US Legalization on the Horizon as Lawmakers Bringing Cannabis Reforms to the Senate Floor

USA News Group – The drumbeat towards cannabis legalization is growing louder, as US lawmakers early in 2021 are signalling increasing openness to the market. In early February, multiple US Senators issued a joint statement announcing that marijuana reform bills would be merged as Congress moves toward some form of federal cannabis legalization. By mid-March, cannabis stocks surged after New York’s Governor said his state was ‘very close’ on legalization. So far the momentum has impacted the share prices of several cannabis stocks of all sizes, including MYM Nutraceuticals Inc. (OTC:MYMMF) (CSE:MYM), OrganiGram Holdings Inc. (NASDAQ:OGI) (TSX:OGI), Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON), HEXO Corp. (NYSE:HEXO) (TSX:HEXO), and Canopy Growth Corporation (NASDAQ:CGC) (TSX:WEED).

North of the border into Canada, MYM Nutraceuticals Inc. (OTC:MYMMF) (CSE:MYM) has moved within one province of having nation-wide distribution across the country that legalized cannabis in October 2018.

Back in February, the cultivator, processor and distributor secured a supply agreement through its wholly-owned subsidiary Highland Growth Inc. with the Ontario Cannabis store, marking official entry into Canada’s largest pot market.

"Entering the Ontario market is another key milestone for our Company," said Michael Wiener, CEO of MYM. "It is the largest and fastest growing market in Canada, and we are excited to finally be able to offer our craft, high THC cannabis to the many discerning consumers in the province."

Now after the recent additions of Ontario and the territory of Nunavut, Highland Grow products are now available in all Canadian provinces and territories, except for Quebec. However, MYM’s other wholly-owned subsidiary, SublimeCulture Inc. is located and cultivates products from a state-of-the-art facility in Laval, Quebec.

"We've come a long way at MYM, and we are building incredible momentum," said Michael Wiener. "In the past week, we've announced the expansion of our distribution network into two new markets and, even before entering these markets, released profitable Q2 financial results in the midst of a global pandemic. [We] are well positioned to continue to build upon and accelerate our growth."

Established cultivators of premium cannabis in Canada like MYM Nutraceuticals Inc. (OTC:MYMMF) (CSE:MYM) are being sought after by larger partners foreseeing entry into the lucrative US market to the south.

“As global cannabis deregulation gains pace, led by the US, we have been approached by an increasing number of Big Tobacco, Big Pharma and leading FMCG companies, looking to invest in the Cannabis sector,” said Tristan Gervais, Chrystal Capital’s Head of Cannabis advisory at Europe’s Cannabis Merchant Bank to CNBC.

The latest major partnership deal saw British American Tobacco pay approximately $175.81 million for a nearly 20% stake in Canada-based cannabis producer OrganiGram Holdings Inc. (NASDAQ:OGI) (TSX:OGI).

“Organigram has a proven track record of consumer-led innovation and developing high quality adult-use recreational and medical cannabis products, which are legally available in Canada,” BAT said in a statement.

OrganiGram wasn’t the first cannabis cultivator to sign a deal with a tobacco giant.

Back in 2018, Altria Group (makers of Marlboro cigarettes) bought a 45% stake in Canadian cannabis producers, Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON) for $2.4 billion.

As per the deal, Altria can earn up to a 55% stake in Cronos. More recently, Altria joined on with other major national corporations to launch a coalition with the purpose of influencing policy and to potentially shape the first federal cannabis regulations.

Among the other corporations in the coalition were major beer bottlers Molson Coors and Constellation Brands who signed partnership deals with HEXO Corp. (NYSE:HEXO) (TSX:HEXO), and Canopy Growth Corporation (NASDAQ:CGC) (TSX:WEED) respectively, to produce CBD-infused beverages.

Constellation, which produces Corona and Modelo beers made big headlines when it signed a massive deal with Canopy Growth Corporation (NASDAQ:CGC) (TSX:WEED) to produce the new beverage line, which they announced will begin selling online in the US under the name Quatreau sparking water.

“It kind of illustrates our playbook where we want to use insights gathered across North America,” said Canopy CEO, David Klein. “We then use our innovation … to develop amazing products, we test them out in Canada for a bit of a test-and-learn process, and then we bring them to the U.S. with the help of Constellation’s distribution as soon as we can.”

The Quatreau launch followed shortly behind the first US CBD drink, launched by a joint venture named Truss CBD between HEXO Corp. (NYSE:HEXO) (TSX:HEXO) and Molson Coors.

Under the brand name Veryvell, the Truss product launched first only in the state of Colorado, in both retail stores and online.

"Colorado has an established regulatory framework in place that covers the production, marketing, labeling and sale of CBD-infused products,” said Truss USA general manager Jane Armstrong Hockman. “The joint venture will approach this opportunity in full alignment with our commitment to commercial responsibility, transparency and compliance.”

Together, the companies had already gained experience by launching CBD drink products in Canada back in 2019, and within the regulated marijuana space in 2020. Truss Beverages in Canada currently sells five lines of THC-infused drinks, including a version of Veryvell.

At some point in the future, more consumer packaged goods such as these could become available, bringing a much wider range of SKUs to a public becoming increasingly more willing to try them.

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