Houston The U.S. Cannabis Sector Has Major Liftoff

2021 is expected to be a banner year for the US cannabis market and this is a market that we are bullish on. Many analysts expect to see a changing of the guard this year as it relates to the companies that are considered to be industry leaders.

In the back half of 2020, several US multi-state operators (MSOs) reported quarterly financial results that exceeded expectations, and this is a trend that we expect to continue this year. When compared to Canadian Licensed Producers (LPs), US MSOs are ramping revenues at a much faster pace, and we expect this difference to become even more substantial this year.

One of the reasons we expect the US cannabis industry to record strong growth in 2021 is related to the opening of new recreational markets. Last year, Illinois and Michigan started to sell recreational cannabis to consumers and the revenue numbers that are being generated by these markets is impressive.

When compared to Canada, the US has more of fragmented cannabis industry and the laws vary on a state level. In some states, there is a low limit on the number of necessary cannabis licenses that are being issued and this creates tough barriers to entry and will help prevent saturation over the long-term.

In 2021, we expect states on the east coast of the US market to play an important role in the growth of the cannabis industry. From Pennsylvania to Florida, there are a few large medical cannabis markets, and we are favorable on the potential for legal recreational cannabis in these markets. Although we do not expect recreational cannabis legislation to pass in Florida in the near-term, the state has been reporting impressive growth on the medical side of the industry and this is a trend to be aware of.

In 2020, consolidation was a major theme in the US cannabis industry, and this is a trend that we expect to become more significant on a going-forward basis. Last year, we noticed a substantial increase in the amount of merger and acquisition (M&A) activity, and expect this is a trend that is expected to become more significant in 2021.

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