U.S. Cannabis Acceptance Could Accelerate Due to COVID-19

COVID-19’s impact on the U.S. cannabis industry and the high demand seen during the pandemic may provide another avenue for national legalization

IAM Newswire | June 1, 2020 | SmallCapPower: The Cannabis industry is not only sailing through the COVID-19 storm relatively well, but is also positioning itself to unleash its long-promised growth potential. Cannabis sales are ramping up in spite of the pandemic and in some cases, because of it. Though the market was beaten up over the last year, operators are focusing on picking up activity as they make it out of the storm.

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(The following article was originally published on iamnewswire.com)

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Large Caps Show Signs of Life

Canopy Growth Corporation (TSX:WEED) is the biggest Canadian cannabis producer with the largest market cap of any pure-play pot stock on the market right now. Canopy’s recent management changes and “right-sizing” of operations, along with its strong cash, robust balance sheet and market share position have helped the producer to scale its business in both Canada and abroad faster than its peers. Its head start has made it an appealing contender for becoming a long-term leader in the cannabis sector despite the fact that Canadian market has evolved somewhat slower than anticipated.

Meanwhile, the U.S.-based cannabis operator Green Thumb Industries Inc. (CSE:GTII) generated even more revenue than its Canadian peer in its latest quarterly report. It might not have as much equity behind it, but it doesn’t appear to be needing it, either. GTI’s revenue surged 267.6% year over year and 35.4% quarter over quarter as they reached $102.6 million in the first quarter. In spite of this momentum, GTI has not managed to turn a profit. Although its net loss of $4.2 million in the first quarter shows a significant improvement when compared to the previous quarter in which it lost more than four times that amount. Along with a positive cash flow from operations, the company also generated a positive EBITDA which went up from $7.8 million in the last quarter of 2019 to $20.3 million in the first fiscal quarter of the current year.

Active Midcaps Are Not Far Behind

Despite pulling its full-year guidance and issuing a warning on its second quarter revenue, KushCo Holdings, Inc. (OTCQX:KSHB) secured somewhat of a cushion when it made a massive strategic partnership with Xtraction Services Holdings Corp., which recently affirmed its ability to capitalize as on May 12. KushCo also announced that it joined forces with the largest private cannabis operators in the US, PharmaCann Inc. as it secured a lease agreement for up to $3.4 million.

COVID-19’s impact on the cannabis industry and the high demand seen during the pandemic may provide another avenue for national legalization in the U.S. With people scared for their health, their jobs, their lives, they are more likely to turn to medical cannabis as a cheap and effective means of coping with chronic pain, insomnia, anxiety and depression, which have all contributed to increased demand during the pandemic, according to Natural Health Services and author of Medical Cannabis in Canada If nothing else, it has shown that cannabis is no longer emerging, it’s essential.

Moreover, as governments now have to look for ways to pull the economy from a recession and possibly even depression with so much unemployment, legalizing cannabis could be an indispensable tool in solving that problem.

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