Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Cannabis companies, betting on a Biden win, ready IPOs

Stock MarketsOct 15, 2020 01:15PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
3/3 © Reuters. FILE PHOTO: Chemdawg marijuana plants grow at a facility 2/3

By Shariq Khan and David Randall

NEW YORK (Reuters) - A year ago, Flora Growth Chief Executive Damian Lopez had just spent a chunk of his company's seed capital buying a Colombian cannabis producer, and was fighting his way through the legal and financial hurdles that have made development of the industry such a challenge over the past decade.

These days, a boom in sales of his hemp-derived health food and beauty products during the coronavirus pandemic, and the prospect of an easing of marijuana laws in the aftermath of the U.S. presidential election, have him sealing a $30 million funding round and making plans for a U.S. public floatation early next year.

“I think the election will be a huge catalyst,” Lopez said on Wednesday. He was busy planning for the initial public offering (IPO) with investment banking firm Boustead Securities set to be the company's chief adviser.

Lopez is far from alone. U.S.-based dispensary business Gage Cannabis announced two weeks ago it would seek to list in the new year, while synthetic cannabinoid maker BioMedican has also laid out plans to go public in the first half of 2021.

Another hemp-based health products maker, Vertical Wellness, told Reuters this week it too was looking to debut next year.

Today's outlook is a far cry from 2018, when many Canadian-based players created for last year's legalization there, as well as expectations of the widespread opening of U.S. markets, faced fines and shutdowns, or were forced to merge, due to regulatory roadblocks that hampered growth prospects.

Lopez and other CEOs say the potential January arrival in the White House of Democratic presidential candidate Joe Biden and his pro-decriminalization running-mate, Senator Kamala Harris, may prove a watershed moment for the industry.

But even if President Donald Trump wins a second term, changing views on marijuana laws among voters and lawmakers have brightened the outlook for the industry, CEOs and analysts said.

“Regardless of who wins, more and more states are showing their support for cannabis,” Lopez said.

Voters in five states, including densely-populated New Jersey and rapidly-growing Arizona, are expected to back measures on Nov. 3 that would allow recreational use of marijuana.

"We believe the November elections could drive meaningful upside for the U.S. marijuana industry," said Michael Lavery, an analyst at Piper Sandler (NYSE:PIPR) & Co.

'DRAMATIC CHANGE IN EXPECTATIONS'

Shares of companies with broad footprints in the U.S. market, including Curaleaf Holdings (OTC:CURLF) Inc (CD:CURA), Cresco Labs Ltd (CD:CL) and Green Thumb Industries Inc (CD:GTII) are all up more than 20% since the presidential debate on Sept. 29, mirroring rising expectations of a Biden victory.

The Democratic nominee has widened his lead in several states likely to decide the election, Reuters polls showed, as well as his lead in online betting markets.

In last week’s debate with Vice President Mike Pence, Harris said marijuana would be decriminalized at a federal level in the United States under a Biden administration.

“Each election cycle cannabis comes closer to federal acceptance, and this election is pivotal to those goals,” said Cynthia Salarizadeh, founder and president of House of Saka, a cannabis-infused beverages business.

A Democratic victory for control of the Senate, which is looking increasingly likely according to polls, would replace Republican Majority Leader Mitch McConnell, who has blocked legislation that would allow cannabis companies greater access to financial markets.

Cannabis sales have surged with people stuck at home during the coronavirus pandemic. In California, sales data for August showed a 26% jump over the past year, while sales in Nevada were up 34%, according to BDS Analytics.

Federal decriminalization, or legalization in more states, would not be without specific challenges, investors said. 

Many point to Canada as an example.

Though the country became the first G-20 nation to legalize recreational use of cannabis in 2018, regulatory hiccups in Canadian dispensary rollouts, slow international legalization and a lack of profitability sent investors packing over the next year. That left most companies at a fraction of their market values by the beginning of this year.

Michael Underhill, chief investment officer at Capital Innovations, cautioned that several bills would need to pass before U.S. companies will be on the same regulatory playing field as their Canadian counterparts.

Still, “it’s a dramatic change in expectations from three months ago, when it appeared Donald Trump would most likely win re-election,” he said.

Cannabis companies, betting on a Biden win, ready IPOs
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Andrew carson
Andrew carson Oct 15, 2020 3:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bad move betting on Biden 🥴
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email