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Marijuana Stocks

Oklahoma: 2020’s Hottest Cannabis Market

One of the hottest cannabis markets in the U.S. isn’t California or Colorado.

It isn’t Florida or Illinois…

It’s Oklahoma.

Back in the summer of 2018, the Sooner State greenlit medical marijuana through a referendum.

The Oklahoma Medical Marijuana and Patient Protection Act wasn’t merely a major victory for advocates. It also established one of the most unique and liberal marijuana markets in the country.

Elsewhere in the U.S., patients must meet requirements and check boxes of selected ailments. But in Oklahoma, there are no qualifying conditions.

Oklahomans can be prescribed cannabis for any condition. This has led to rapid growth.

The Oklahoma Medical Marijuana Authority has approved 235,786 patient licenses. That represents almost 6% of the state’s 3.95 million residents.

According to the Marijuana Policy Project, that’s a participation rate more robust than any other state.

In 2019, Oklahoma’s cannabis sales topped $350 million. And its first-year pace exceeded medical markets in Illinois, Maryland, Nevada and Ohio.

To say the state has seen a marijuana explosion is an understatement. There are now more dispensaries in Oklahoma per 100,000 residents than every other state, except Oregon.

Chart - Dispensaries per 100,000 Residents

All of the U.S. and Canadian markets have struggled over the past year.

The biggest obstacle has been a lack of access to cannabis. Sales are being choked by a shortage of dispensaries and product.

Well, Oklahomans are enjoying plenty of both. There are 15.6 dispensaries per 100,000 residents. And of the 30 U.S. cities with the most dispensaries, nine are in Oklahoma.

That’s after less than two years since legalization.

And we’ve seen early Oklahoma homesteaders separate themselves from the herd.

We love pick-and-shovel plays here. That goes for energy and resources, as well as cannabis. And we’ve seen some standout performances from third-party pot suppliers.

For instance, GrowGeneration Corp. (Nasdaq: GRWG) had a fantastic 2019.

The hydroponics and organic gardening supply chain uplisted to the Nasdaq. It reported a record $80 million in revenue for the year. And a significant part of that success is thanks to Oklahoma.

The company has 26 U.S. locations. Four of those are in the Sooner State. And in GrowGeneration’s third quarter results, its Oklahoma outlets brought in $3.36 million in revenue.

Only its retail locations in California and Colorado brought in more.

In turn, over the past year, GrowGeneration’s shares have gained more than 60%. That momentum was fueled by its Oklahoma operations, which contributed almost half of the company’s revenue growth in 2019.

California, Colorado, Florida and Illinois win headlines. But Oklahoma is winning the race.

The High Five

Below are our High Five, where each Monday I cover the five pot stocks I believe will make major moves – up or down – in the week ahead.

1) MedMen Enterprises (OTC: MMNFF) was named my No. 1 U.S. pot stock in 2019. Unfortunately, it got chewed up by the bear market in cannabis and like most of the sector, struggled last year.

But the company is tightening its belt. It dropped its acquisition of PharmaCann four months ago. It began laying off employees to rein in costs. And last week, MedMen announced Co-Founder and CEO Adam Bierman is stepping down immediately. Though he will remain on the board.

This move was cheered by investors as MedMen shares jumped 7% on the news. I think we can expect the optimism to continue as Bierman was a lightning rod for controversy.

2) Dixie Brands (OTC: DXBRF) announced in mid-January that it was entering the Oklahoma market. And its initial products would be on shelves by the end the month. The company also has a partnership with AriZona Beverage Co. to produce THC-infused products.

3) Curaleaf Holdings (OTC: CURLF) opened its first dispensary in Massachusetts last week. The company has 52 dispensaries in 12 states. Though, once its proposed acquisition of Grassroots is completed, it’ll also have 12 dispensaries in Oklahoma.

4) Green Growth Brands (OTC: GGBXF) reported 128,000 transactions during the holiday season at its Seventh Sense Botanical Therapy stores. The company operates more than 139 CBD shops in 34 states, including Oklahoma.

5) Lift & Co. (OTC: LFCOF) will report third quarter earnings Tuesday after the market closes. The Canadian cannabis-focused tech and media company reported CA$332,000 in revenue in the second quarter but with a loss of more than $2 million.

Year to date, Curaleaf and Dixie Brands are outperforming our benchmark, the Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF).

Chart - The High Five

Despite some heavy selling in recent weeks, cannabis is still positive for the year. And we’re starting to see rebounds in Lift & Co. and MedMen shares.

We’ll be on the lookout for positive momentum to return. The broader markets are sick to their stomachs for now, infected by the Wuhan coronavirus. And that’s overshadowing all the bright spots we’ve seen.

If you have a pot stock in mind that you’d like me to discuss here, click the comment button below.

Here’s to high returns,

Matthew


About

Matthew’s expertise ranges from classic industries such as oil and mining to cutting-edge markets like small cap tech, cannabis, 3D printing and cloud computing. With almost two decades of financial experience under his belt, Matthew’s knack for finding market trends never fails to surprise us, which is why we keep a close eye on his free e-letter, Profit Trends.

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