In launching coverage of US cannabis stocks, Wedbush Securities says that after battling through several storms, the cannabis industry has a chance to benefit as the market grows and lawmakers implement reforms.
Gerald Pascarelli Investigators and Antoine Legault says that in the past 18 months, the industry has faced many challenges, including overcrowding, low prices, a lack of new stores, and a drop in income that appears to be inflation.
In addition, the researchers stated that the lack of management and control of the system and the management of the system and the management of management management management management management management management management management k This decline in performance means that the best performers in the multistate operating group (MSO) have fallen more than 60% from their peak.
“As we approach the end of 2022, we believe bright days are ahead for the US cannabis industry,” the pair wrote in a research note on Thursday, citing the exciting launch of the award to leading MSOs for market growth and proximity. – term regulatory reforms.
Using a bottom-up analysis based on the type of federal and state funding, analysts project the US cannabis industry to add more than $9B in revenue over the next three years.
They also generate more than $25B in sales and growth of about 2% for the US cannabis industry in 2022 and expect the total legal cannabis market in the US to reach $34B by 2025. % of the forecast.
The analysts also project a significant decrease in Capex spending in 2023, arguing that “it will provide a good estimate of the current/demand imbalance in major markets such as PA, IL, and MA.”
The two are expressing optimism about the path the SAFE Banking Act will take as Congress enters an impasse. In October, Sen. Cory Booker (DN.J.) said there is a good chance that some of the marijuana reform laws will continue in the disability sector.
However, the analysts added that the SAFE Banking Act “will be a long time coming,” and the Senate will only have three weeks “to act.” However, “it could be very useful for companies that are hungry for regulatory change,” the researchers wrote.
Wedbush initiates coverage of MSOs Cresco Labs (OTCQX:CRLBF), Curaleaf (OTCPK:CURLF), Green Thumb Industries (OTCQX:GTBIF), and Trulieve (OTCQX:TCNNF) with Outperform ratings. The researchers say their decision was prompted by the company’s frustration and competitive advantage.
However, based on the company’s growth, margins, profitability, and cash flow, Pascarelli and Legault named Green Thumb (OTCQX:GTBIF) as their top pick in cannabis.
Seeking Alpha analyst Alexander Carchidi thinks that while Green Thumb (OTCQX:GTBIF) stock doesn’t look cheap, it compares well to its competitors, especially those with good cash flow.