U.S. industry celebrates big night for pot

Despite all the uncertainty surrounding the U.S. election, there's a clear victor already: U.S. cannabis companies.

Leaders across the industry cheered after marijuana measures passed in all five states that had them on the ballot Tuesday — even in deeply red parts of the country. The results showed how marijuana is becoming less of a partisan issue, and buoyed the biggest U.S.based players in the market.

“Cannabis won, and won big,” said Boris Jordan, chairman of Curaleaf Holdings Inc., one of the largest cannabis companies. “It's a green landslide.”

The latest results make recreational marijuana legal in 15 states and approved for medical purposes nearly nationwide, pushing the once-taboo topic of legalization firmly into the U.S. mainstream. Voter support in New Jersey passed by a wide margin, while Mississippi voted for the more liberal of two options to legalize medical use. South Dakota was also the first state to vote in recreational and medical use at the same time.

“We think that is a big signal to Washington and other states,” Jordan said in a phone interview. “Cannabis has won much bigger than anyone thought.”

Curaleaf closed down 1.8 per cent while Harvest Health & Recreation Inc. climbed .88 per cent, Cresco Labs Inc. advanced one per cent and Green Thumb Industries Inc. jumped 4.91 per cent.

Like many of his contemporaries, Cresco chief executive Charlie Bachtell was thrilled by the election news pinging his phone all night, and he celebrated with a glass of wine and a cup of coffee.

“We may not know the results of the presidential election, but it's safe to say cannabis was victorious,” Bachtell said in a phone interview.

Despite growing support for cannabis in the U.S., prospects for federal legalization took a hit, at least in the short term, with the likely possibility that Republicans retain control of the Senate.

That weighed on Canadian cannabis companies, which are missing out on the U.S. market strength. Some investors had also thought they might have had an easier time breaking into it under an all-blue scenario. Shares of Canopy Growth Corp., the industry's biggest Canadian company, slumped 5.3 per cent, while Tilray, once one of Canada's hottest stocks, fell 8 per cent.

After the latest results led to legalization in New Jersey, Arizona, Montana and South Dakota, as well as medical legalization in Mississippi, the total addressable market for cannabis producers has grown by more than US$3 billion, Cowen analyst Vivien Azer said in a note.