Last year was supposed to be when the North American marijuana industry took the next step in its maturation process. Instead, it was an absolute train wreck for the industry and marijuana stocks.
But there's a decent chance the bad memories of 2019 can be put in the rearview mirror. Following Illinois' unique means of legalizing cannabis in June, the focus has turned to the 2020 elections and, more specifically, which states could be next to give the green rush the green light. While there are a number of states vying to put marijuana initiatives or amendments on their November ballots, the following three appear the likeliest to actually legalize recreational or medical cannabis this year.
If there's one state that stands head and shoulders above the rest in terms of likelihood to legalize adult-use marijuana in 2020, my vote goes to New Jersey.
On Dec. 16, the Garden State's Senate and Assembly voted -- 24-16 and 49-24, respectively -- in favor of putting a constitutional amendment on the November ballot that would legalize adult-use pot. The measure, which is pretty much consistent with what other states have previously passed, would allow for persons 21 or older to buy cannabis products, and would give the state and municipalities (should they choose) the right to impose a tax on marijuana products.
Aside from the fact that two-thirds of Americans support the idea of legalizing recreational marijuana, according to Gallup's October 2019 poll, New Jersey was within reach of waving the green flag on adult-use weed in March. Regulators were in favor of legalizing the drug, and had agreed upon an appropriate tax.
The monkey wrench came when certain lawmakers wanted to see an expungement clause introduced for folks previously convicted of cannabis use or possession. On-the-fence New Jersey lawmakers wouldn't support this aspect of the proposal, and momentum for legalization stalled. With the Garden State's ballot measure specifically focused on consumption and not expungement, it looks to have a very good chance to pass.
Likewise, I'm also counting on the Grand Canyon State to join the ranks of states that have legalized recreational weed.
For those of you who may recall, Arizona was the lone loser on election night in 2016. There were a grand total of nine states where residents were voting on a cannabis measure, and Arizona was the only state where the initiative failed. Proposition 205 would have legalized adult-use marijuana, but it fell short of the required majority vote by just 2%.
The good news is that the second time does seem to be the charm when it comes to voting on recreational cannabis measures. Both California and Oregon initially failed to pass adult-use pot initiatives. But a second attempt years later passed with ease.
Marijuana support organizations are liable to devote considerable resources to Arizona in the upcoming election, and it'd be shocking if a measure pertaining to legalization isn't on the upcoming ballot (most initiatives are in the signature-gathering stage right now).
An online poll by OH Predictive Insights, released in November, found that 54% of Arizona residents support legalization, compared with just 33% who oppose the idea.
It's also looking likely that Nebraska (yes, Nebraska!) could turn over a new leaf by becoming the 34th state to OK medical marijuana come November.
As it stands now, the Nebraska Medical Marijuana Initiative, an amendment to the Cornhusker State's constitution, is gathering signatures. If approved, it would allow individuals who are 18 or older to purchase medical marijuana if given a prescription by a licensed physician. It would also allow adolescents under the age of 18 to use medical marijuana if prescribed by a licensed physician and with parental permission.
All the way back in February 2017, a survey described in The Lincoln Journal Star showed that a whopping 77% of likely Nebraska voters were in favor of allowing physicians to prescribe medical marijuana. Amazingly, this is actually below the national average, which is more like 9 out of 10 Americans in favor of medical marijuana. Nevertheless, it demonstrates just how strong the support is for legalizing medical marijuana, and why Nebraska, a traditionally conservative state, is likely to approve it later this year.
U.S. pot stocks are positioned for more legalizations in 2020
Ultimately, no matter which states wind up passing marijuana initiatives or amendments, vertically integrated multistate operators (MSOs) will be ready to pounce.
While Nebraska represents a relatively small-scale market that'll mostly remain off the radar for now, New Jersey and Arizona both have billion-dollar potential by 2024, according to the State of the Legal Cannabis Markets report by Arcview Market Research and BDS Analytics. That makes the Garden State and Grand Canyon State worthy of the pot industry's attention.
In Arizona (where medical marijuana is already legal), Harvest Health & Recreation (OTC:HRVSF) has been among the most opportune MSOs. Harvest Health currently has 10 open retail locations, and the largest footprint in the state, inclusive of cultivation and processing facilities. The interesting thing is that, on a pro forma basis, Harvest Health is neck-and-neck with Curaleaf Holdings (OTC:CURLF) for the largest retail license presence in the United States...yet is devoting a lot of its attention to the Arizona market.
As for New Jersey, there aren't too many MSOs that already have a presence, but the largest U.S. MSO by market cap, Curaleaf, certainly does. While it could be argued that Curaleaf's organic and acquisition-based expansion is spreading its retail presence a bit thin across the U.S., it's made clear its plans to target billion-dollar markets. With New Jersey projected to be 11th in U.S. marijuana sales by 2024, it looks to be a smart state for Curaleaf to focus on.