3 marijuana stocks to buy if New York City legalizes recreational pot
The cannabis industry may soon be in a New York state of mind. Governor Andrew Cuomo and state lawmakers continue to negotiate a deal that could lead to the legalization of recreational marijuana for adult use. While no final agreement has been reached, the question seems to be when and not if.
There are many marijuana stocks which should be poised for explosive growth in New York’s lucrative market. Here are three stocks to buy if and when the great state legalizes recreational marijuana.
1. Curaleaf Holdings
Curaleaf Holdings (OTC: CURLF) ranks among the largest multi-state cannabis operators (MSOs) in the United States based on market capitalization and revenue. He’s also one of the best-placed MSOs to win if New York City legalizes recreational pot.
The company currently claims a market share in the New York medical cannabis market of over 25%. That’s enough to make Curaleaf the # 1 player in the state’s cannabis market right now. Curaleaf operates four dispensaries and a culture center in New York City.
CEO Joe Bayern believes legalizing adult-use marijuana in New Jersey will help push New York City, along with Connecticut and Pennsylvania, to legalize recreational marijuana. He recently said that these markets “present a huge growth opportunity” for Curaleaf.
Growth has apparently been easy for the company so far. Curaleaf’s revenue more than tripled year-over-year in the fourth quarter and jumped 26% from the previous quarter. The company is waiting 2021 will be another banner year. If New York City legalizes cannabis for adult use, the year will likely be even better than expected.
2. Cresco Laboratories
Like Curaleaf, Cresco Laboratories (OTC: CRLBF) is a leading MSO with established operations in the medical cannabis market in New York City. Cresco operates four medical cannabis dispensaries in the state under its Sunnyside brand. It has also started a medical cannabis delivery program in New York City.
Cresco continues to aggressively expand into new markets. For example, the company acquires Bluma Wellness to enter the fast growing medical cannabis market in Florida. She also recently started selling recreational cannabis in Arizona.
This last example offers a parallel with New York. Cresco already operated a medical cannabis dispensary in Arizona before the state legalized recreational pot. It’s likely that the company would follow a similar path if New York City went ahead with legalizing adult use.
One of the advantages of Cresco over Curaleaf from an investment point of view is valuation. Curaleaf’s market capitalization is more than 3.5 times that of Cresco, but its revenues are hardly greater than that of Cresco.
3. Ayr’s well-being
There is an even more valued cannabis operator that could enter the New York market: Ayr Well-being (OTC: AYRW.F). Its shares are currently trading at a lower price / sell multiple than any of the major MSOs.
Ayr does not currently compete in the medical cannabis market in New York City like Curaleaf and Cresco do. However, the company expects to complete an acquisition in the third quarter that will allow it to operate in neighboring New Jersey. The opportunity in New York might be hard for Ayr to pass up if the state legalizes recreational marijuana.
The MSO is also moving quickly to expand into other attractive markets. The deals to acquire Ayr in Arizona and Ohio are expected to end overnight. He is also considering buying Liberty Health Sciences to become a major competitor in the medical cannabis market in Florida.
Ayr continues to generate strong revenue growth. It also generates positive and growing adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). The title is less secure for the New York market than Curaleaf and Cresco. However, the likelihood of Ayr entering New York along with its relatively low valuation makes it a stock that investors will want to consider buying.
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