2 Stocks to Play the Midwest Cannabis Revolution

The Midwest is emerging as one of the fastest-growing cannabis markets in the United States, with two early industry leaders cashing in on the incredible growth.

This Middle America revolution is being led by Illinois and Michigan. Both of these states recently legalized cannabis and both are seeing explosive sales growth.

Despite the depressed consumer spending, Illinois just reported another record month of cannabis sales because of COVID-19 and quarantine.

Here are some more details from the Chicago Tribune.

Illinois marijuana shops sold almost $61 million in recreational weed in July, beating the previous record set in June by $13.4 million.

In all, dispensaries have sold about $300.1 million in recreational marijuana since sales started in Illinois Jan. 1.

The sales figures have set new records every month since May. July’s sales were a 75% increase over February, the month with the lowest sales at $34.8 million.

Michigan is also quickly evolving into a multi-billion dollar cannabis market.

Similar to Illinois, Michigan just reported another month of record sales. Here are some more details from mjbizdaily.com.

Michigan’s 7-month-old recreational marijuana market is growing quickly, with sales up from nearly $7 million in the first month of sales last December to more than $39 million in May.

The Marijuana Business Factbook estimates Michigan’s 2020 adult-use sales will total between $400 million and $475 million, growing to $1.9 billion-$2.4 billion by 2024.

Looking forward, both of these states should see cannabis sales continue to tick higher for the next few years. We should see more cultivation and dispensaries pop up in Illinois and Michigan and that will help address current supply shortages.

2 Companies Leading The Midwest Cannabis Industry

Today I am going to share two companies that are already cashing in on Illinois and Michigan. These two stocks have a lot in common.

  • These are industry leaders with market values over $1B.
  • They are both multi-state operators.
  • Both of these companies own cultivation facilities and dispensaries.

Cresco Labs (CRLBF)

Cresco Labs (CSE: CL, OTC: CRLBF) is one of the largest cannabis companies in the United States. The company is headquartered in Chicago and is a direct play on Illinois’ high-growth cannabis market.

Cresco operates in nine states and owns one of the best portfolios of cannabis assets in the industry. That includes 15 production facilities, 29 retail licenses, and 18 dispensaries.

Cresco is one of the largest players in the Illinois cannabis industry. Cresco owns and operates 10 dispensaries in Illinois and three cultivation facilities, including the largest in the state.

This portfolio has been producing impressive results. First-quarter revenue came in at $66 million, up 60% from the same period last year.

The strong results have been driving shares higher. Cresco is up more than 200% from the recent low in March. Despite the big rebound, Cresco is still trading more than 50% below the all-time high.

Red White & Bloom Brands (RWBYF)

Red White & Bloom Brands (CSE: RWB, OTC: RWBYF) is headquartered in Vancouver. However, this promising cannabis company recently evolved into an early leader in Michigan through a series of acquisitions. The company acquired MichiCann Medical, one of the state’s largest cannabis companies. They also picked up PharmaCo, Inc., another early leader in Michigan. The combined entity will create one of the largest cannabis operators in Michigan with the potential for plenty of growth.

Here are a few more details from a recent press release.

The investee currently owns 10 operating dispensaries (referred to as provisioning centers in Michigan) and owns or has leased 8 additional locations earmarked to open throughout 2020.  RWB’s Michigan Investee is vertically integrated with two operational indoor cultivation facilities, an outdoor cultivation facility, and various others coming on stream to increase margins and meet their demands for 2020 and beyond.

Shares of Red White & Bloom have been weak on the chart, currently trading near the 52-week low. However, with more dispensaries coming online in 2020, shares should get plenty of support moving forward.

Chart from tradingview.com

The Big Picture on Illinois and Michigan

The Midwest is emerging as one of the fastest-growing cannabis markets in the U.S., and Illinois and Michigan are leading the way.

Cresco is a direct play on Illinois and Red White & Bloom is a direct play on Michigan.

These two early industry leaders are set for rapid sales and earnings growth in the next two years.

When to Buy These Midwest Gems?

I’ll be keeping a close eye on Cresco and Red White & Bloom for my CST members –  they’ll be the first know when a new buying opportunity presents itself or when it’s time to capture profits!

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Best,
Michael Vodicka
Editor, Cannabis Stock Trades


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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