Prospect of Biden presidency boosts U.S. cannabis stocks

The share prices of Curaleaf Holdings, Harvest Health & Recreation, and Acreage Holdings all rose more than 10 percent this week.

Joe Biden has a big lead over Donald Trump in the polls, fuelling excitement over some U.S. cannabis stocks. Photo by Joe Biden campaign

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After Prime Minister Justin Trudeau legalized cannabis in 2018, Canadian investment dealers, accountants, and lawyers scooped up lots of business, including from U.S. weed companies. That’s because the vast majority listed their shares on Canadian stock exchanges. But now, some industry observers wonder if a Joe Biden presidency will help these U.S. cannabis firms’ revenues, elevating their stock-market values.

The presumptive Democratic candidate has only promised to decriminalize rather than legalize recreational weed at the federal level. That won’t stem any flow of listings north of the border. But a Biden presidency would allow states to decide on legalizing recreational use.

And Biden’s 110-page policy paper suggests that he may give cannabis companies access to the banking system, according to the online Tulsa-based Stone Fox Capital Advisors.

Recently, it identified three U.S. cannabis stocks that might benefit from these proposals: Curaleaf Holdings, Harvest Health & Recreation, and Acreage Holdings.

So how did they fare this week as Biden continued enjoying a large lead over Donald Trump in the polls?

Wakefield, Massachusetts–based Curaleaf Holdings is a vertically integrated cannabis company. It operates 88 dispensaries, 22 cultivation sites, and 30 processing sites in 23 states.

Listed on the Canadian Securities Exchange, its share price climbed an impressive 10.1 percent this week to close at $11.26. Curaleaf Holdings is now worth just under $5 billion.

Tempe, Arizona–based Harvest Health & Recreation also lists its shares on the CSE. Over the last five days of trading, its stock jumped 14.2 percent to reach $1.45. The company is now worth $136.54 million.

Shareholders in New York-based Acreage Holdings also enjoyed a stellar week as its stock rose 16.9 percent. It closed on Friday (July 31) at US$3.11 on CSE. Acreage’s market cap stands at nearly US$304 million.

Biden presidency may not help Canadian weed companies

In June, Smith Falls, Ontario–based Canopy Growth Corporation modified and updated the terms of its agreement to buy Acreage Holdings. The deal can only proceed if the U.S. government legalizes cannabis—something Biden has refused to do.

This was still a good week for investors in Canopy Growth. Its shares increased by 10.2 percent to close at $24.46 in Toronto. That pushed the company’s value over $9 billion.

But none of the other large Canadian companies’ shares could match the performance of the three U.S. companies listed above. This suggests a Biden presidency might not spread any magic for investors in cannabis companies with head offices north of the border.

For example, Toronto-based Cronos Group’s shares moved up by 4.5 percent to close at $8.78 on the Toronto Stock Exchange. As a result, the investment community values Cronos Group at $3.06 billion.

And Nanaimo-based Tilray shares edged up 3.7 percent to reach US$7.38 on NASDAQ. It’s worth US$921.48 million, which puts its Canadian market value at more than $1.2 billion.

However, not everyone came out ahead. Shareholders in Aurora Cannabis suffered a 2.5 percent decline when the Edmonton-based company’s shares closed on Friday in Toronto at $13.65.

Aurora is worth $1.54 billion.

And Leamington, Ontario–based Apria shares sunk 8.6 percent to end the week at $6.39 in Toronto. That pushed down its market value to $1.84 billion.

Among Canadian cannabis companies worth less than $1 billion, Ottawa-based Hexo Corp. shares fell 5.3 percent this week; Moncton-based Organigram Holdings stock dropped 10.1 percent; and Delta, B.C.–Village Farms International shares rose 4.5 percent.

All of this indicates that a trio of U.S. cannabis stocks proved to be superior investments than almost all of their Canadian counterparts—at least over the last five trading days in July.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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