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Cannabis Legalization On The Horizon: Trulieve, Village Farms Could Soar

Summary

  • The House of Representatives has passed the MORE Act, which would effectively decriminalize cannabis and expunge the records of those convicted for cannabis offenses.
  • Cannabis stocks rallied on the news, but it's unlikely that the Senate will pass the MORE Act.
  • Instead, SAFE banking is more likely to pass in the near term.
  • I discuss two names - one Canadian and one American - that stand to benefit from cannabis legalization.
  • Looking for a portfolio of ideas like this one? Members of Cannabis Growth Portfolio get exclusive access to our model portfolio. Learn More »
Cannabis Industry In The United States High Quality

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Cannabis stocks have rallied as of late on news that the House of Representatives would be voting on a cannabis legalization bill. The House did end up passing the bill, called the Marijuana Opportunity Reinvestment and Expungement (‘MORE’) Act, but stock prices stalled since

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of TCNNF either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am long all holdings of the Cannabis Growth Portfolio.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (67)

Robert NYC profile picture
FYI - A friend of mine in Florida in the cannabis industry sends me stuff now and then about applications.

it seems the 'equity' issues are real as far as this article goes and Florida is on board with it.

'State regulators released a list of names, but little else.
Regulators of Florida’s medical marijuana industry are currently examining a dozen applications for a new license intended for Black farmers.'

floridapolitics.com/...
b
Should have published this on April 1st
Bold Investments profile picture
@Cannabis Growth Investor Interesting that you never covered UGRO? Not as exciting, but safer & with upside
z
ALL the cannabis stocks will go up upon legalization, not just these two. The legalization rising tide will lift all cannabis boats, albeit some more than others.
d
Feels like House passing bills and Senate dropping the ball is built into prices at this point. So the question you have to ask yourself is whether the Senate will be willing to go into midterm elections without passing something. I just wrote my Republican senators in Florida telling them to get off their high horse and pass something. Full legalisation is way way off. The vertical nature of cannabis operations allows the states some control and benefit. Full legalisation with production crossing state lines has much fewer winners and will crush any social equity initiatives. I bought more MSOS today and hoping for the SAFE banking act! Feels like buying fossil fuel companies 18 months ago.
vfc1955 profile picture
Hopefully a dozen GOP senators will support the bill
b
@vfc1955 Maybe Manchin will behave in the manner he should.
I
No patients left let's move this along.
I
@Investerlou yes "patience"
Robert NYC profile picture
Be honest. 'On the horizon' to get through The Senate means late 2022 if not late 2023.
Cannabis Growth Investor profile picture
@Robert NYC SAFE is more on the horizon. Full-blown legalization likely many years if not a decade away
Robert NYC profile picture
@Cannabis Growth Investor Agreed and I do not think SAFE gets through in 2022.
eblunt profile picture
@Cannabis Growth Investor NY, NJ and legalization has to occur for multiple reasons.
z
Long Trulieve but aren't the stocks likely to be sold off when the Senate push fails?
Cannabis Growth Investor profile picture
@zanderion Possibly, but the valuations are already compelling here, so there may be a fundamental floor
D
@Cannabis Growth Investor Lol there's no fundamental floor for MSOs. These things keep drilling like there's no tomorrow. The lack of volume absolutely kills them.
Robert NYC profile picture
@DC_22 There will be a SALE in July and August after they all drop another 30%.
A
TCNNF average volume: 200k shares

TLRY Average volume: 25m+ shares?

Want to know what happens when uplisting happens and there is 10x more buyers than sellers on a stock? MSO’s (TCNNF) has the potential to squeeze hard. I’m expecting 65$+ after uplisting
s
Up listing and SAFE act, nothing short of this will raise all boats!!
Cannabis Growth Investor profile picture
@specA I do see US stocks trading up higher even without uplisting/SAFE.
Robert NYC profile picture
@Cannabis Growth Investor I see everything going lower. Small-cap 'Growth' stocks with negative PEs are going to get slaughtered.
d
Like trulieve, don’t believe the story on moving cannabis across borders.
OneStrawRevolutionFarming2023 profile picture
This thesis might be relevant at some point in time

but it appears that our USA economy and dollar are about to be

transformed/discombobulated/rearranged and

what happens after that can be anybody's guess and

whether we'll have a tradable, stable currency to do business because

no one wants to be part of a digital currency

AFTER what we saw in Communist Canada which is now Cuba :-(
e
@DualRootZoneAquaponics2022
Canada is not doing much business in crypto; the USD ‘s uncomfortableness is more due the end of a currency monopoy ie. oil having to be being bought and sold in USD in exchange for military equipment shipped to oil producers like Saudi Arabia.
I think you might need a history lesson if you think Canada in 2022 is Cuba!
Robert NYC profile picture
@eloibertholet Fact. Any inflation and every inflation is very majority a problem by running the printing presses and spending too much in DC. Period.

mises.org/...
Money Talks! profile picture
@eloibertholet, I had promised myself to stop posting on any site, this one included, because of folks akin to the one you replied to. I broke my promise just to give you a 👍, and many more 👍👍👍👍👍👍👍👍👍❗
Now, I will remain silent, as I promised.
U
Long Truelieve. In at $22.80 and very patient.
A
Aido
04 Apr. 2022
SNDL forever !
b
Canadian LPs will not be able to ship MJ into the U.S. unless another law is passed and that can take a long time.
Cannabis Growth Investor profile picture
@blome international commerce would need to be allowed
Robert NYC profile picture
@blome Of couse. But what will also not happen until everything goes through in The Senate is inter-state shipping. This means all the MSOs are captured up in state redundancy and less efficiency meaning less profits.

When what I suspect happening in 2023, will be one huge bill getting passed into law. Then, MSOs and LPs get into a wild-west shoot-out for land.
Robert NYC profile picture
@Cannabis Growth Investor Inter-state commerce will also not be allowed until the Feds let them.
georgefelix75 profile picture
If the case for VFF is utilizing their grow operations in Canada then why not TLRY?
l
@georgefelix75 no one can beat vff in farming, low cost producer.

30+ years of experience big scale green house growing will do that.
t
@Cannabis Growth Investor
just like semicon, not sure why drought regions are so attractive for industries that needs reliable and cheap water.
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