The biggest news in the cannabis sector for January is the starting of recreational cannabis sales in Illinois. Sales started on New Year’s Day and several companies are already reporting closing stores due to a lack of enough inventory.
Outside of eventual U.S. federal approval, the cannabis companies can benefit greatly from the legalization of cannabis sales at the state levels whether for medical or recreational purposes. Illinois and Michigan recently added recreational use to existing medical cannabis approvals while Florida remains the biggest state with the potential to add recreational sales to a thriving medical cannabis business.
Over the initial days of January, Illinois sold over $11 million worth of legal weed from 55 dispensaries. Illinois has the potential of reaching $4 billion in annual sales and building on an existing minimal $250 million medical cannabis market.
Analysts have forecasted U.S. cannabis sales topping $16 billion in 2020 while the total global sales may not even reach $20 billion following the weak recreational sales in Canada and the slow rollout of Cannabis 2.0 products. The Illinois market has the potential of matching the current international market of only a few billion dollars highlighting the massive opportunity for U.S. multi-state operators (MSOs).
MSOs already in the Illinois market have first mover advantage in this market of 13 million residents and 117 million tourists annually. In addition, the companies with the most cultivation capacity have the potential to thrive while others lack inventory.
We’ve delved into these three U.S. cannabis MSOs with a strong market position in Illinois that will benefit from the opening up of the adult-use market. According to TipRanks’ Stock Comparison tool, all three currently have a Strong Buy consensus rating and over 70% upside potential.
Cresco Labs (CRLBF)
Cresco Labs is the proclaimed leader in the Illinois market with 25% market