A record 3 million Georgia voters cast their ballots before early voting ended for the U.S. Senate runoffs, setting up a showdown that will be decided on election day on Tuesday, January 5th, 2021. The race is particularly important in regard to which party controls the U.S. Senate and many agendas Democratic leadership may wish to amend or make law as well as cannabis consumers and investors interest. For consumers, they are looking for a faster pathway to national legalization and decriminalization and for investors, they seek public companies whose value will grow substantially from the overall market expansion and new potential customers. We will share some stocks to watch in the later part of our report.
While 36 states allow “medicinal” cannabis or marijuana, only 14 states currently allow recreational sales in which marijuana is fully legal and these numbers have been growing year after year in the last decade as research and science have proven therapeutic values and an additional means for taxation and income on a state by state level.
The MORE ACT 2020
The Marijuana Opportunity Reinvestment and Expungement Act, also known as the MORE Act, is a proposed piece of U.S. federal legislation that would deschedule cannabis from the Controlled Substances Act and enact various criminal and social justice reforms related to cannabis, including the expungement of prior convictions. Introduced in 2019, the U.S. House of Representatives passed the bill on December 4, 2020, marking the first time a chamber of Congress approved legislation to end federal marijuana prohibition.
The act would remove cannabis from the Controlled Substances Act, facilitate the expungement of past convictions, and tax cannabis products at 5% to fund criminal and social reform projects, including an Office of Cannabis Justice within the Department of Justice Office of Justice Programs, responsible for administering grants to aid communities negatively affected by the war on drugs. It would also prohibit the denial of any federal public benefits, like housing, based on cannabis use and states that use, or possession of marijuana would have no adverse impact under immigration laws.
With the bill passing the House in early December, it has been shelved in wait for the outcome of Tuesday’s Senate run-off. If the Democratic ticket can win, we believe we will see the MORE ACT bill be voted upon in the Senate sooner than later.
The Georgia RUN-OFF
The political world is focused on Georgia’s two U.S. Senate races, which will settle the kind of Senate that President-elect Joe Biden will be dealing with. The races, taking place Tuesday — the day before Biden is slated to be certified by Congress as the winner of the 2020 presidential election — are expected to be close. Consider that Biden won the rapidly changing but previously traditionally Republican state by fewer than 12,000 votes and Trump is still trying to fight it.
Two wins for Democrats, and they will control the Senate, along with the White House and the House, in a few weeks — a stark turnabout from the beginning of the Trump presidency four years earlier, when Republicans had full control in the Senate.
But one Republican WIN, and its split government, with the GOP likely able to block most of Biden’s legislative agenda. That is why, between the candidates and outside groups, almost $500 million has been spent on ads for the races in just about two months. It is notable that these contests are the first since the 2020 presidential election and that the usual metrics to measure races are mostly being cast aside.
Trump has also thrown a big variable into the elections with his mixed messages on voting. On the one hand, he is casting doubt on voting by baselessly claiming elections are rigged — and blaming Georgia’s secretary of state for reducing GOP enthusiasm. On the other, he is encouraging Republicans to turn out and vote, so things will be interesting on Tuesday.
One contest pits incumbent Republican Sen. David Perdue against Democratic challenger Jon Ossoff. Perdue was first elected in 2014 and is seeking reelection. The other race features incumbent Republican Sen. Kelly Loeffler against Democrat Raphael Warnock, senior pastor at Ebenezer Baptist Church in Atlanta. Loeffler was appointed to her seat in 2019 after former Republican Sen. Johnny Isakson retired because of health reasons.
Why are these elections so important? Well, in determining control of the Senate, the results will put one party or the other in charge of the legislative agenda. A Democratic sweep would result in a 50-50 Senate with soon-to-be Vice President Kamala Harris being the tie breaking vote in the chamber. While there still is a 60-vote threshold to get legislation through, it would be much easier to confirm Biden’s Cabinet picks and judicial appointments than if Democrats were in the minority. Democratic leader Chuck Schumer, who would be presumed to be Senate majority leader if Democrats took control of the chamber, would oversee what goes to the floor, including, if it came to it, items like doing away with the filibuster entirely or adding justices to the Supreme Court. If Republicans won, though, GOP leader Mitch McConnell would be able to largely thwart much of Biden’s agenda.
