Cannabis Stocks Soar On Heels Of VP Debate, Vermont Bill Passing

Sen. Kamala Harris and Vice President Mike Pence covered a range of topics at Thursday night’s VP debate, and Cantor Fitzgerald analyst Pablo Zuanic said cannabis investors have a lot to like about what Harris had to say.

What To Know: Democratic presidential nominee Joe Biden, who leads President Donald Trump handily in many polls, has consistently said he is in favor of more cannabis research before he endorses federal legalization. However, Harris has been more progressive on the cannabis issue and even sponsored the Marijuana Opportunity Reinvestment and Expungement Act (MORE), which would deschedule cannabis from the Controlled Substance Act and expunge criminal convictions related to federal cannabis offenses.

In Her Own Words: At Wednesday’s debates, Harris said Biden’s administration would “decriminalize marijuana” and “expunge the records of those who have been convicted.”

Zuanic said Harris’ comments weren’t necessarily a deviation from what she has said in the past, but they were important given Biden hasn’t addressed the cannabis issue publicly since Harris joined his campaign.

“We expect the Democrats, if taking control of the White House and both chambers of Congress, to have a more ambitious agenda regarding MJ than just decriminalization/descheduling, and continue to believe the focus will be on MORE, in part because the bill’s lead sponsor is Sen Harris,” Zuanic said.

Related Link: Cannabis Investors Underestimate Upside Of 'Blue Wave' Election, Analyst Says

How To Play It: While the ultimate goal for many cannabis investors is federal legalization, Zuanic said simply getting marijuana de-scheduled from the Controlled Substances Act would provide a major tailwind for multi-state operators by easing their tax burden. He said the MORE Act or a similar bill would drive between 30% and 60% upside in profitable multi-state operator stocks simply due to increased cash flow.

Zuanic has named Trulieve Cannabis Corp TCNNF as his top U.S. MSO stock pick followed by Green Thumb Industries Inc GTBIF, Curaleaf Holdings Inc CURLF and Cresco Labs Inc CRLBF.

Good News In VT: Also this week, Vermont passed legislation to regulate cannabis for adults. The Green Mountain State is now the 11th state to regulate cannabis.

According to Vermont.gov, the state's legislature sent the bill (S. 54) to the desk of Gov. Phil Scott. The measure would allow legal commercial cultivation, processing, testing and sales.

Scott allowed the bill to become law on Wednesday —without his signature. He also signed separate legislation to ease the expungement process for cannabis convictions. Sales are expected to begin in 2022.

Benzinga’s Take: Online prediction market PredictIt suggests Biden has a 67% chance of winning the election, but investors who remember 2016 know polls and gambling markets can certainly be wrong.

Cannabis stock investors can help mitigate risk associated with the volatile industry by buying a basket of Canadian legal producers and U.S. multi-state operators that have high-quality balance sheets and leading market shares.

Here's a look at how the major cannabis stocks moved today:

• Curaleaf closed at $8.06, up 10.4%.
• Green Thumb Industries saw gains of 9.7%, closing at $15.11.
• Aphria Inc. APHA shares rose 10% to close at $5.67.
• OrganiGram Holdings Inc. OGI rose 11.5% to close at $1.26 per share.
• Charlotte's Web Holdings CWBHF gained 17.85% to close at $2.95.
• Aurora Cannabis Inc. ACB opened at $4.66 and popped 12% to $5.10.
• Canopy Growth Corp. CGC climbed 13.5% to $17.63.
• Cronos Group CRON went from $5.43 at the opening bell to $5.85.
• Tilray Inc. TLRY soared 18% from $5.39 to $6.15.

Anthony Noto contributed to this report.