Best Top-Selling Cannabis States in 2020

To say Top-Selling Cannabis States. that is, 2019 was not a banner year for the cannabis industry and marijuana stocks may be understating just how poor things actually went. Despite Canada becoming the first industrialized country to legalize and commence the sale of recreational pot, and momentum for legalization remaining strong in the U.S., the black market has been virtually unstoppable throughout much of North America.

On the bright side, if there is a gleam of light to be found in these struggles, organic growth and ongoing legalization in the U.S. should lead to significant growth in total cannabis sales in 2020.A black silhouette outline of the United States, partially filled in by baggies of cannabis, rolled joints, and a scale.

IMAGE SOURCE: GETTY IMAGES.

America’s top-selling marijuana states in 2020

In June, the team of Arcview Market Research and BDS Analytics put out its latest annual report, “State of the Legal Cannabis Markets,” which made a number of assumptions and estimates on future growth in Canada, the U.S., and abroad. Though certain aspects of their assumptions have changed (which is to be expected of the nascent, but rapidly evolving, pot industry), the report from Arcview and BDS points to 10 U.S. states surpassing $500 million in full-year marijuana sales in 2020.

Listed in descending order, the top-selling cannabis states in 2020 are expected to be:

  1. California: $3.8 billion (recreational and medical mix)
  2. Colorado: $1.7 billion ($1.4 billion recreational, $0.3 billion medical)
  3. Michigan: $1.21 billion ($299 million recreational, $909 million medical)
  4. Florida: $1.2 billion (all medical)
  5. Washington: $1.1 billion (recreational and medical mix)
  6. Nevada: $960 million ($900 million recreational, $60 million medical)
  7. Oregon: $831 million ($796 million recreational, $35 million medical)
  8. Arizona: $804 million (all medical)
  9. Massachusetts: $682 million ($451 million recreational, $231 million medical)
  10. Illinois: $543 million ($270 million recreational, $273 million medical)

First off, you’ll note that the report expects California’s pot industry to register its first signs of true growth since 2017 this year. Despite its stagnant growth over the past two years, California remains the largest cannabis market in the U.S. by a substantial amount.

You’ll also note just how robust sales in Arizona are expected to be, despite the fact that it’s solely a medical marijuana-legal state at the moment. Even though Arizonans aren’t guaranteed to be voting on a recreational pot initiative come November, it certainly seems likely at this point.A large cannabis dispensary sign in front of a retail store.

IMAGE SOURCE: GETTY IMAGES.

No surprise: MSOs are focusing their attention on many of these key states

What shouldn’t come as a surprise is that vertically integrated multistate operators (MSOs) are ensuring that they have a presence in a majority of these top-selling cannabis states.

Perhaps the hottest state at the moment is Illinois, which just commenced adult-use weed sales on Jan. 1, 2020. Illinois became the first state ever to pass a bill allowing for the consumption and sale of recreational weed at the legislative level this past June. By 2024, Arcview and BDS foresee annual sales surpassing $1 billion. Both Cresco Labs (OTC:CRLBF) and Green Thumb Industries have vested interests in the Land of Lincoln, with each aiming for the maximum of 10 open locations.

Nevada is another stealthy market that could be a big-time winner for MSOs. Even though the Silver State is slated to hit only $960 million in 2020 sales, Arcview and BDS believe it’ll be the leading state for per-capita cannabis spending by 2024 (thanks, tourism). Green Thumb Industries has bet big on Nevada by acquiring Integral Associates in 2019. This acquisition gave Green Thumb eight retail licenses in the state, as well as the only marijuana store presence on the Las Vegas Strip.

And, of course, there’s California, which is where all major MSOs want a piece of the pie. Cresco Labs recently went a different route via its now-closed acquisition of Origin House. Rather than buying up dispensary and cultivation licenses, the allure or Origin House is that it’s one of only a select few companies to hold cannabis distribution licenses in California. Thus, Cresco Labs buying Origin House gives it access to more than 575 dispensaries in the Golden State.A judge’s gavel next to a book on federal and state marijuana laws.

IMAGE SOURCE: GETTY IMAGES.

