What happened

Shares of both Canadian and U.S. cannabis companies moved higher Wednesday morning after New York became the latest state to vote to legalize recreational marijuana use. At 11:30 a.m. EDT, shares of Canadian growers Aphria (APHA) and Aurora Cannabis (ACB -4.71%) had gained 5.8% and 4.6%, respectively. Shares of U.S.-based Green Thumb Industries (GTBIF 3.60%) had jumped 7.6%. 

So what

New York's governor, Andrew Cuomo, said he would sign the legislation, which will make New York the 15th U.S. state to legalize adult recreational marijuana use. (The District of Columbia has also done so.) Green Thumb Industries is based in Chicago and has manufacturing facilities plus licenses for 97 retail locations and operations across 12 U.S. markets. The Canadian companies won't immediately benefit from the state's legalizing pot and will need federal legalization to transact across the border. But the Canadian companies are preparing for it and are also growing business elsewhere. 

marijuana flower buds in jars at dispensary, with customer paying for a bag

Image source: Getty Images.

Now what

Green Thumb already has retail locations in New York for medical cannabis distribution and should be able to quickly add offerings once legal recreational sales begin. It's not clear yet when that will be, but CNBC reports it should be within one or two years after the bill is signed by the governor. In a statement after the New York legislation passed, Gov. Cuomo said, "This landmark legislation provides justice for long-marginalized communities, embraces a new industry that will grow the economy, and establishes substantial safety guards for the public." 

Green Thumb reported strong fourth-quarter and full-year 2020 results two weeks ago. The company grew revenue more than 157% for the full year versus 2019. It also reported a profit of $15 million for the year. 

Aphria entered the U.S. market last year with the acquisition of Georgia-based SweetWater Brewing Company. Part of the strategy for the $300 million deal was to provide the company with "a platform and infrastructure within the U.S. to enable it to access the U.S. market more quickly in the event of federal legalization," management said in a statement. Aphria will also soon be merging with Tilray (TLRY) pending shareholder approval. The combined company will be one of the largest global cannabis producers, and Tilray has been expanding into Europe, having made several recent announcements about new business in the U.K., Spain, and Portugal. Aphria will announce its next fiscal quarterly results on April 12, 2021.

Aurora made its initial entry into Europe with medical cannabis in Nov. 2020. Though overall still unprofitable, Aurora did report 42% year-over-year growth for its medical cannabis products in its fiscal quarter ended Dec. 31, 2020. Aurora has been consolidating its operations to better manage cash flow and work toward profitability.