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There Is A Cannabis Shortage Looming In One Of The United States Largest Adult Use Markets

Feb 3, 2021 • 7:44 AM EST
2 MIN READ  •  By Michael Berger
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In the US general election in November 2020, several major cannabis ballot initiatives passed which caused there to be a surge in interest in the US cannabis industry. When you combine the passing of multiple pieces of significant cannabis legislation with the election of Joe Biden as President and the democrats gaining a major it the House of Representatives and Senate, you have a recipe for growth with the US cannabis industry and this is a trend that our readers need to be aware of.

One of the most significant developments in the November general election was the passing of recreational cannabis legislation in Arizona. The state has one of the largest medical cannabis markets in the US and we are bullish on the growth prospects that are associated with the recreational opportunity in Arizona.

Last month, MJBizDaily published an update on the Arizona recreational market after the state’s program commenced on January 22nd. We are impressed with the performance of the market in the first week and expect companies with leverage to the market to benefit from the change in legislation.

MJBizDaily projects that Arizona’s recreational market could be worth $375 million to $400 million in the first year. The leading cannabis published projects that the state’s recreational cannabis market could be worth between $700 million to $760 million by 2024 are bullish with the long-term growth prospects that are associated with it.

Vext Science, Inc. (VEXT.CN) (VEXTF) is highly levered to the Arizona cannabis market and is an opportunity that we believe has been flying under the radar. So far this year, the stock has rallied more than 20% and this is an operator that we are highly focused on. Although the stock has performed well, it has come off its recent highs and we are closely following the trend from here.

Over the next year, we expect Vext to report impressive revenue growth and expect the Arizona market to serve as the primary growth driver for it. The company is also focused on the cannabidiol (CBD) market in the US but we have lower expectations for this aspect of the business.

At current levels, Vext is trading for a significant discount to its peers and find the risk-reward profile to be favorable. We are of the opinion that Vext has a compelling valuation and believe that there is significant upside to the current level. In 2019, the company was negatively impacted by the vaping crisis and believe that the market is missing out on something significant with Vext.

If you are interested in learning more about the companies that are capitalizing on Arizona’s recreational cannabis market, please send an email to support@technical420.com with the subject “Arizona Cannabis Companies” to be added to our distribution list.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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