CannabisNewsWire
Editorial Coverage: A new attorney general is still to be named
to replace unabashedly anti-cannabis former AG Jeff Sessions. As
the market awaits a new AG, there’s a steady push from cannabis
companies keeping an eye on the massive potential of the U.S.
market, companies that include Chemistree Technology, Inc.
(CSE: CHM) (OTCQB: CHMJF) (CHMJF
Profile), Aurora Cannabis (TSX: ACB) (NYSE:
ACB), CannTrust Holdings, Inc. (TSX:
TRST), Organigram Holdings, Inc. (TSX.V: OGI)
(OTCQX: OGRMF), and Supreme Cannabis Co. (TSX.V:
FIRE) (OTCQX: SPRWF) (SPRWF
Profile).
To view an infographic of this editorial, click here.
By the end of 2025, the legal cannabis industry is expected to
reach $146.4 billion
worldwide. Meanwhile, a good number of U.S. companies and investors
are being mostly locked out of this booming market because the
federal government still classifies cannabis as a Schedule I
drug.
However, a sea change of public opinion pointing towards a
demand for federal legalization is underway with several states
already having voted in favor
of cannabis in some form. Even the notoriously conservative,
teetotalling state of Utah has joined this revolution.
As Sessions’ replacement has yet to be announced, there is
ongoing speculation on the positive benefits of a new face for the
cannabis sector. As Forbes magazine
puts it, “The new AG will likely be less of an opponent for
cannabis simply because it is hard to find someone who has stronger
opposition than Mr. Sessions.”
What’s on the table is a massive multibillion-dollar sector that
could be unleashed quite quickly should the next AG have a softer
and more populist approach to the plant. During the lead-up to a
potential legalization, companies large and small are staking their
ground in lucrative U.S. regions already brimming with a willing
clientele eager to buy legal cannabis.
California alone could bring about a green wave, boasting an
existing cannabis market larger than all of Canada combined.
Chemistree
Technology, Inc. (CSE: CHM) (OTCQB: CHMJF) has already
begun setting up shop in the Golden State, having recently
solidified a land purchase of
9.55 acres in California’s prominent Desert Hot Springs’ cannabis
cultivation zone.
Chemistree’s strategic move into California is representative of
an early-mover advantage, despite the state’s already booming
cannabis sales. California’s cannabis spending hovered near $3
billion in 2017 — even before recreational marijuana became legal
on January 1. By 2022, the market in the state is expected to soar
to $7.7 billion.
In spite of the legal limbo of cannabis in the United States,
the sector’s advantage may already be moving south from Canada into
its neighbor to the south. Ahead of the new AG announcement, it
appears the U.S. opportunity may have already arrived.
Waking the American Sleeping Giant
Combined, the top U.S. cannabis firms trading on Canadian
exchanges represent $8 billion of market value—or roughly 20
percent of the billion-dollar market capitalization of the 144
cannabis companies listed in Canada. This just scratches the
surface.
At the moment, the United States lags behind its fellow North
American peers in fully capitalizing on the legalization of medical
and recreational cannabis. Mexico is moving
closer to legalization, with its congress at the beginning of
deliberation of a bill to legalize cannabis across the country.
During his election campaign, Mexican president-elect Andrés Manuel
López Obrador signaled his willingness to consider legalization.
Then last week, the country’s Supreme Court ruled that
anti-cannabis laws are unconstitutional, forcing lawmakers to
decide how to regulate its use.
To the north, Canada — along with Uruguay in South America — has
already made recreational use legal. An additional 30 countries and
33 U.S. states, including Australia, Germany and Israel, have
legalized some type of cannabis use. Those numbers are growing.
More than a dozen countries have already started on the path to
full legalization of the plant.
Following the resignation of AG Jeff Sessions, Sessions’ chief
of staff, Matthew Whitaker, is presently serving as acting attorney
general. Media outlets are speculating who the next AG could be,
with New Jersey Governor Chris Christie and Florida AG Pam Bondi
leading the way as potential candidates.
