The US cannabis industry received a big boost after New York Governor Andrew Cuomo signed a bill to legalize recreational cannabis for adults that are over the age of 21. The signing of the legislation comes quickly after New York’s Senate and Assembly voted to approve it.
One of the impacts the legislation will have is related to expunging previous cannabis convictions for actions that would be legal under the new bill. The legislation also creates licenses for producers and distributors, and we are bullish on the growth prospects that are associated with the New York market.
The legislation allows for consumers to purchase cannabis from authorized sellers and possess up to 3 ounces of cannabis and 24 grams of cannabis concentrate. We expect the legislation to serve as a catalyst for companies that are levered to the New York market and will monitor the rollout of it.
According to the legislation, cities, towns, and villages may opt-out of allowing recreational cannabis dispensaries or on-site consumption licenses by passing a local law by December 31, 2021 or nine months after the legislation takes effect. We do not expect to see many cities in New York opt-out after the COVID pandemic severely stressed the balance sheet.
We believe the legalization of cannabis in New York was necessary after surrounding states passed bills to legalize recreational cannabis. We are bullish on the structure of cannabis markets in the northeast and expect New York to be one of the largest markets in the US once the program is operational for a few years.
During the last month, we have seen a substantial increase in the amount of information on New York’s cannabis market and are favorable on the trend. Through a strategic relationship with Acreage Holdings (ACRG-AU.CN) (ACRDF), Canopy Growth Corporation (WEED.TO) (CGC) has attractive leverage to the New York market and will monitor how the company benefits from the change in legislation.
Canopy Growth is one of the few Canadian cannabis companies to have leverage to the New York market. Going forward, we expect companies like Aurora Cannabis Inc. (ACB.TO) (ACB), Aphria/Tilray (TLRY), and HEXO Corporation (HEXO.TO) (HEXO) to become levered to the Big Apple and will monitor how the industry advances from here.
If you are interested in learning more about the companies that could benefit from the passing of recreational cannabis legislation in New York, please email firstname.lastname@example.org with the subject “New York Cannabis Companies” to be added to our distribution list.