The Cannabis Stocks Could Win If New Jersey Legalizes Adult Use

On Election Day, Nov. 3, voters in New Jersey — where there's already an existing medical cannabis market — will consider legalizing adult use.

The Garden State will likely vote "yes," according to Cantor Fitzgerald analyst Pablo Zuanic. As a result, several big-name cannabis companies stand to benefit.

"We think NJ voters are likely to approve rec legalization this [November]," Zuanic said in a note this week. Polls indicate 65% approval among voters.

Who Benefits From Legal Cannabis In New Jersey?

A vote for cannabis bodes well for a company like Curaleaf Holdings Inc. CURLF, and they should "trade up on the news given market share and sales exposure," the analyst said. 

Acreage Holdings Inc. (OTCQX: ACRDF), which has two stores in the state, will also benefit from New Jersey "going rec," he said.

Green Thumb Industries Inc. GTBIF would likely add two more stores and "add capacity once there is clarity on the state’s path to rec," Zuanic said.

Cantor doesn't cover TerrAscend Corp. TRSSF or Columbia Care Inc. CCHWF, but both companies have said they plan to operate three stores plus cultivation, the analyst said.

"But of these two, we understand NJ would be a larger % of company sales at TerrAscend."

How Long Would Adult Use Take To Launch?

Today, 11 states allow legal recreational use: Colorado, Washington, Alaska, Oregon, California, Maine, Massachusetts, Nevada, Vermont, Michigan and Illinois.

In each market, it has taken a year or longer for state legislatures to actually get a rec program up and running.

New Jersey "will be slow," Zuanic said, citing red tape, pending lawsuits and "no clear plan post ballot."

Pennsylvania's legislature, which is Republican-controlled, may enact a rec program by mid-2021 versus a New Jersey start date in mid-2022.