Americans' support for legalizing cannabis edges up to 70% and Ohio voters OK pot referendum, as cannabis stocks rise

By Steve Gelsi

Trulieve, Verano, Green Thumb Industries and Cresco Labs all post solid gains

Cannabis stocks rose Wednesday after Ohio voters approved a referendum to legalize cannabis for adult recreational use and a national poll showed increased support for cannabis legalization.

A record 70% of Americans think cannabis use should be legal, after the level remained steady at 68% for three years, according to Gallup polling data released Wednesday.

Cannabis stocks pared gains in the course of trading on Wednesday but remained in positive territory.

The AdvisorShares Pure U.S. Cannabis ETF MSOS rose by 3.5%, with a lift of 3.2% from Trulieve Cannabis Corp. (TCNNF), a 3.4% rise by Green Thumb Industries Inc. (GTBIF), a 5.8% jump in Cresco Labs Inc. (CRLBF) and a 6.4% gain by Ayr Wellness Inc. (AYRWF).

Sitting out the gains, Curaleaf Holdings Inc. (CURLF) fell by 0.6%, Acreage Holdings (ACRHF) dropped by 3% and the ETFMG Alternative Harvest ETF MJ moved lower by 0.3%.

Verano Holdings Corp. (VRNOF) was up by 7.5% after it reported a 5% increase in third-quarter revenue to $240 million and a narrower loss of $17.84 million, from $43 million in the same period a year earlier.

Fifty-seven percent of Ohio voters on Tuesday approved a state referendum legalizing cannabis use for people 21 and older, making Ohio the 24th state to legalize adult recreational cannabis use. With Ohio's referendum, more than half the U.S. population now resides in states where pot is legal.

"State-based legalization efforts will continue to shift toward red states as the number of pickup opportunities in blue states has narrowed," TD Cowen analyst Eric Assaraf said. "This is an important trend to watch as legalization in conservative states could improve the political calculus on the federal level."

Green Thumb Industries Chief Executive Ben Kovler said the company has operated medical dispensaries in Ohio since 2019 and has supported the transition to retail adult sales in several states.

"This vote is not just about legalization; it's a recognition that Americans are continuing to embrace cannabis for well-being," Kovler said in a statement emailed to MarketWatch.

Colin Ferrian, a portfolio manager at Poseidon Investment Management, said cannabis will provide an estimated $350 million in annual tax income and annual sales of $3 billion to $4 billion in sales within five years.

Since crossing the 30% mark in 2000, support for legal cannabis accelerated after 2010 to more than half of Americans in 2013, Gallup said.

In the latest polling, 29% of Americans think cannabis should be illegal and 1% are unsure.

A July survey by Gallup showed that 17% of Americans say they personally smoke cannabis, up by 10 percentage points since 2013.

Today, 87% of Democrats and 55% of Republicans favor legal cannabis use, according to Gallup. A majority of Republicans in 2017 gave majority backing to cannabis legalization for the first time.

Meanwhile, the Drug Enforcement Administration is considering a recommendation from the Department of Health and Human Services to reschedule cannabis to Schedule III from Schedule I.

Attorney General Merrick Garland is also working on an update of the Cole memo, a 2013 document that instructs federal prosecutors to avoid going after legal cannabis companies.

In terms of recent developments at cannabis companies, Trulieve said Wednesday it will redeem $130 million in 9.75% senior secured notes due 2024 on Dec. 1.

Also read: Cannabis companies hire Microsoft antitrust lawyer David Boies to sue U.S. government for federal pot prohibition

-Steve Gelsi

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11-08-23 1614ET

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