Cannabis opportunities called out by Cantor Fitzgerald ahead of election
Oct. 8, 2020 3:04 PM ET|About: Trulieve Cannabis Corp. (TCNNF)|By: Clark Schultz, SA News Editor
With the U.S. election less than a month away, the cannabis sector is getting a harder look from analysts and investors for the potential implications on future legislation.
Cantor Fitzgerald analyst Pablo Zuanic says state-level legalization may be priced in for marijuana stocks, but the sizeable benefits from a change in control of the Senate are not.
"We think a Senate controlled by the Democrats would most likely pass some form of legislation (along the lines of the MORE Act, sponsored by Sen. Kamala Harris) that would be favorable to the US MSO group. In a nutshell, this would deschedule cannabis, so taxes would be paid on PBT and not gross profit, as per rule 280E. It would also provide access to capital and a slew of banking services that would lower funding costs (currently hovering in the low-teens or higher), reduce cash handling costs, and, likely boost demand given access to new payment mechanisms," previews Zuanic.
In a rough estimate, Zuanic says 30% to 60% upside could be seen for well-managed, profitable multi-state operators just on cash flow alone.
Multi-state operators Trulieve ( OTCQX:TCNNF), Green Thumb Industries ( OTCQX:GTBIF), Curaleaf ( OTCPK:CURLF) and Cresco are all rated at Overweight by Cantor Fitzgerald into the election. Acreage ( OTCQX:ACRGF) is also mentioned as possible arbitrage case given its acquisition by Canopy Growth (NYSE: CGC) is contingent on federal permissibility. |
