After years of wrangling, both houses of the New York state legislature on Tuesday passed a bill that legalizes recreational marijuana, and it wasn’t even really close. The state assembly passed the bill 100 to 49, and the senate voted 40 to 23 in favor of legalization. Governor Andrew Cuomo has said he will sign the legislation and that could happen as soon as this week.
New York is set to become the 15th state to legalize marijuana for recreational use. Since neighboring New Jersey legalized recreational marijuana in the November 2020 election, it’s been virtually certain that New York would soon follow suit. There’s no point in letting that tax revenue travel south, right?
Pennsylvania, another New Jersey neighbor, is also seeing a push for full legalization of marijuana. The state currently allows medical marijuana, but Governor Tom Wolf has warned that Pennsylvania residents may travel to New Jersey for their stash of recreational weed, spending money and generating tax revenue that belongs in Pennsylvania.
Even for a state as large as New York, the economic impact of legal, taxed weed is significant. Under the new law, cannabis will be taxed at a 13% rate, comprising a 9% state tax and a 4% local tax. A potency tax of up to three cents per milligram of THC (tetrahydrocannabinol, the psychoactive ingredient in marijuana) is also part of the legislation. The governor’s office forecasts annual tax revenue of up to $350 million and 60,000 new jobs.
Once the governor signs the bill, it will no longer be illegal to possess up to three ounces of weed and 24 ounces of cannabis concentrates. Residents will be allowed to grow up to six plants at home. The law also will expunge the criminal records of tens of thousands of New Yorkers, according to a report from CNBC.
The catch in all this is that nonregulated pot sales will continue and the price for street-corner pot will be lower than the price at state-regulated stores. Tax receipts often miss their forecast levels because marijuana users will vote with their wallets.
Marijuana company stocks have been anticipating New York’s legalization and share prices for several of the pot stocks have been rising steadily since the beginning of the year. Here’s a look at how six Canada-based growers are faring so far in 2021. For comparison, see our story from November giving share prices on five of these stocks just after the U.S. election.
Tilray Inc. (NASDAQ: TLRY) has shot up by 167% since the beginning of the year. Shares closed up about 1.9% Tuesday and traded up almost 9.5% Wednesday morning to around $24.14. The stock’s 52-week trading range is $4.41 to $67.00, and the consensus price target on the shares is $20.55.
Aphria Inc. (NASDAQ: APHA) stock has soared by nearly 155% in 2021. Shares traded up about 3.9% Tuesday to close at $17.61. In early trading Wednesday, the stock was up nearly 9%, at around $19.20 in a 52-week range of $2.68 to $32.99. The price target is about $12.75.
Sundial Growers Inc. (NASDAQ: SNDL) has jumped by 141% since January. The stock closed at $1.14 on Tuesday, up by 1.8% for the day, and traded up about 4.5% at $1.20 on Wednesday. The stock’s 52-week range is $0.14 to $3.96, and the consensus price target is $0.77. Sundial Growers, which wasn’t included in our November story, was trading at $0.22 per share at the time.
Cronos Group Inc. (NASDAQ: CRON) stock has risen by 34% since January. Shares traded up about 3.5% Tuesday to close at $9.65. In early trading Wednesday, the stock was up about 3.3%, at $9.61 in a 52-week range of $4.62 to $15.83. The consensus price target on the stock is around $7.00.
Canopy Growth Corp. (NASDAQ: CGC) has added about 29% to its share price so far this year. The shares traded up about 4% Tuesday to close at around $33.00. The stock traded up about 2% Wednesday morning to $32.35, in a 52-week range of $12.88 to $56.50 and with a price target of about $37.25.
Aurora Cannabis Inc. (NASDAQ: ACB) has added about 9% since January. Shares traded flat on Tuesday and were up about 6% Wednesday morning to $9.60, in a 52-week range of $3.71 to $19.68. The consensus price target is around $10.40.