This morning BofA Securities raised their 12-month price target on Canopy Growth Corp (TSX: WEED) (NASDAQ: CGC) to C$42 from C$36 and reiterated their buy rating.
Bryan D. Spillane, BofA’s cannabis analyst, says, “We see the likelihood rising for US fed’l decriminalization / descheduling of marijuana and more US states to move towards legalization.” This comes off the back of election night, where other than voting for the next American president, there were also five cannabis ballots, which all were approved in five states. He also cites a Gallup Poll where it said 68% of Americans are in favor of legalization.
Spillane says they see an improvement in Canopy’s share position, balance sheet as well as management right-sizing their operations and general industry outlook, “as all reasons to believe that Canopy can be a LT leader in the cannabis sector.”
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Last week, the US House scheduled the MORE Act, which has 120 House sponsors, for a floor vote this week, which would be the second cannabis bill passed by the US House of Representatives if approved. The Senate has voted on no cannabis bill yet, and Spillane says, “It remains uncertain that the Senate will vote on or pass the MORE Act. We do see the House vote, combined with recent state ballot initiatives signaling of public support for action at the federal level.” He says that any change to cannabis on the federal level would be, “one of, if not the most significant catalyst for the budding global cannabis sector.”
If the MORE Act gets passed by the Senate, it would remove cannabis from the schedule of controlled substances. It would also make various other changes, such as:
- 1) replaces statutory references to marijuana and marihuana with cannabis.
- 2) requires the Bureau of Labor Statistics to publish demographic data on cannabis business owners/employees regularly.
- 3) establishes a trust fund to support various programs and services for individuals/businesses in communities impacted by the war on drugs.
- 4) imposes a 5% tax on cannabis products and requires revenues to be deposited into the trust fund.
- 5) makes Small Business Administration loans and services available to entities that are cannabis-related legitimate businesses or service providers.
- 6) prohibits the denial of federal public benefits to a person on the basis of certain cannabis-related conduct or convictions.
- 7) prohibits the denial of benefits and protections under immigration laws on the basis of a cannabis-related event (e.g., conduct or a conviction).
- 8) establishes a process to expunge convictions and conduct sentencing review hearings related to federal cannabis offenses.
Source: BofA Analyst Note
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
