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Valuations Continue to Climb for U.S. Cannabis Companies

Nachrichtenquelle: PR Newswire (engl.)
15.04.2019, 14:55  |  453   |   |   

FN Media Group Presents Potstocknews.com Market Commentary

NEW YORK, April 15, 2019 /PRNewswire/ -- Recent moves by both New Jersey and Pennsylvania towards marijuana legalization are pushing expectations on US stocks ahead of their neighbors to the North. Analysts are observing a valuation gap between Canadian and US cannabis stocks developing, despite US-based revenues surging ahead. The result has been a recent increased focus on US-based companies such as Chemistree Technology Inc. (CSE:CHM) (OTC:CHMJF), Planet 13 Holdings Inc. (CSE:PLTH) (OTC:PLNHF), KushCo Holdings, Inc. (OTC:KSHB), Charlotte's Web Holdings, Inc. (OTC:CWBHF) (CSE:CWEB) and Tilray, Inc. (NASDAQ:TLRY).

Among the top 10 companies in the cannabis sector by market value, the split is now currently 50/50 — Canadian vs American. As the market begins to realize the huge potential of the US market, entities like vertically integrated Chemistree Technology Inc. (CSE:CHM.CN) (OTCQB:CHMJF)are continuing to forge ahead in increasing their US footprint.

Through its US subsidiary, American CHM Investments, Chemistree Technology Inc. (CHM) (CHMJF) recently announced an LOI to partner with New Jersey-based medical dispensary applicant, Applied Cannabis Sciences of New Jersey. The move further expanded the company's reach to three states, with the first two being Washington and California.

Growing across multiple states has quickly become a plausible strategy for many growing US cannabis companies. With promising new legal developments such as the initial passing of the SAFE Act by the House Financial Committee, it appears that the sector is gaining support in high places. Next up, consideration by the entire House of Representatives for a vote on the bill which already has 150 sponsors could be the nudge the industry needs to get full federal legalization rolling.

Gaining A Stars-and-Stripes Advantage 

Over the last few years, the legal cannabis advantage went to Canada and Canadian operators in particular. Given that US operations have been held back by the illegality of the drug at the federal level, US-based operators have had to deal with unique challenges along the way.

However, to many analysts, that advantage is disappearing, and swinging into the Americans' favor.

"On a whole bunch of fronts, the head start that we had is rapidly eroding," said Neil Selfe, CEO of Infor Financial Group Inc., in an interview with Bloomberg.

Selfe's group is recognized as one of the top investment bankers in the cannabis industry. What Infor is noticing is that Canadian companies have their own limitations and restrictions as well.

"In many ways, the U.S. multi-state operators have a significant competitive advantage now over the Canadian companies," Selfe added.

New markets are opening up across the country, including the "Garden State" of New Jersey, which is expected to be worth US$850 million. A vote in the state on legalization could be as early as next month.

Getting out ahead of the rush, Chemistree Technology Inc. (CHM - CHMJF) has already gone ahead and secured a potentially powerful footprint for its products in the state—through a deal with Applied Cannabis Sciences of New Jersey that will likely open up the company's flagship Sugarleaf brand to the East Coast.

The first round of New Jersey dispensary applications is expected to be for 2020. Applied Cannabis Sciences has been established by a team of seasoned professionals from the legal medicinal, and adult-use cannabis industry whose collective experience exceeds 50 years and includes over 20 cultivation, processing, and manufacturing licenses across four states (WA, OR, CA, and CO) within the USA.

"We are really happy about establishing a partnership with this experienced group and the potential to expand Chemistree's presence outside of California and Washington state and ultimately introduce our signature brand Sugarleaf to the large New Jersey consumer base." Said CEO of Chemistree, Karl Kottmeier. "New Jersey is home to over nine million people currently being served by only 12 cannabis operators in its medical program. New Jersey is a logical place for Chemistree to expand into and bring the Sugarleaf brand to the New Jersey market."

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