U.S. Marijuana Stocks to Watch
The House voted on the MORE ACT in early December, investors were positioning themselves in cannabis stocks with hopes of finding profits from a positive vote. It seemed the rally started after Thanksgiving in speculation of it passing in the Democratic majority House of Representatives to the surprise that even Canadian based companies were being invested in due to unsavvy investors. The effect from the bill does not affect Canadian stocks and word quickly spread and companies like Canopy Growth (NASDAQ: CGC) and Aurora Cannabis (NYSE: ACB) were RED on the day. Also shares of Canadian pot producer Tilray (NASDAQ: TLRY) began 2021 with a sharp move higher December 16th after it announced plans to merge with rival Canadian pot producer Aphria (NASDAQ: APHA) and almost comedic the stock has climbed, as new polling data raised hopes that the Democrats could retake the U.S. Senate but again, this is a Canadian company.
If you want the best of both worlds, look no further than CordovaCann (OTCMKTS: LVRLF) as this company has an expanding footprint in both the U.S. and Canadian markets. While the company has operations in Washington and Oregon, they have opened Canadian retail stores under the StarBuds brand in Ontario and Manitoba with goals of new stores in Alberta and British Columbia earlier this year. The company also feels they will not have to raise future capital, as the success from their retail stores will self-fund their growth and expansion across North America.
For sub-penny enthusiasts, Anything Technologies Media (OTCMKTS: EXMT), has begun expanding its grow room facility just outside Tucson, AZ to include Cannabis production on a large-scale basis. The company has also partnered with a dispensary to lease a cultivation license to grow Cannabis in AZ and looks to have its first robust harvest in the near term. The company is also looking for other prospective cultivation sites in the state. The company also has been associated Minerco (OTCMKTS: MINE), who are doing psilocybin research and investment firm and is emerging as the world’s first publicly traded company focused on the research, production and distribution of psilocybin mushrooms and has developed Blockchain Token SHRU to create a payment gateway for retail purchases. For investors that like revenues from an oil producer look no further than Global Consortium (OTCMKTS: GCGX). The stock was depressed due to the issues related to prior acquisitions which soon might be fixed. The company believes is can complete its funding and roll out its line of products to create sustainable monthly revenue. Also, a speculative play Pazoo Inc. (OTCMKTS: PZOO) has a significant interest in a Cannabis Laboratory in Las Vegas, NV. but also, is in New Jersey, which has investors buzzing as N.J. is one of the latest states to legalize recreational marijuana.
On the “Big Board” side of things, Innovative Industrial Properties Inc (NYSE: IIPR)
is the only publicly traded cannabis-focused Real Estate Investment Trust. The company manages a portfolio of real estate properties that it leases to medical cannabis companies in the U.S. Among its lessees are PharmaCann (New York and Massachusetts), The Pharm (Arizona), Holistic Industries (Maryland and Massachusetts), Green Peak (Michigan) and Vireo Health (Minnesota, New York, and Pennsylvania).
GrowGeneration (GrowGen) (NASDAQ: GRWG) who have had a great 2020, owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 14 locations,9 locations in Colorado, 2 locations in California, 1 location in Washington and 2 in Nevada. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers.
Greenlane (NASDAQ: GNLN) is the leading distributor of vaporization products and accessories in North America and we began covering the stock back in August 2019 after its IPO. Since then, the stock has nosedived due to the heavy regulatory crackdown of Juul products which accounted for a significant portion of Greenlane’s revenues. As Juul faces increasing scrutiny and mounting lawsuits, Greenlane has adapted its business model to a smaller revenue base. For our cannabis investors, it also means that Greenlane has adopted a new strategy to focus on cannabis products instead of e-cigarette. While the near-term outlook for the stock remains uncertain, we think the continued transition towards cannabis is a rational path towards growth.
On the OTC market, Cannabis Strategic Ventures (OTCMKTS: NUGS) booked over $6.4 million in total sales from cannabis during the three months ended Sept. 30, 2020, which compares with $3.3 million in total sales from cannabis during the three months ended June 30, 2020, a sequential quarterly increase of over 90%, and a year-over-year increase of over 800% compared to the three months ended Sept. 30, 2019. Revenues from the next Q are due next month.
These are just a handful we will be watching tomorrow and the weeks ahead. Did we miss an MJ stock you own or like? Please share it in the comments below.
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Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.
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