Two Early Leaders to Profit from New York’s $3.1 Billion Cannabis Market

A new report predicts that New York is set to grow into the second-largest cannabis market in the United States behind California.

Today I am going to share what is happening in New York and reveal two of the best cannabis stocks to potentially profit.

The New York City Comptroller predicts that New York’s recreational cannabis market could generate $3.1 billion in annual sales and $1.3 billion in new state and local taxes.

Here are some more details from the report.

“This report estimates the legal, adult-use marijuana market at some $3.1 billion per year in New York State, about $1.1 billion of that in New York City. In turn, the Comptroller’s Office estimates that this market could conservatively yield annual tax revenues of as much as $1.3 billion total at the State and City levels. That assumes a combination of state and local sales and excise taxes in line with what other jurisdictions have passed that could yield up to $436 million in revenues for the State, $336 million for the City, and some $570 million for localities outside of the city.”

Estimated Tax Revenues from Marijuana Legalization in New York

If correct, $3.1 billion in annual sales would make New York the second largest cannabis marker in the US behind California, with recreational cannabis sales expected to top $5 billion in 2019.

New York is Following a Predictable Legalization Pattern

New York legalized medical cannabis in 2014. Although the program is off to a slow start simply because medical cannabis can only be prescribed for a limited number of conditions, New York is following a predictable pattern we have seen in many other states – medical cannabis sets the stage for legalizing recreational cannabis.

In January 2018, Governor Andrew Cuomo requested a report from the New York Department of Health on recreational cannabis that was just delivered a few weeks ago.

The report concluded that “the positives outweigh the negatives.”

Here’s a quote from the report.

“Regulation of marijuana benefits public health by enabling government oversight of the production, testing, labeling, distribution, and sale of marijuana. The creation of a regulated marijuana program would enable NYS to better control licensing, ensure quality control and consumer protection, and set age and quantity restrictions.”

Last week, the New York Health Department enacted emergency measures that allow for the use of medical cannabis for conditions currently treated by opioids.

Also recently, the New York State Department of Financial Services recently released a report encouraging banks to do business with medical cannabis and hemp companies.

These signals are creating a clear message – New York’s medical cannabis program is expanding rapidly and setting the stage for recreational cannabis to go legal within 18 to 24 months.

If it happens, I see two young cannabis companies in position to capitalize.

These Two Young Cannabis Companies are in Position to Capitalize on New York’s Recreational Market

MedMen Enterprises (CNSX: MMEN, OTC: MMNFF) is a Canadian cannabis company with growing operations in New York.

Medmen recently opened a medical cannabis dispensary on Manhattan’s Fifth Avenue, a high-traffic urban location that is one of the most exclusive and expensive in the world.

In addition to Manhattan, Medmen operates locations in Buffalo, Syracuse, and Lake Success.

These dispensaries aren’t designed like a typical low-cost dispensary. They look more like Apple Stores, which I view as a key point of differentiation from the competition.

Medmen just went public in early June. Since then shares have been a bit weak with the broader cannabis sector.

Innovative Industrial Properties (IIPR) is a US-based cannabis company with a growing presence in New York.

IIPR acquires or builds huge industrial cannabis greenhouses and then leases those facilities to cannabis producers.

Its current portfolio includes six properties located in Arizona, Maryland, Minnesota, New York and Pennsylvania, for total rentable square footage of 700K that is 100% leased.

Here is a quick rundown of IIPR’s operations in New York.

Location: Hamptonburgh, New York

Rentable square feet: 127,000

Type: Industrial and Greenhouse

Percentage Leased: 100%

Tenant: PharmCann LLC

Tenant’s website:

Location: Perth, New York

Rentable square feet: 40,000

Type: Industrial and Greenhouse

Percentage Leased: 100%

Tenant: Minnesota Medical Solutions, LLC (a subsidiary of Vireo Health, Inc.)

IIPR has been strong on the chart. Shares have doubled in the last two years.

The Big Picture:

New York looks ready to grow into the second-largest cannabis market in the US. These two early industry leaders have an early and growing presence in the state. I expect recreational cannabis to go legal within 18 to 24 months. If that happens, the stock for these two companies could skyrocket.

Michael Vodicka owns shares of Innovative Industrial Properties.

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.