Maryland has five constitutional amendments on its ballot this November, but the one getting the most attention is Question 4, which would legalize recreational adult marijuana use if it passes, as polls suggest it will. Maryland has allowed medical-use marijuana sales since 2014 and approval of the amendment would make it the 20th state to legalize recreational marijuana use.

That would open the door, but not immediately, for marijuana sales. The amendment would legalize adult-use of cannabis by July 1, 2023, but leaves it to the state legislature to set up the framework for sales and regulation. If amendment is approved, sales probably would begin in 2024.

It's obviously a game changer for marijuana growers and retailers in the state, but what companies have put themselves in a position to benefit the most? To me, multistate operators (MSOs) Trulieve Cannabis (TCNNF -3.83%), Curaleaf Holdings (CURLF -0.21%), and TerrAscend (TRSSF -3.80%) stand out as the best prepared to take advantage. Because they have already gone through the process of adapting to a state's change to allow adult-use marijuana sales, all three companies are better equipped to manage the regulatory hurdles and costs.

Last year, Maryland reported more than $595 million in medical marijuana sales and it could have as much as $1 billion in annual adult-use sales. Colorado, which is slightly smaller in population than Maryland and already allows recreational marijuana use, did $1.82 billion in sales last year.

This follows an expected trend of strong adult-use sales in the Northeast. Cannabis research company BDS Analytics (BDSA) estimated that by 2026, New York would have $2.7 billion in total legal cannabis sales, followed by New Jersey at more than $2 billion and Pennsylvania at more than $1 billion.

Trulieve is ready to test the waters

Trulieve, the dominant cannabis seller in Florida, has been steadily increasing its presence in the Northeast and as of October had 34 dispensaries in the region. It has licenses for four dispensaries in Maryland, along with a license for a cultivation and a processing facility. The company inherited its Maryland operations when it bought Harvest Health & Recreation last year. Trulieve already has the largest presence of any MSO in two neighboring states, with 19 dispensaries in Pennsylvania and eight in West Virginia. The company is the referendum's largest single backer and has spent $50,000 on the effort.

Trulieve, the second-largest MSO behind Curaleaf in terms of quarterly revenue, has had 18 consecutive quarters of profitability, based on adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). In the second quarter, the company reported revenue of $320.3 million, up 49% year over year and 1% sequentially. The company posted a net loss of $22.5 million, 30% less than in the prior quarter.

Curaleaf has Maryland well covered

Curaleaf has four dispensaries in Maryland, the maximum allowable, and reported revenue of $338 million in the latest quarter, up 8% year over year and sequentially.

However, the company may be stretched a little thinner as it had an even bigger quarterly loss than Trulieve at $28.2 million compared with  a $21.8 million net loss in the previous quarter.

Curaleaf also has a strong presence in two neighboring states, with 17 dispensaries in Pennsylvania and four in New York. That's important because the company should benefit from name recognition. Last year, the company improved its footprint in the state by purchasing Maryland Compassionate Care and Wellness, along with that company's 55,000-square-foot cultivation and processing facility.

TerrAscend is small with big plans

Ontario-based TerrAscend is the smallest company of the three with a market cap of $453 million, but it has ambitious plans for Maryland. The company bought a 20,000-square-foot growing and processing facility in the state last year from Curaleaf for $27.5 million. It has another 156,000-square-foot growing and processing site in the works in the state.

TerrAscend also bought its way into the state by purchasing a dispensary near the Pennsylvania and West Virginia borders, in April for $11.7 million and said it has plans for three more dispensaries.

Like the other two companies, TerrAscend has dispensaries in Pennsylvania and New Jersey, which helps with management of the operations and some economies of scale. The company has been buoyed by its success in New Jersey when that state went to adult-use sales earlier this year and is looking to duplicate that game plan in Maryland.

While TerrAscend is small, unlike the other two companies, it turned a profit in the second quarter. The company reported revenue of $65 million, up from $50 million in the prior quarter, and net income of $14.2 million, compared with a loss of $16 million in the first quarter of 2022.