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“Go west, young man” may have been practical advice during the original Gold Rush and America‘s Western expansion, in general.
In cannabis, however, the market’s already out west.
For the next big opportunity, investors have to begin moving their focus to the east because two huge catalysts that are well on the way.
I promised you last week when talking about the U.S. midterm elections – which saw three more states’ voters pass cannabis legalization laws and dozens of others elect pro-marijuana U.S. House representatives – that we would talk about the other way states go legal: through the legislature.
States like West Virginia and Vermont already broke that glass ceiling, creating a template for states to work out their own programs in the legislature, without waiting for a primary or general election. Vermont even did so for its recreational program.
The race is now heating to a boil between two Eastern neighbors to join the 10 states that have ended adult cannabis prohibition.
And they’re surefire market-movers, along the lines of states like Nevada, Colorado, or California.
Here’s what I’m talking about…
Two of the Four Biggest Recreational Markets in the U.S. Are About to Be Created
In the U.S., the end of the midterm election cycle means that attention now shifts to the legislatures. Although we’re excited about the passage last week for Michigan‘s recreational program and the hugely symbolic passage of medical programs in conservative hubs Utah and Missouri, the next wave of catalysts will make investors even happier.
New York and New Jersey will probably be first, with twin adult-use laws likely within weeks, if not months. The two states are among the top 11 in U.S. adult population rankings. The total population between New York and New Jersey is about 80% of that in Canada and more than all of Australia.
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They’re also huge tourism destinations, which Nevada found out is hugely important for legalized cannabis business.
Remember, Nevada had to declare a state of emergency less than two weeks after dispensaries opened for sales to all adults. Officials were afraid medical marijuana patients would not be able to get their medicine because of the huge rush in demand for products.
And this is the 34th most populated state we’re talking about here.
New Jersey, the smaller of these two giants has a population nearly three times as large. Let’s start with “The Garden State” when looking at these markets and what’s happening right now.
Legal Cannabis Is the New Governor’s Centerpiece
Legalization in New Jersey would create upwards of 6.6 million new customers. And the vote is now expected to happen the week of November 27.
During his race to replace the outgoing Chris Christie after two terms, Gov. Phil Murphy, promised he’d legalize recreational marijuana as soon as the legislature sends him a bill. It has been one of the top stated priorities for the former Goldman Sachs executive.
Murphy told as much to one of my top researchers here at the National Institute for Cannabis Investors during a private meeting while he was on the campaign trail.
Legislators there have missed a few deadlines to get a vote in so far, but there is support from – not to mention pressure on – both side of the aisle to get this done before year’s end.
About 62% of New Jersey residents, including 90% of adults under the age of 34, support full legalization, according to a Quinnipiac University poll. This makes it a ripe market for customers.
Additionally, much of the New Jersey coast is composed of tourist towns, bringing millions of beach vacationers to the area between May and September ever year. Between the residential and tourist factors, that makes it one of the crown jewel cannabis markets to have not yet been tapped.
And having lost huge casino industry market share for Atlantic City and surrounding towns because of the spread of legal gambling along the Interstate 95 corridor, New Jersey legislators want to beat its neighbors to this market.
It even helped shape policy in neighboring New York…
Only California Would Be Bigger Than a New York Market
Key New York lawmakers long-opposed the idea of legalizing recreational marijuana in the state. Moderate Democrat Gov. Andrew Cuomo was chief among the cannabis resisters at one time.
But as the latest gubernatorial election approached, Cuomo and his inner circle began to sing a different tune.
They had to face the reality that New Jersey was getting positive marks for its movement toward cannabis and all the money it could bring in if fully legalized. And a pre-election poll found that 63% of New Yorkers supported full legalization. Additionally, Cuomo was pushed from pro-business Republicans as well as a primary fight from Cynthia Nixon, the Sex and the City actress who ran a farther left campaign that prominently featured cannabis legalization as an issue.
Cuomo came through the primary and this month’s general election unscathed. But, along the way, he became a pro-legalization candidate. That included appointing a team tasked with drafting the new legalization legislation.
New York City Comptroller Scott Stringer says legalization would create a $3.1 billion market.
According to Stringer, 15.1 million adults live in New York State, with a heavier percentage of marijuana users than most of the country. He expects roughly $435.7 million in tax revenue would come to New York. Under the prohibition model, that money now winds up in the hands of the black market.
“This is going to impact the kinds of resources we’ll have to invest in education, to invest in health care,” he told CNBC.
Simply put, it has become in-fashion to support cannabis whether for social reasons or economic opportunity.
There are reasons why larger U.S. cannabis companies are increasingly looking to move some operations there, whether at the (medical only, for now) storefronts, in agriculture, or otherwise. Companies like MedMen Inc., General Cannabis Corp., and Terra Tech Corp., among many other well-known companies that start in California and Colorado, are already working in either or both of these states. And that’s without firm dates for official votes.
These markets are the next big thing coming to cannabis. And, here at Cannabis Profits Daily, we’re closely watching every move as this plays out. We’ll be back with more about New York and New Jersey before year’s end and into 2019.
Just don’t be surprised if our next piece on either talks about a vote happening in a legislature – and soon.
Thanks for being an important part of the National Institute for Cannabis Investors,
Executive Director, National Institute for Cannabis Investors
November 14 2018