Cantor Fitzgerald: Curaleaf And Green Thumb Best Positioned To Thrive In Connecticut's New Cannabis Market

After Connecticut Gov. Ned Lamont signed an adult-use cannabis bill into law on Tuesday, making it the 18th U.S. state to legalize marijuana, Cantor Fitzgerald’s Pablo Zuanic shared his insights on the new market.

Curaleaf And Green Thumb To Thrive 

CT's legalization, which takes effect on July 1 and sales are expected in May 2022. should be particularly beneficial to Curaleaf Holdings CURLF and Green Thumb Industries  GTBIF in that they are the only two vertically integrated cannabis operators in the state.

“Medical retailers and producers will be grandfathered into the program,” Zuanic said.

Based on the Illinois and Michigan model, Zuanic projects that total cannabis sales in Connecticut (medical and recreational) will hit $500-600 million by the end of 2023.

In the longer run, based on the current per capita spend of around $400 in medical and recreational weed, Connecticut could develop a $1.43 billion cannabis market.

Bill Highlights

The analyst briefly pointed out some of the most important provisions of the bill, noting that current medical retailers will be enabled to transform into “hybrid retailers” adding recreational use to their services.

New recreational store licenses will be provided via a lottery system, with half of the licenses being reserved for social equity applicants. The limit is set to two stores per company, based on which Trulieve Cannabis TCNNF can apply but Curaleaf cannot.

Existing cultivators will be allowed to supply the recreational market with authorization from the Department of Consumer Protection, but only if they grant $500,000 to the Social Equity Council or partner with a social equity applicant.

“We believe the four existing medical cultivators will grab the lion’s share of the rec wholesale market initially, at least for the first couple of years,” Zuanic wrote. 

Three sales taxes will be included, which could add around $10-12 to the final price for 1/6 ounce of flower, according to the analyst.  

Impact On Neighboring States 

Connecticut’s adult-use legalization could force cannabis commissions in New York and New Jersey to finalize their regulatory processes and commence recreational sales. It could also potentially inspire the approval of recreational cannabis legalization in Pennsylvania.

“On the margin, we think the Connecticut recreational program will take some consumers away from Massachusetts recreational,” Zuanic concluded.

Photo by Kym MacKinnon on Unsplash