A green wave swept through the US yesterday.
The US midterm elections were a big win for the US cannabis industry.
Three new states voted to legalize and join the cannabis party.
- Michigan voted to legalize recreational cannabis.
- Missouri voted to legalize medical cannabis.
- Utah voted to legalize medical cannabis.
Medical cannabis is now legal in 50% of US states. Recreational is now legal in 11 states.
Beyond cannabis ballots, a number of pro-cannabis governors made it into office.
Illinois, Minnesota and New Mexico all elected pro-cannabis governors that campaigned on bringing recreational cannabis to their states.
Pete Sessions, an anti-cannabis Texas senator that has repeatedly voted against cannabis has been shown the door.
And finally – and potentially most important – the Democrats regained control of the House. This sets the stage for some major deal making on federal cannabis laws, where Trump has acknowledged that he supports medical cannabis.
All factors considered, the US midterms were a huge win for the US cannabis industry.
The big day sets the stage for US cannabis stocks to go into hyperdrive in 2019.
Right now there are hundreds of US cannabis stocks trading on global stock exchanges.
Although many of these companies look promising on first glance, within five years I expect as many as 80% to file for bankruptcy.
The companies with the highest probability to succeed in the high-growth US cannabis industry possess five key advantages over the competition.
- Billion-dollar valuation.
- Vertical integration.
- Low-cost providers.
- Multi-state operations.
- Expanding internationally.
Only a handful of US cannabis companies have what it takes to clear the bar.
Two Cannabis Leaders Ready to Cash in on the US Green Wave
Medmen Enterprises (CSE: MMEN, OTCQB: MMNFF) is one of the largest and fastest growing cannabis companies in the US. The company is quickly emerging as an early industry leader and is a direct play on the high-growth US cannabis market.
Shares began trading on the Canadian Securities Exchange in July.
Despite the Canadian listing, Medmen is primarily focused on the US cannabis market.
The company owns a portfolio of cannabis greenhouses and dispensaries in high-growth states California, Nevada and New York.
Medmen Operates One 45,000 Square Foot Cannabis Greenhouse and Building Two More
Medmen recently kicked off production at its brand new 45,000 square foot cannabis greenhouse located in Nevada. This facility is state of the art and is expected to produce more than 10,000 pounds of cannabis per year.
While this facility ramps up, Medmen is building two more cannabis greenhouses, one in Hot Springs, California and the other in Utica, New York.
Medmen Operates 14 Dispensaries in High-Growth States
Medmen currently operates 14 retail locations in high-growth states California, Nevada and New York.
Medmen Sets Cannabis Industry Record with $682 Million Acquisition
Medmen has been busy building on its early industry leadership with one of the largest acquisitions in the history of the US cannabis industry.
On October 11, Medmen announced it was acquiring fellow US cannabis company PharmaCann for $682 million.
The acquisition is a huge expansion for Medmen.
Medmen will double the number of states its licensed to operate to twelve, with 66 retail centers and 13 cultivation centers.
Medmen has done well since going public. Shares are up more than 75% and trading just below the 52-week high.
Curaleaf (CSE: CURA, OTC: LDVTF) just made history – becoming the largest IPO in the history of the US cannabis industry.
CURA went public last week and currently has a market value of more than $4 billion – so this is a big company in the cannabis world on par with the Canadian companies such as Aphria and Organigram.
Shares are trading on the Canadian Securities Exchange under the ticker CURA. Shares are available on US OTC markets under the ticker symbol LDVTF.
Even though CURA shares are listed on a Canadian exchange, this company is a direct play on the high-growth, US cannabis industry.
Curaleaf is one of the Largest Cannabis Companies in the United States
Curaleaf is an early industry leader and is already one of the largest cannabis companies in the US.
Headquartered in Wakefield, Massachusetts, Curaleaf owns or runs 28 dispensaries, 12 cultivation sites and nine processing facilities in 12 U.S. states.
Vertical integration: Curaleaf controls its supply chain from cultivation all the way down to retail. This is a similar model to the large Canadian companies like Canopy. It gives CURA tremendous pricing power and margin strength.
Size and scale: Bigger is better in the cannabis industry and CURA is already one of the largest cannabis companies in the US. As one of the lowest-cost producers, it will be difficult for smaller cannabis companies to compete with the CURA.
Branded cannabis products: CURA already owns an impressive portfolio of branded cannabis products. This creates brand identity – and more important loyalty.
Well Funded Rapid Expansion: After the IPO, CURA has more than $400 million in cash sitting in its bank account. CURA will use that capital to pump up current operations, develop new products and acquire new businesses.
The Big Picture
The Midterms were great for the US cannabis industry. I see a big green wave coming in 2019. Medmen and Curaleaf both possess five key advantages that give them a big edge over the competition.
About the Author
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.