(Image via Golden Leaf Holdings Ltd.)
With new shoppers emerging to take advantage of Oregon’s cannabis offerings now that the industry has been legal in the state for some time, coupled with the lockdown and isolation caused by COVID-19, the recreational cannabis business in “The Beaver State” is getting better than ever.
Casual consumers are finding themselves more and more comfortable with stopping by a dispensary like they would a liquor store and coupled with wide offerings ranging from pre-rolls to edibles, sales have jumped 40% in the past year to more than $1 billion (USD) according to Oregon’s Liquor Control Commission. The agency reported that both supply and demand are significantly on the rise with production up 78% since 2019, while the amount of cannabis sold has jumped up by 150%.
Meanwhile on the supply side, the amount of cannabis harvested last year had increased by 37% over the year before and the state’s cannabis regulatory agency could be set to issue as many as 100 more producer licenses by April 2021.
Though the cannabis market is rebounding, there is still room to grow even bigger and now might just be the right time to invest in one of the state’s top companies.
Operating seven dispensaries in Portland is
Golden Leaf Holdings Ltd. (CSE: GLH, OTCQB: GLDFF, Forum), a consumer-driven cannabis Company that specializes in production, processing, wholesale, distribution, and retail.
Serving the Oregon market, along with California and Nevada, this Company is committed to developing a dynamic portfolio built around the recognized brands of Chalice Farms, with a focus on health and wellness.
Further cementing its status as a leader in the Oregon market, the Company just signed a non-binding letter of intent to acquire a multistore chain. It is expected that these stores would generate at least $10 million (USD) in annual run rate revenue (based on unaudited January 2021 results) and had a net operating margin of 11% (unaudited) during fiscal 2020.
In
a February 2021 media release detailing this news for investors, GLH’s Chief Executive Officer, Jeff Yapp called the acquisition of this retail chain a “transformational” deal for the Company.
“The Company expects this transaction to be accretive on close, as we will achieve tremendous synergy with our effort and current footprint and the introduction of our market-leading Chalice brand products.”
As the market grows, so too does opportunity for cultivators, as the OLCC noted that some growers, like GLH are targeting retailers’ top shelves to sell their product with the aim of raking in more cash.
Golden Leaf plans to advance this plan through the aid of its recently proposed non-brokered private placement of up to 169,230,770 units priced at $0.065 (CAD) per Unit for aggregate gross proceeds of up to
$11 million (CAD). The proceeds of the Offering will be used by the Company for strategic retail license acquisitions. When news of this financing broke, it helped build upon the recent momentum the stock has seen since late January when the Company closed its
$3.4 million (CAD) financing.
Oregon is progressive and the bellwether state for the cannabis industry, as the first state to decriminalize the possession of small amounts of hard drugs. The state’s market continues to demonstrate incredible growth surpassing the $1 billion (USD) mark, despite its perceived maturity and saturation – there is much room to grow.
Oregon is also one of several jurisdictions that have legalized cannabis for recreational purposes – along with Colorado, Alaska, Washington, and the District of Columbia.
With the exception of DC, these jurisdictions allow for the production of cannabis through licensed commercial growers. In addition, all except for Washington, permit individuals to grow their own cannabis. All of these jurisdictions place restrictions on the number of plants that individuals can grow. In the US, Colorado, Alaska and the DC allow their citizens to grow a maximum of six plants. Oregon allows its residents to grow four plants.
Under the market’s current landscape, depending on the jurisdiction, the price of cannabis varies between $150 (USD) to $450 (USD) an ounce.
This makes for a very cheap product in Oregon, yet relatively expensive on the East Coast. Even under full legalization, different state policies would likely generate substantial price differentials. Within three years, legal prices in Oregon fell from $10 to $5 per gram.
Like other states that have relaxed their drug laws, Oregon’s reforms were not born out of overnight realization from its political leaders. Instead, the state took three significant steps through ballot initiatives. The same can also be said of 13 of the 15 states that had legalized cannabis so far; only two states have legalized cannabis through their legislatures.
It is a challenge to overstate how important Oregon’s legislation for cannabis will play a primary role in the federal legalization of cannabis. One of the politicians spearheading the forefront of this movement is Senate Finance Committee Ranking Member Ron Wyden, (D-Or), who announced introduction of S. 420, the Marijuana Revenue and Regulation Act (MORE), legislation that would responsibly legalize, tax, and regulate marijuana at the federal level.
One of three bills introduced in the Senate by Wyden, this legislation was introduced in the House of Representatives by senior member of the House Ways and Means Committee Representative Earl Blumenauer, (D-Or), to preserve the integrity of state marijuana laws and provide a path for responsible federal legalization and regulation of the marijuana industry. A lead sponsor of the MORE Act in the House, he will play a primary role in the federal legalization of cannabis.
The example that Oregon has set shows that even if politicians continue to resist the issue, the public can take action into its own collective hands. Ballot initiatives can ultimately inspire action, even when less than half of states do not have an open-ended ballot initiative process. This can extend beyond state borders, as political leaders in New York, a state which does not have an open-ended process, started to take legalization more seriously after Massachusetts and Maine legalized. Both of those areas had already become more vocal after New Jersey voted to legalize.
Even so, there are still limits as to what any state can do. For example, any the drugs decriminalized or legalized in Oregon (including cannabis), remains illegal at the federal level. While the federal government has taken a hands-off approach to state-level drug policy reforms, federal prohibition creates hurdles to state policies, such as limits on government benefits and banking cannabis profits.
Oregon is also the first legalizing state to share a border with another state with legal cannabis (Washington), and while interstate cannabis commerce remains illegal federally, interstate market pressures—influenced in large part by regulatory choices in each state—can have serious consequences for the legal market.
The first to decriminalize cannabis in the 70’s and the first state to legalize recreational cannabis consumption, it is clear that Oregon has some of the most progressive policies in the industry while also being the only state that has established legal shipments across state lines. These are all attributes that work well to favour the operations of a Company such as Golden Leaf Holdings.
(Golden Leaf Holdings Ltd. stock chart – Nov 2020 to April 2021.)
In the last year Golden Leaf Holdings saw its revenue grow by 33% and as it continues to follow and optimize its strategic vision, the Company is steadily working to become a market leader in its cannabis product categories. This stock is one to watch for investors looking to expand their portfolio.
As Oregon continues to establish its leadership as one of the most influential and important markets in cannabis, now is the right time for traders to make a move on this opportunity given the OLCC’s report, which also noted that the increased demand for cannabis products reflects new consumers entering the market as people turn to cannabis as a substitute for products such as alcohol and opioids and even sleep aids during the COVID-19 pandemic.
For regular updates on the Company, visit
goldenleafholdings.com.
New to investing in Cannabis? Check out Stockhouse tips on How to Invest in Cannabis Stocks and some of our Top Cannabis Stocks.
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FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.