The change of New York governor is likely to result in a smooth introduction of cannabis

From Viridian Capital Advisors

The governor of New York, Andrew Cuomo, announced that he would step down on August 24th. Mr. Cuomo will be replaced by Kathy Hochul, Lieutenant Governor of New York. We believe this transition will likely get the recreational cannabis adoption in New York back on track and could even speed up the timeline of initial sales from the original summer destinations for 2H / 22nd. Before the news from Governor Cuomo, many industry participants began to believe that a launch in 2023 was the most likely.

Despite the passage of laws in March, Mr Cuomo has always been a reluctant advocate of cannabis legislation and in recent months the timing of its introduction has become uncertain as he and other heads of state politicized the issue of using cannabis to prioritize other issues. Recently, the Governor and Senate Chairs have argued over who will head the Office of Cannabis Management and the Cannabis Control Board. Both sides allegedly seek favor with the appointees on other issues. The two state agencies are now instrumental in enacting laws and providing operators with sufficient transparency to fund asset build-up and future capacity.

Photo by KC Kratt via WikiMedia Commons

For her part, Ms. Hochul has not been a keen advocate of cannabis legislation in the past, but appears to be a realist and this winter advocating the law that highlights the New York budget deficit and the causes of social justice as motivators. Ms. Hochul is expected to be more cooperative than Governor Cuomo, and we believe the new Governor could see cannabis as a popular initial (or short-term) topic to step in at the start of her tenure for an initial victory.

RELATED: New York Becomes 15th State to Legalize Recreational Cannabis

As for operators, we believe that a quick legislative follow-up will be particularly beneficial for the ten companies with existing medical approvals. As previously mentioned, the 10 existing medical license holders will get significant and sustained competitive advantages under New York law, including vertical integration and licensing additional pharmacies above the state quota. Given that New York is set to quickly become one of the largest cannabis markets in the US (we estimate ~ 2 billion license holders to generate above average revenues and profits in the short term as they build assets.

RELATED: New York’s Cannabis Control Board – What’s Up?

Should any of the licenses go up for sale, we would expect them to be among the most coveted assets in U.S. cannabis, fetching a premium take-away price well above current operators’ ratings. We anticipate any newly issued licenses will also be in high demand, especially anything that allows access to New York City or large-scale cultivation / production, and believe that all MSOs will try to get into the To enter the market.

Photo by Alex Azabache from Pexels

Investment highlights:

• The departure of Governor Cuomo could speed up cannabis adoption, or at least stabilize the schedule.

• NY cannabis legislation passed in March, but recent advances have stalled.

• State is expected to quickly become one of the largest markets in the US. Under the law, there are considerable competitive advantages for existing operators.

• 10 existing operators. Publics: Acreage, Columbia Care, Cresco, Curaleaf, iAnthus, Goodness Growth, Green Thumb, Medmen / Ascend.

• Expect benefits that translate into above-average results and award ratings.

• Continue to assume that new licenses are being sought, even if they are less valuable.

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This article originally appeared on Benzinga and was republished with permission.