The chief executives of Canopy Growth Corp. (WEED.TO)(CGC) and Acreage Holdings Inc. (ACRG-U.CN)(ACRGF) are encouraged by growing support for cannabis reform in the United States, developments that could pave the way for Canopy becoming the largest player in the massive American market.
“Most large groups you talk to, whether Democrat or Republican, or American farmers, are in favour of state’s rights progressing. I think that is a major step in the right direction,” Canopy Growth chief executive officer Mark Zekulin told Yahoo Finance Canada in an interview.
“We’ve really moved into the stage where there are a lot of details to work out, but we are past that principal question.”
Canopy Growth has a US$3.4-billion deal to buy 100 per cent of the shares of New York-based Acreage Holdings, a multi-state operator with dispensaries, cultivation sites and processing facilities across the U.S. The acquisition hinges on cannabis production and sales becoming federally legal in that country.
The District of Columbia and 11 states have adopted laws legalizing recreational cannabis. Illinois recently became the second most-populous state allow adult use.
The latest hope for broader cannabis reform came from the U.S. president last Friday. Asked by reporters if cannabis would be federally legalized while he is in office, Donald Trump said: “We’re going to see what’s going on. It’s a very big subject and right now we are allowing states to make that decision. A lot of states are making that decision, but we’re allowing states to make that decision.”
Trump has backed legalization of medical cannabis since his 2016 presidential campaign, and has previously said states should chart their own course on adult-use policy.
Speaking on a panel chat with Zekulin at the 2019 MJBizCon International Conference in Toronto on Thursday, Acreage Holdings CEO Kevin Murphy said Trump’s latest remarks on cannabis are cause for optimism.
“That’s signalling to the rest of his Republicans that you know what, it’s basically okay to have a view around cannabis. The reason he is doing it is because in the United States 95 per cent of the country believes in medical cannabis, and 66 per cent believe in adult-use or recreational cannabis,” he said.
“Our president clearly wants to be reelected in 2020. He wants to see his fellow Republicans get reelected. It’s the popular thing at this point.”
Zekulin said after 70-straight months of construction, Canopy is near the end of its Canadian infrastructure build-out and has “never been in a better place” to shift attention to scaling operations in the U.S. and leverage its intellectual property in that market.
Murphy said Canopy stands to benefit from Acreage’s work on building popular brands free from the strict marketing restrictions in place in Canada.
“Given the fact that many of the brands worldwide have come from the U.S., I think that's probably the most important export,” he said. “We believe we can bring a lot of what we do here in the U.S. back to Canada. I think it’s a two-way street.”