant portion of people who voted against marijuana legalization in 2016 have changed their minds.”
If Prop 207 passes, and I think it will, the Arizona cannabis market will see explosive growth in the next two years.
Many of the largest cannabis companies in the U.S. have been pouring capital into Arizona to cash in.
2 Early Industry Leaders Ready to Dominate Arizona
Curaleaf Holdings (CSE: CURL, OTC: CURLF) is the largest cannabis company in the U.S. with a market value of $4.8 billion.
Headquartered in Wakefield, Massachusetts, Curaleaf just completed a $700 million acquisition that gives it the best cannabis portfolio in the industry.
- operations in 23 states
- 135 dispensary licenses
- 88 operating dispensaries
- 30 processing facilities
- 22 cultivation facilitates
- 1.6 million square feet of cultivation capacity
Curaleaf currently operates eight medical dispensaries in Arizona. This is an important advantage over the competition. Companies that own medical dispensary licenses will be the first to receive the new licenses to sell recreational cannabis.
This portfolio of cannabis assets should drive huge revenue growth in the next few years – particularly because U.S. cannabis sales are expected to surge.
Curaleaf has been rallying on the chart. Shares are up 250% since hitting a 52-week low in March. Despite the rebound, Curaleaf still has plenty of potential for more gains.
Curaleaf is in a position to deliver strong revenue growth for the next few quarters and years. I expect that growth to drive shares higher.
Harvest Health and Recreation (CSE: HARV, OTC: HRVSF) is a mid-sized U.S. cannabis company headquartered in Tempe, Arizona, with a market cap of $500 million.
Harvest operates 14 retail dispensaries in Arizona and is opening one new location in the state. This makes Harvest one of the largest cannabis operators in Arizona.
Once again, owning these licenses is a big advantage for Harvest. Harvest will be first in line when it comes time to hand out recreational licenses.
Harvest is already reporting great results. Second-quarter revenue was up 109% from the same period last year to $56 million. This puts Harvest on pace to do $250 million in sales in the next 12 months. If Arizona goes legal, sales will be even better.
Despite the promising results and outlook, shares of Harvest are still trading 75% below the 52-week high. This looks like a great opportunity to buy the dip directly ahead of a big fundamental catalyst.
The Bottom Line on Arizona and Two Cannabis Leaders
Arizona just qualified to vote on recreational cannabis on November 3.
If Prop 207 passes, Arizona cannabis sales should skyrocket over the next few years.
Curaleaf and Harvest are two of the largest cannabis companies in the state. Both of these early industry leaders are in a position to benefit from legalization. Medical license holders are first in line to receive a license for recreational.
*Author Michael Vodicka owns shares of Curaleaf Holdings (CURLF).
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.
Mr. Vodicka brings his expertise and guidance to the members of Cannabis Stock Trades.
Join Cannabis Stock Trades for Mr. Vodicka’s exclusive analysis, trade alerts, and model portfolio.