Yesterday we wrote a piece outlining how Ohio, America’s 7th most populated state was moving towards legalization of recreational cannabis. Since 2016 the state has implemented a medical marijuana program, issued dispensary, processing and production licenses and is set to vote in Q4 of 2019 for full the legalization of cannabis.
Ohio is still in its early stages. California, Colorado, Nevada, Oregon and Washington have been hugely successful with regards to revenue. The Denver Post reported $1.5 billion USD in revenue for the state of Colorado in 2017, to put that into contex, Ohio has more than twice the population of Colorado. More so, with 11.6 million people, Ohio has just over half the population of Colorado, Nevada, Oregon and Washington State combined.
The Case For BAM
One company who looks to benefit greatly from this process is the undervalued Body & Mind (BAMM.C) as they not only have a dispensary license, but processing and production licenses as well. With the recent news of the production license, BAM’s stock is starting to rally, up 21% today as of 12:15 PM EST.
BAM is up 96.9% over the last month.
Market Cap: $28.6M
Shares Outstanding: 47.7 million
With a low market cap, not many shares out and a very low price/book, this company is still very undervalued, even with the recent jump . The company did $1,618,967 in revenue in the US last year, netting $948,087. With so many gains happening in Canada, it’s only logical than if and when the hype dies down, the US is the next frontier for those profits to be put into. The US has 10x the population of Canada, and US cannabis stocks have less than 10% of the overall market cap of Canadian cannabis companies.
It’s Still Early In the US
Investors can profit off of the current stigma against cannabis that exists in the US. Cannabis is not widely accepted in most states like it is in Canada, however, as states like Colorado have shown the customer base is more than ready for legal marijuana.
Investors in Canadian cannabis stocks are likely to re-invest in the US cannabis sector because they already understand:
- The array of different products
- Which news is important
- What causes buying in the market
- How much growth potential is in the sector
- What fundamentals to look for to determine a winner
- The risk/reward ratio of investing in emerging sectors
Just as big Canadian banks have stayed away from the sector, the American banks and the American investors have largely stayed away from the cannabis sector as it is emerging and still federally illegal for the time being. May as well profit while the stigma still exists and the prices are low.