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This Week in Cannabis Investing Weed Legalization Gains Ground in Midterms

Maryland and Missouri became the two most recent U.S. states to legalize recreational marijuana use. (opens in new tab) (opens in new tab) (opens in new tab) Newsletter sign up Newsletter (Image credit: Getty Images) By Morgan Paxhia published 11 November 2022 Weed legalization scored some solid wins in the 2022 midterm elections. Maryland and Missouri legalized cannabis for adult-use, and internal estimates at Poseidon note that those two markets could generate $2.6 billion in legal cannabis sales. According to cannabis research firm Headset, the additions of Maryland and Missouri to the market would add about 10% growth over the $26 billion that U.S. adult-use marijuana sales are predicted to earn in 2022. There were also decriminalization initiatives passed in Ohio, Texas and Wyoming.

10 Best Stocks You've Never Heard Of California voters had the opportunity to generate growth via ballot initiatives to open adult-use businesses in municipalities across the state. For context, only a third of cities and counties in California currently allow cannabis retail operations. This election cycle could prove quite impactful to that state's market.

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Profit and prosper with the best of Kiplinger's expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail. Profit and prosper with the best of Kiplinger's expert advice - straight to your e-mail. Sign up Republicans are on track to gain control of the House, and the Senate may stay split with Vice President Kamala Harris as the tiebreaker. We see this as the highest probability outcome for federal progress on cannabis during the lame-duck session. Passing the SAFE Act or the SAFE+ Act would be the first positive federal action taken since Poseidon was formed. We continue to say this is the dawn of federal legalization, and the day is young!

Diddy Enters Cannabis Industry 

It was another historic week in cannabis with the announcement that Sean "Diddy" Combs is forming the largest minority-owned multi-state operator (MSO), as well as the world's largest Black-owned cannabis company.

Time to Invest in Multi-Family Real Estate Stocks? Not So Fast In a deal worth up to $185 million, Combs agreed to acquire cannabis operations in Illinois, Massachusetts and New York from Cresco Labs (CRLBF (opens in new tab)) and Columbia Care (CCHWF (opens in new tab)). Combs' new MSO will be able to manufacture branded cannabis products and distribute them to dispensaries in major cities like New York, Boston and Chicago. Earlier this year, Cresco Labs agreed to purchase Columbia Care in a $2 billion deal that would've made Cresco the top cannabis producer in the U.S. We have been closely watching the pending merger of Cresco and Columbia and the requisite divestiture of licenses. Investors have become increasingly focused on the balance sheets of cannabis operators. The industry needs to see M&A proceed versus busting like other transactions in 2022. We look forward to seeing the Combs team continue to build on their footprint.

Tilray Brands Purchases Montauk Brewing Company 

Tilray Brands (TLRY (opens in new tab)) continues to acquire U.S. beer brands with this week's announcement of its purchase of Montauk Brewing Company. TLRY has recently focused on building a portfolio of beer brands, noting the potential accretive value of this transaction. However, the company continues to struggle with rightsizing its cannabis operation in Canada. Headset data shows that TLRY is losing market share in Canada, and there is likely quite a lot of work to further improve the overall enterprise. This week's Highrise podcast (opens in new tab) provides a good rundown of the transaction.

Senator Hickenlooper Introduces PREPARE Act

Democratic Senator John Hickenlooper from Colorado announced his plan to introduce legislation that would provide a framework for the federal government to legalize cannabis. The PREPARE Act would require the U.S. Attorney General to convene a "Commission on the Federal Regulation of Cannabis" if the federal government passes cannabis legalization. The commission's role would be to make recommendations related to cannabis policy, though it would not have the authority to institute any new policies.

Warren Buffett's Berkshire Hathaway Slashes Stake in U.S. Bancorp "This bill will provide lawmakers across the ideological spectrum the opportunity to engage on cannabis reform by creating a fair, honest, and publicly transparent process for the federal government to establish effective regulation to be enacted upon the termination of its 85-year prohibition of cannabis," wrote Hickenlooper's office in a summary of the bill. As we noted, this is a big week for U.S. cannabis, with many focused on the outcome of the midterm elections. We try to focus on companies and fundamentals, but progressive federal action could help take tremendous strides in normalizing the cannabis industry. The SAFE Banking Act is still top of mind as it would open access to banking for cannabis companies and result in subsequent implications for capital flows and stock prices. We have heard much talk from the Democrats and additional bills, including Hickenlooper's PREPARE Act initiative, which is potentially helpful for starting the conversation of a federal regulatory regime. Discussions around cannabis legislation continue, but we all need and want SAFE to get passed in the lame-duck session as a starting point of federal action. Any of the securities identified and described herein are for illustrative purposes only. Their selection was based upon non-performance-based objective criteria. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities identified.

Bear Market Strategy for Millennial Investors Explore More Tilray (TLRY) Morgan PaxhiaContributing WriterMorgan Paxhia is Co-Founder of $PSDN ETF & Managing Director and Co-Founder of Poseidon Investment Management. The $PSDN ETF is an actively managed fund that primarily invests in U.S. and foreign companies, directly or indirectly involved in the marijuana and hemp industry. With over 10 years experience in investing and finance, Morgan has developed a deep understanding of individual company analysis, portfolio construction, and risk mitigation. Latest Warren Buffett's Berkshire Hathaway Slashes Stake in U.S. Bancorp Warren Buffett's holding company continued to lower its exposure to financial stocks, more than halving its stake in USB. By Dan Burrows • Published 11 November 22 Kiplinger's Weekly Earnings Calendar stocks Check out our earnings calendar for the upcoming week. By Karee Venema • Published 11 November 22 You might also like Stock Market Today: Major Indexes Post Weekly Gains Stock Market Today Stocks largely traded flat Friday amid a slow news day and a trickle of economic datapoints. By Kyle Woodley • Published 25 March 22 Investing in Cannabis: 3 Top Trends for 2022 marijuana stocks What's next for cannabis investors? We look at three vital trends that will define the landscape for the year ahead. By Matt Hawkins • Last updated 14 December 21 Stock Market Today: Jobs Data Give Investors Cause for Pause Stock Market Today Higher-than-expected initial unemployment claims left the major indices with middling results Thursday; chip stocks and marijuana plays had much more clear direction. By Kyle Woodley • Published 11 February 21 Stock Market Today: Markets End Raucous Week on a Restrained Note stocks An encouraging October jobs report and a clearer presidential picture didn't do much Friday for a market exhausted from running. By Kyle Woodley • Published 6 November 20 10 Best Marijuana Stocks to Buy Now Kiplinger's Investing Outlook Investors in marijuana stocks have been put through the wringer for years. But with U.S. cannabis sales on the rise, these 10 picks could finally have their day in the sun. By Will Ashworth • Last updated 22 September 22 View More ▸ kiplinger About Us (opens in new tab) Terms and Conditions (opens in new tab) Privacy Policy (opens in new tab) Cookie Policy (opens in new tab) Kiplinger is part of Future plc, an international media group and leading digital publisher. Visit our corporate site.
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