Here’s why things could remain challenging for U.S. pot stocks

While rising sales would obviously bode well for MSOs, there are still a number of issues that U.S.-focused cannabis stocks are going to need to contend with.

For one, marijuana remains illegal at the federal level, and that’s highly unlikely to change anytime soon. For MSOs, this means being unable to transport marijuana across state lines, even in instances where two fully legalized states border each other. Instead, MSOs are being forced to set up redundant cultivation and processing operations in every state where they also have dispensaries. This nuisance leads to higher expenses for most U.S. pot stocks.

To build on this point, financing remains a key concern for most U.S. marijuana stocks. With minimal access to basic banking services, many have had to turn to common stock offerings or sale-leaseback agreements in order to ensure that they have enough capital on hand to fund their operations and ongoing expansion. Though Cresco Labs is one of the few MSOs to have (within the past few days) secured traditional forms of financing, access to cash could remain challenging.

Lastly, MSOs are contending with exorbitant tax rates on marijuana in select states. In California, pot consumers can expect state and local sales tax, an excise tax, a wholesale tax, and various fees such as laboratory testing to be factored into the final price of a pot product. High tax rates make it impossible for legal-channel weed to compete with the black market.

Thus, while sales of legal marijuana may be on the rise in 2020, life isn’t going to get much easier for publicly traded pot stocks.Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends Cresco Labs Inc. The Motley Fool has a disclosure policy.


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These U.S. Pot Stocks Have the Most Open Dispensaries

Being able to translate retail licenses into operational dispensaries should mean a lot of revenue for these marijuana stocks.

Sean Williams

Sean Williams(TMFUltraLong)Feb 19, 2020 at 7:21AMAuthor Bio

Marijuana stocks might have slogged through some awful growing pains in 2019, but there’s little doubt that a big-dollar opportunity awaits over the long run. After the industry generated $10.9 billion in worldwide sales in 2018, Wall Street projects that global yearly sales could grow by 400% to 1,800% by 2030.

What’s important to understand from an investment perspective is that while Canada was the first industrialized country in the modern era to green-light recreational pot, the United States is the industry’s crown jewel. Even with peak sales estimates all over the place, the consensus is that the U.S. will be responsible for anywhere from 33% to perhaps more than 50% of global weed sales by 2030. That makes it a market of high interest for marijuana stock investors.

While there are numerous ways for pot stocks to generate sales in the U.S., the most effective way to really ramp up revenue is to be a vertically integrated multistate operator (MSO). In layman’s terms, we’re talking about a company that’s capable of controlling the seed-to-sale process within a recreationally legal or medical marijuana-legal state.A large cannabis dispensary sign outside of a retail store.

IMAGE SOURCE: GETTY IMAGES.

But in order to ramp up sales quickly, MSOs have to be effective at opening dispensaries and not just sitting on retail licenses. Right now, three U.S. pot stocks have stood out from their peers in terms of their ability to open and operate retail marijuana stores.

Curaleaf Holdings: 53 open dispensaries

Among MSOs, few cannabis stocks have created more envy than Curaleaf Holdings (OTC:CURLF), which currently has 53 operational dispensaries, 15 grow sites, and 24 processing sites spanning 14 states. Though Curaleaf has managed to open a number of its locations organically, it’s been no stranger to acquisitions.

Just over two weeks ago, Curaleaf closed its acquisition of the Select brand of cannabis products, and it looks to be closing in on the completion of an all-stock deal to acquire privately held MSO Grassroots. When the Grassroots deal closes, Curaleaf will gain access to an additional 60 retail licenses, as well as add roughly 20 operational dispensaries to its portfolio. It’ll also have access to a number of new states. On a pro-forma basis, the company anticipates having 131 retail licenses, which is potentially No. 1 among MSOs, and a presence in 19 states.

Assuming the Grassroots deal closes during the first quarter, and taking into account the revenue spike Curaleaf will benefit from now that the Select deal has closed, there’s a genuine opportunity for Curaleaf to reach $1 billion in annual sales in either 2020 or 2021.A green highway sign that reads, Now Entering Florida, with a white cannabis leaf on the right-hand side.

