Being able to translate retail licenses into operational dispensaries should mean a lot of revenue for these marijuana stocks.
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.
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.
To Read The Rest Of This Article By Sean Williams on The Motley Fool
Published: February 19, 2020