Weed Legalization Is Broadening, and One Company Is Getting Ready

Business in cannabis.
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With more states legalizing weed and a potential federal legalization, American cannabis stocks have tripled over the last year as investors took note of its heated sales growth and merger activity, according to Barron’s.

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And the trend is here to stay, judging by Curaleaf’s recent record earnings release and financial guidance for the next quarter.

“IMO, the growth we’re seeing right now in the industry is part of a longer-term trend, of more consumers entering the category. Incredibly optimistic about our future,” Joe Bayern, CEO of Curaleaf, tweeted.

The Wakefield, Massachusetts-based cannabis company, which is listed in Canada and trades over the counter in the U.S., had record revenue of $260 million for the first quarter, a growth of 170% year over year, according to a release.

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“Curaleaf delivered record first quarter 2021 financial results with total revenue exceeding the high-end of our guidance range as we extended our U.S. leadership, all while creating a new foundation for future international growth opportunities,” Bayern said in the release. “With our revenue projected to increase to $305 million to $315 million in the second quarter, we also expect to generate significant improvements in terms of achieving positive net income and positive operating cash flows in the back half of 2021.”

According to MarketWatch, MKM analyst Bill Kirk said that the company’s guidance “looks conservative,” as it does not include any sales in New Jersey or New York, two states that recently legalized cannabis for adult recreational use, as well as medical use. Kirk said that Curaleaf is his top pick across sectors covered by MKM, according to MarketWatch.

The sentiment was echoed by CB1 Capital, an investment manager and advisor that specializes in the supply chain of cannabinoid-based wellness, as its CIO reiterated a buy rating for the stock, according a tweeted statement.

See: Investing Recommendations and Stock Picks From Bank of America, Wells Fargo, Chase and Other Top Banks
Find: What States Will Make From Marijuana Legalization

“Cura gave great color on the progress of Senator Schumer’s expected introduction of cannabis legislation. Consistent with our previous notes, Sen. Schumer’s bill is expected to be all encompassing (will include SAFE, social justice, decriminalization, etc.) and could be introduced this month,” CIO Todd Harrisson said in a note.

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In a call with investors, Curaleaf executive Chairman Boris Jordan said, “I think we’ve got one shot before the mid-terms, as soon as Schumer’s law drops, we’ve got really one shot to get this through. And I want to make sure that the sector is very well prepared for it. So we’re currently raising funds in order to be able to make sure, this is outside of the normal funds that we use to fund our efforts there. This is additional funds to make sure that we can try to get regulatory change in Washington.”

Jordan added that Schumer thinks “he’s got one shot at this with the Republicans and so he’s putting a much broader bill. The reason for the recent hold up we learned today is the Schumer is in discussions with the FDA about what their role would be in a federal legalization. And so, that’s what’s currently holding it up. But we do expect that law to drop sometime in May. At least, that’s what we’ve been told by his and Booker’s and by his people.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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