Cannabis Regulatory Changes Are A Key Stock Catalyst, Analyst Says

Cantor FItzgerald has highlighted several key factors in the year ahead for the THC and CBD markets.

Pablo Zuanic, a research analyst with the firm, explained that state-level efforts should lead to further adult use and medical reform.

He also posits that legislative action will put pressure on Congress to pass legislation itself.

"Since the 3/18/20 market bottom, the US MJ Index is up 100% (Canada's +150%), and we think further upside is likely given positive reg catalysts playing out," stated the July 27, 2020 report.

Four Points to Consider

Cantor identified four areas that should play a significant role in shaping the market.

Those highlighted include state-level initiatives, including the varying effect the COVID-10 pandemic had on ballot initiatives in several states.

New Jersey is of particular interest, according to the report.

The report hypothesizes that if New Jersey voters approve a November ballot initiative, it could trigger a legislation wave in the region, affecting Pennsylvania, New York and Connecticut's adult use efforts.

"We still think agreeing on the ins and outs of federal med MJ legalization will be a complex exercise," Zuanic wrote. "So Congressional acts may be more impactful in the near/medium term."

Congressional action highlighted by Cantor was the SAFE Banking and STATES ACTS. However, activity under current leadership remains unlikely.

"Although half of Republicans voted in favor of the SAFE Act passed by the House of Representatives, the Senate leader, Mitch McConnell, is opposed to considering cannabis legislation, according to Politico," Zuanic added.

Congress is less of a concern for CBD, where FDA guidelines remain its most significant obstacle.

"Given the projected size of the CBD market (over $20Bn by 2025, as per BDSA), the classification of the document as not economically significant (less than $100Mn in sales) makes us think it does not include the key features sought by the industry," the report stated.