Image Source: Legal cannabis sales reached about $25 billion last year and could hit four times that amount with federal legalization, according to GreenWave Advisors.(GETTY IMAGES)
TCNNF Trulieve Cannabis Corp.
Multistate operators, or MSOs, are large marijuana businesses that operate in multiple U.S. states where marijuana is legal. These businesses offer advantages to investors looking to invest in marijuana through cannabis stocks for those willing to buy shares and hold them for what will likely be a long period of time.
When it comes to enduring a harsh regulatory climate, larger enterprises have an advantage over smaller ones.
According to GreenWave Advisors, one of the MSOs that can fully finance its tax requirement with cash flow from operations is Trulieve, which holds dominant market positions in Florida, Arizona, and Pennsylvania.
The corporation had $195 million in cash at the end of the most recent quarter. As of May 16, its shares have decreased 68.8% over the previous year.
(VRNOF) Verano Holdings Corp.
According to GreenWave, Verano is also in the fortunate position of being able to pay its taxes out of operating cash flow. This MSO operates in 13 U.S. states and has 126 functioning retail outlets in addition to 14 production facilities.
The start of recreational sales in Connecticut helped the firm improve its first-quarter revenue from $202 million in 2022 to $227 million in 2019.
CEO George Archos said in remarks that accompanied the results: “We remain confident in our ability to continue growing the business in a difficult environment, will closely monitor developments in Washington, D.C., on the reintroduction of SAFE banking legislation, and look forward to leveraging our deep experience in transitioning markets as we approach the impending launch of adult use sales in Maryland.”
The corporation had $95 million in cash at the end of the most recent quarter. As of May 16, shares of Verano are down 57.9% from the previous year.
The company Curaleaf Holdings Inc.
In 19 states, including Arizona, Florida, Illinois, Massachusetts, New Jersey, New York, and Pennsylvania, this MSO operates 152 dispensaries and 28 growing facilities.
According to GreenWave Advisors, Curaleaf will have the most revenue of any top-tier MSO in 2023, totaling $1.4 billion, with an annual revenue growth rate of 5%.
With $163 million in cash on hand at year’s end, the business will be better able to weather industry uncertainties and position itself as a prospective acquirer during industry restructuring.
In fact, the company has finished acquiring Bloom Dispensaries in Arizona and has acquired a majority position in Four 20 Pharma in Germany as of early 2022.
As of May 16, the company’s shares had dropped 56.5% in the previous year.
(GTBIF) Green Thumb Industries Inc.
Green Thumb is an MSO with 18 manufacturing facilities, 79 open dispensaries, and activities in 15 U.S. areas.
Despite decreasing cannabis prices, the firm reported $249 million in sales for the first quarter, a 2% year-over-year growth, and $185 million in cash at the conclusion of the period.
CEO Ben Kovler commented on the results, saying, “Our $185 million cash balance continues to give us the (option) to make investment decisions that will position us for the growing demand for legal cannabis.”
Through May 16, the stock has dropped 41.8% in the past year.
Organization Gram Holdings Inc.
This business specializes on growing cannabis indoors for Canadian patients and recreational users. British American Tobacco PLC (BTI), which holds a 20% stake in OrganiGram, provides financial support for the company. That offers it a certain stability that many other marijuana businesses lack in the face of market uncertainty.
According to a recent report from New Cannabis Ventures, which identifies OrganiGram as a cannabis bear market bargain, “That deal was transformational for the company, allowing it to repay all debt.”
According to New Cannabis, “the company is currently expanding in a competitive market, and it trades at just 44% of tangible book value.”
With cash and short-term investments at the conclusion of the most recent quarter, the company had almost $53.4 million ($72 million) in cash. As of May 16, its shares have decreased 64.8% in the past year.
The company Columbia Care Inc.
This MSO runs 94 dispensaries, 32 cultivation and manufacturing facilities, some of which are still under construction, and is engaged in 16 markets across the United States.
Another one of New Cannabis Ventures’ bargain picks, Columbia Care, was purchased by Cresco Labs Inc. (CRLBF) for $2 billion last year. However, due to regulatory requirements for divestitures, which the firms are working on, that sale hasn’t yet been completed.
According to New Cannabis Ventures, the merger will succeed. And if that were the case, shares of Columbia Care, which have fallen 76.4% over the past year, would increase.
“The stock is trading at a massive discount of 55% at a 0.25 ratio,” claims New Cannabis. “Columbia Care shares would soar even if Cresco were to lower the deal cost in shares by 20% (a ratio of 0.446).”
The shares of Columbia Care won’t suffer much damage even if the acquisition doesn’t go through, according to New Cannabis. With $40.2 million in cash on hand at the conclusion of the most recent quarter, the corporation.
SHFS SHF Holdings Inc.
Due to their concern about being accused of money laundering or aiding and abetting a federal crime, the majority of financial institutions avoid lending to the marijuana industry.
There is a workaround, though, if businesses submit specific paperwork with each transaction. SHF Holdings, through Safe Harbor Financial, takes on this task in order to offer conventional banking services to operators in the cannabis, hemp, CBD, and auxiliary industries.
SHF Holdings, which has lost 96.3% of its value in the last year and has a market cap of just $16.3 million, is cited by New Cannabis Ventures as a bargain in this cannabis bear market. (Investors should be aware that there may not be much liquidity for positions in the small-cap equities on this list.)
According to New Cannabis, the company isn’t well-known, which may have contributed to the development of this deal. “This company, which operates Safe Harbor Financial, is valued at an incredibly low level.”
Due to its expertise in cannabis loans, that brand is significant. If the federal government relaxes the restrictions on marijuana banking, which is a possibility that would raise competition for SHF Holdings, the company should be able to benefit from its current connections.
Sundie Seefried, CEO of SHF, asserts that speciality cannabis banks will still be necessary even if federal banking restrictions are relaxed because not all banks will want to enter the marijuana lending market.
In its first-quarter report released on May 15, SHF reported a 150% increase in revenue year over year and a 55% increase in average monthly deposit balances.