Virginia just voted to legalize recreational cannabis, making it the first southern state to go legal. This is another big step forward for the U.S. cannabis industry and another big win for cannabis investors.
I’m going to reveal one company, valued at $1 billion and growing quickly, that could be the best investment play on Virginia’s big legalization move.
Why Virginia and Why Now?
Virginia is the 16th U.S. state to legalize recreational cannabis. Here are some more details from mjbizdaily.com.
Virginia lawmakers on Saturday narrowly approved compromise legislation legalizing a commercial recreational marijuana program that could generate nearly $1.5 billion in annual sales within five years of the scheduled Jan. 1, 2024, start. Virginia would become the country’s 16th state and the first in the South to legalize adult-use marijuana as soon as Gov. Ralph Northam signs the bill, as he is expected to do.
Virginia going legal is important for two reasons:
- The U.S. cannabis industry is going through one of its most prolific stages of growth. Due to COVID, many U.S. states lost billions in tax revenue and they are turning to legalization to help fill the gap. Virginia is the latest domino to fall and there should be many more this year and beyond.
- Virginia is projected to grow into a multi-billion dollar cannabis market. Analysts are projecting recreational sales could hit $1.2 to $1.4 billion per year when the market matures. When you add in medical cannabis sales, that number should be much closer to $2 billion in annual sales.
As it stands, Virginia’s cannabis market is highly underdeveloped. Its medical cannabis program only began last October. Many early industry leaders have simply not had an opportunity to establish operations in the state.
However, there is an exception.
Jushi Holdings (CSE: JUSH, OTC: JUSHF) is one of the largest cannabis companies in the U.S. with a market cap of $1 billion. This cannabis company has an early lead in Virginia and is in a top position to thrive on legalization.
In Virginia alone, Jushi:
- owns a 93,000 square foot cultivation center
- operates and owns one dispensary
- holds permits to open five more dispensaries
Jushi has already been cashing in on the high-growth U.S. cannabis industry. Third-quarter sales from late November were up 67% from the same period last year. Jushi also recently raised its fourth-quarter revenue guidance.
Q4 2020 Guidance Update
Based on the continued strength of the Company’s operations, Jushi is updating its previously announced fourth quarter 2020 (“Q4 2020”) revenue and Adjusted EBITDA guidance. The Company now expects Q4 2020 revenue of between $32 to $33 million, up from $28 to $30 million, and maintain Adjusted EBITDA1 guidance of $2.5 to $3 million. The Company continues to maintain its previously announced 2021 revenue guidance of $205 to $255 million and 2021 Adjusted EBITDA1 guidance of approximately $40 to $50 million.
As you can see Jushi is cashing in on the high-growth U.S. cannabis industry. Now, Jushi is making moves to cash in on Virginia.
Jushi is a Play on Virginia’s Cannabis Industry
Jushi is also a direct play on Virginia’s young cannabis industry. Its one of the largest operators in the state and has established early market leadership.
In the fall of 2020, Jushi began operations at its 93,000 square foot cultivation center. Here is what Jushi said when the facility went live.
Jushi’s majority-owned Dalitso’s 93,000 sq. ft. facility in Virginia began its cultivation operations, planting its first seeds in the fall. Initially, Dalitso’s custom-built, Manassas facility is expected to produce 6,000 pounds of dried flower and its state-of-the-art CO2 extraction capabilities are expected to process up to 32,000 pounds of biomass each year. Jushi’s extraction lab and kitchen will also manufacture high-quality, medically infused cannabis products, including select in-house brands from the Company. At full capacity, Dalitso’s new Virginia facility is expected to have an annual cultivation output of approximately 27,000 pounds of dried flower and the capacity to process up to 64,000 pounds of biomass.
In addition to the new cultivation facility, Jushi also owns a manufacturing facility, processing center, one dispensary, and a permit to open five more dispensaries.
These assets have established Jushi as an early leader in Virginia’s young cannabis market.
Jushi Has Been on a Roll for the Last 12 Months
Jushi shares have seen a huge rally in the last 12 months, up more than 600%.
More recently, shares have been consolidating for the last month directly below the 52-week high.
Looking forward, the trend is still higher and it looks like shares are setting up for a breakout and new high.
The Big Picture on Virginia Going Legal and Jushi
Virginia just became the latest state to go legal and the first Southern state to go legal.
Although Virginia’s cannabis industry is still in the early stages, the state should grow into a multi-billion cannabis market when fully mature. Jushi Holdings is an early leader in Virginia and in a position to capture market share as the industry expands.
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.
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