IMAGE SOURCE: GETTY IMAGES.

Trulieve Cannabis: 47 open dispensaries

If Curaleaf is the envy of most MSOs on the expansion front, then Trulieve Cannabis (OTC:TCNNF) is the envy of MSOs on the profit front. Trulieve Cannabis’ third-quarter results featured $70.7 million in sales and more than $23 million in operating income without the aid of one-time benefits or fair-value adjustments. Not bad for a relatively no-name MSO!

Whereas most vertically integrated MSOs have attempted to expand their footprint to as many states as possible, Trulieve has, instead, dug its proverbial feet into the ground in its home market of Florida and seemingly opened as many dispensaries as it could organically. This past Saturday, Feb. 15, Trulieve opened its 45th dispensary in the Sunshine State, bringing its national total to 47. It also has one dispensary each in Palm Springs, California, and Bristol, Connecticut, at the moment.

By focusing on the medical marijuana-legal Florida market, Trulieve has been able to keep its expenses close to the vest while at the same time effectively building up its brand. Even while facing tough competition that includes Curaleaf and MedMen Enterprises, Trulieve Cannabis has secured the lion’s share of medical pot revenue in the Sunshine State.Multiple labeled jars filled with unique cannabis strains that are on top of a dispensary store counter.

IMAGE SOURCE: GETTY IMAGES.

Green Thumb Industries: 41 open dispensaries

Third and finally, there’s Green Thumb Industries (OTC:GTBIF), which opened its seventh Illinois dispensary on Jan. 31, its 41st in the country. In total, Green Thumb, which goes by the shorter acronym GTI, has 13 manufacturing facilities and the ability to open as many as 96 retail stores across 12 states.

Similar to Curaleaf, GTI has been leaning on a combination of organic expansion and acquisitions to drive its operational dispensary count. It’s certainly expected to push toward the current state-imposed limit of 10 retail locations in Illinois, which opened its doors to adult-use weed sales on Jan. 1, 2020. With relatively low licensing limits in Illinois, even 10 operational dispensaries in the right cities could lead to substantial sales growth for GTI.

On the acquisition front, Green Thumb made a splash through its purchase of Integral Associates, which closed last year. Integral ran the Essence-branded dispensaries in Nevada, including the only dispensary authorized on the Las Vegas Strip. According to the State of the Legal Cannabis Markets report by Arc-view Market Research and BDS Analytics, Nevada is forecast to lead the country in marijuana spending per capita by 2024, which is a testament to the state’s strong tourism industry. That should make GTI’s investments in Nevada quite lucrative.Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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STOCKS

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OTC:GTBIF

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Curaleaf Holdings, Inc.

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Colorado Cannabis Companies Adopt Highways to Get Around Advertising Restrictions

They’ve found a loophole in rules preventing signage.

David Jagielski

David Jagielski(TMFdjagielski)Feb 18, 2020 at 12:58PM

There are currently 51 cannabis companies adopting Colorado highways as a way to advertise and get the public to see their logos on signs along the road, according to the Oregonian. Data from the Adopt a Highway Maintenance Corporation shows that cannabis companies are behind 66% of the sponsored roads in the state. 

The driving reason for companies to go this route is that cannabis advertising is heavily restricted in Colorado and this offers companies a loophole. One of the challenges for Colorado cannabis companies is that in order to advertise on print, TV, or radio, they have to prove their audience is made up mainly of adults aged 21 or older.

IMAGE SOURCE: GETTY IMAGES

Colorado continues to be a hot cannabis market 

Marijuana sales in Colorado have been growing since the state became the first in the country to permit recreational sales in 2014. This past year, the state recorded over $1.7 billion in sales, which is more than double the $683 million it generated in its first year. 

One company that looks to get into the Colorado market is Columbia Care (OTC:CCHWF). It announced in November that it would be acquiring The Green Solutions for $140 million, a leading cannabis company in the state. 

Green Thumb Industries (OTC:GTBIF) is another multistage operator with a presence in Colorado where it sells its branded cannabis products including incredible and Bebop. With more than $161 million in sales over the past 12 months, it’s one of the biggest marijuana stocks in the entire country. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.