While Christie has been adamantly anti-pot in the past, Bondi
oversaw the approval of medical marijuana in her state of Florida.
A Bondi nomination, coupled with strong public
support could ultimately be a major boost for the cannabis
sector.
Gearing Up for a New Era
Cannabis companies are already getting their ducks in a row for
a new era of legalization. With operations in Washington State and
now California, Chemistree is gearing up for a big move.
Upon the announcement of its California land acquisition,
Chemistree president Karl Kottmeier stated, “This is a great
purchase for Chemistree. I am pleased to report that our highly
experienced team in California has begun working on this exciting
project. Not only did we arrive at what we believe is a very
attractive price, we are buying a site that already has much of the
Conditional Use Permit application process well underway. We expect
to have the application submitted within the next few weeks and
anticipate approval to take 2–3 months thereafter.”
The property is capable of supporting development plans and a
Conditional Use Permit application for three 68,000-square-foot
cultivation and processing buildings on the site, totaling
approximately 205,000 square feet.
Earlier in the year, Chemistree purchased the high-quality,
Washington-based Sugarleaf brand
with the expressed intent to more than quadruple the reach of its
product line through 2019. By taking Sugarleaf’s brand reach across
state lines into California, Chemistree is pairing the new brand
with its already acquired assets.
Beyond cultivation and branding, Chemistree is also expanding
into Northern California. The company has entered into a joint
venture on a cannabis processing facility in the north, while also
seeking capital to expand locations in the state and broaden its
service offerings.
More Red, White, Blue and Green
Opportunities
Having recently spun off its American assets into Australis
Capital, multinational cannabis producer Aurora Cannabis
(TSX: ACB) (NYSE: ACB) plans to enter the world’s largest
economy when relevant laws allow it to do so. While Aurora
currently has no direct ownership interest in Australis, the
company holds two warrants that would allow it to acquire an
ownership interest in Australis if holding investments in U.S.
cannabis assets becomes permissible within a decade. In the
meantime, Aurora has successfully listed itself on the NYSE.
Soon to be following in Aurora’s NYSE footsteps is
CannTrust Holdings, Inc. (TSX: TRST). CannTrust
managed to double its sales in Q3, as it prepared to move to the
NYSE. While still early in the game, CannTrust delivered sizeable
sales growth, and nominal profits. It entered into supply
agreements with nine Canadian provinces to supply recreational
cannabis across Canada. The company recently launched its fourth
recreational brand named “Peak Leaf,” started shipping cannabis oil
to Denmark and entered into an exclusive partnership agreement with
Kindred Partners, Inc.
Possibly joining the caravan to the NYSE is OrganiGram
Holdings, Inc. (TSX.V: OGI) (OTCQX: OGRMF). With a market
cap around $600 million, OrganiGram is likely a suitable choice for
listing on the NASDAQ exchange, but it could also potentially fit
on the NYSE. When it’s finally to scale, OrganiGram will likely be
one of the 10 largest cannabis producers in Canada. However, an
opening up of the U.S. market would only serve to boost
OrganiGram’s already impressive growth curve.
While not actively operating in the United States,
Supreme Cannabis Co. (TSX.V: FIRE) (OTCQX: SPRWF)
is preparing for entry into the international oils (for medical
use) market. Through a partnership with Medigrow located in
Lesotho, Supreme is looking to secure international opportunities
including Medigrow’s 40,000 litres of cannabis oil potential per
year. A loosening of U.S. drug policy could allow groups such as
Supreme to import their wares from abroad into the United States
and get involved in what could be the largest cannabis market in
the world.
For more information on Chemistree, visit Chemistree
Technology, Inc. (CSE: CHM) (OTCQB: CHMJF)
Please also read and review the article 'With Cannabis
Now Legal in Canada, Investors Are Turning South to the Largest
Emerging Cannabis Market in the World'
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