One top cannabis analyst believes the rally in marijuana stocks is just beginning, with a more than 50% pop ahead due to the increased likelihood of marijuana reform on the horizon with Democrats taking control of the Senate.

Cowen Managing Director Vivien Azer explained her thinking in an interview with Yahoo Finance Live Thursday, noting that reform could open the door to many U.S. multi-state operators finally being able to access traditional banking and begin trading on major U.S. exchanges just as their Canadian peers have.

Regulations currently prevent all plant-touching cannabis companies in the U.S. from listing on the Nasdaq or the New York Stock Exchange, but that could change if cannabis is removed from the list of federally regulated substances.

“We’re still working through the models because we don’t have visibility around the timing of [legislation] but we would anticipate either the back half of ’21 or the first half of ’22,” Azer said. “But what we have asserted is we think there could be as much as 50% upside to the revenue multiples for the U.S. operators strictly by virtue of re-listing to the U.S. exchanges.”

Importantly, that call doesn’t take into account other catalysts like added revenue stemming from new states beginning the legal sale of cannabis after voters in five states approved to legalize the use of marijuana either recreationally or medically. In New Jersey, where voters approved recreational marijuana through a ballot initiative, Azer expects the legal framework to be finalized as soon as the summer with revenue numbers growing in the back half of the year.

The move by New Jersey has also once again moved cannabis legalization to the front burner for New York Gov. Andrew Cuomo. Cuomo once again called on state legislators to approve a framework to bring legal cannabis to the state in his annual State of the State address Monday — just as he did in 2019 and 2020 before efforts stalled. Azer and other analysts are expecting this attempt to finally yield results in what would amount to a total of a $40 billion boost to the size of the U.S. cannabis market by 2025 when totaling new states legalizing.

Azer says her top cannabis picks are the U.S. companies that are most prepared to benefit from the near-term catalysts of more states beginning the legal sale of cannabis. Those include Green Thumb Industries (GTBIF), Curaleaf (CURLF), and Cresco Labs (CRLBF). All three make up a significant portion of the AdvisorShares multi-state operator ETF (MSOS).

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