Recently, CLS Holdings USA, Inc. (OTCQB:CLSH; CSE:CLSH) announced its second quarter results for fiscal 2021, which included a 61% increase in revenue over the second fiscal quarter of 2020. This was driven by a 58% increase in year over year quarterly revenue at City Trees, and continued growth in traffic and average transaction totals at Oasis Cannabis.
Meanwhile, the author notes, cannabis stocks including Tilray (NASDAQ:TLRY), Canopy Growth (NASDAQ:CGC), Cronos Group (NASDAQ:CRON), and Aurora Cannabis (NYSE:ACB) had all declined.
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The writer notes that investors are warming up to ancillary cannabis companies that do not directly cultivate or distribute cannabis products. Among these include AFC Gamma (NASDAQ:AFCG), who announced the pricing of its IPO last week.
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Looking at three US cannabis companies, the author notes that growth among these companies significantly outpaced the S&P 500. The companies noted include Green Thumb Industries (OTC:GTBIF) and Cresco Labs (OTC:CRLBF), who saw significant growth in their home state of Illinois, and Trulieve Cannabis (OTC:TCNNF), which has a strong foothold in Florida’s medical cannabis industry.
Companies like Village Farms International (NASDAQ:VFF), a greenhouse agriculture giant, and real estate developer Innovative Industrial Properties Inc. (NYSE:IIPR) are expanding into the industry as well. Similarly, not all companies focus on the psychoactive plant that is the primary focus of legalization - companies like Charlotte’s Web (OTCMKTS:CWBHF) focus on non-psychoactive, therapeutic products that have also seen growing interest.
Among the companies mentioned by the author were Cresco Labs (OTC:CRLBF), who currently operates in 9 states and is positioned to enter additional markets with strategic acquisitions later this year. The writer notes another multi-state operator that currently operates in 12 states - Green Thumb Industries (OTC:GTBIF), which also has an eye toward new markets and partnerships. Finally, the author notes Jushi Holdings (OTC:JUSHF), which currently operates 16 retail locations across 4 states.
On the flip side, American companies, such as Curaleaf (OTC:CRLF), Cresco Labs (OTC:CRLBF), and Trulieve (OTC:TCNNF) have had to trade in more limited OTC markets. Despite this, demand for cannabis in the US is poised to outpace the Canadian market once federal legalization occurs, unleashing pent up investor demand simultaneously. If the SAFE Banking Act were to allow US-based cannabis companies to trade on major exchanges, Canadian companies may lose their premium placement currently enjoyed.
Currently, the analyst consensus on Avadel Pharmaceuticals is a Strong Buy with an average price target of $20.25, a 167.9% upside from current levels. In a report issued on March 1, Oppenheimer also maintained a Buy rating on the stock with a $19.00 price target