WASHINGTON DC – Further consolidation of the cannabis industry and more cross-border transactions and listings on the Toronto Stock Exchange are likely over the next 18 months, but full U.S. legalization is not, cannabis analyst Pablo Zuanic said Monday.
“We do not expect major breakthroughs at the federal level in the U.S. before the third quarter of 2023, so, news flow from [Washington, D.C.] in the interim may at best result in ripples among U.S. cannabis stocks (not waves),” Zuanic said in his first research report since leaving Cantor Fitzgerald earlier this year to start up his own firm.
“The bigger positive catalysts in the near term will revolve more around company initiatives, whether in terms of strategic partnerships such as consumer packaged goods or cross-border transactions, further industry consolidation, and potential TSX listings,” Zuanic said.
After a quick start to adult-use cannabis sales in Maryland this summer, it’s difficult to predict where the next adult-use market will emerge, but Zuanic said Pennsylvania remains a possibility, as does Virginia, which plans to introduce an adult-use market in 2024.
Among his 10 predictions for the next 18 months, Zuanic said he sees a 70% chance that SAFE Banking legislation to open up the U.S. financial system to cannabis companies will pass Congress, with potential passage by the Senate in the spring of 2024 putting pressure on the House to do the same.
Zuanic sees a 65% change that the Biden administration will reschedule cannabis over the same time period, but any move to change it to a Schedule II or Schedule III drug from its current status as a Schedule I drug now “could complicate matters for cannabis businesses,” he said.
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