By 
Industry pundits mostly praised the mixed results for cannabis votes in Tuesday’s midterm elections, as Maryland and Missouri became the 20th and 21st U.S. states to allow adults over 21 to buy cannabis.
Ballot measures failed in Arkansas, North Dakota and South Dakota, however. The results signified a marginal gain for the adult-use cannabis industry.
Also read: Maryland, Missouri vote to legalize recreational cannabis, while 2 states reject measures
Cowen analyst Vivien Azer said the “cannabis green wave hit a wall” with the defeats in three states.
Maryland and Missouri only represent about 3.8% of the U.S. population over 18 years old, but they still add to the growing trend toward acceptance of adult-use cannabis, she said.
“It’s worth noting that as the industry has moved to penetrate deeper ‘red’ states, even measures that failed saw support consistently over 40%,” Azer said.
Curaleaf
CURLF,
+3.44%
CURA,
+3.36%
CEO Matt Darin said the company is thrilled about the outcome in Maryland, where it operates four dispensaries.
“And even though it didn’t pass, seeing more Republican-leaning states like North Dakota and Arkansas continue to have cannabis on the ballot is encouraging,” Darin said in an email to MarketWatch. “Curaleaf has been successful at helping medical [cannabis] states transition to adult use … by relying on our infrastructure and experience.”
Joe Caltabiano, co-founder of Cresco Labs
CRLBF,
CL,
+1.12%
and the JSC Fund, said one of the best outcomes of the voting this week is that it will boost the number of U.S. congressional representatives from states with adult-use cannabis.
“Federal reform … will provide security for these workers, fairness for cannabis businesses and confidence for the investors who need a clear roadmap to continue support of the industry’s growth,” Caltabiano said in an email to MarketWatch.
One of the key measures being considered in Congress is the SAFE Banking bill — also called the Safe Plus Banking bill — which would open up the U.S. financial system to cannabis companies.
Shares of cannabis companies have been weak this year amid dim prospects for federal legalization, but they have continued to increase their revenue as more adult-use programs have gotten under way around the country.
The AdvisorShares Pure US Cannabis ETF
MSOS,
+2.74%
rose 3% in Wednesday. The ETF is down 57.2% in 2022, compared with a 32% drop by the Nasdaq
COMP,
-7.35%.
The ETFMG Alternative Harvest ETF
MJ,
-0.57%
is up 1.6% on Wednesday.
Missouri is the second state that backed Donald Trump in the 2020 election to allow adult-use cannabis, with the issue drawing support from Republicans as well as Democrats. Alaska, which already allows adult-use cannabis, also voted for Trump in 2020, and Arizona, a swing state that went to Biden, permits cannabis use and purchases for adults.
With 89% of the vote counted, 53.1% of Missouri voters OK’d the adult-use measure, and 46.9% voted no.
Maryland — historically a Democratic-leaning state — delivered on expectations of a strong victory for cannabis. The Associated Press called the voting at 9:33 p.m. Eastern time with a roughly two-thirds majority in favor.
The cannabis initiatives fell short of the clean sweep of states with ballot initiatives in 2020, however. This year, voters pushed back against cannabis in the more conservative states of Arkansas, North Dakota and South Dakota.
In Arkansas, 56% of voters opposed adult-use cannabis, while 43.8% supported it. About 55% of the voters in North Dakota voted against cannabis, and roughly 54% did so in South Dakota.
Greenlight Dispensary CEO and co-founder John Mueller said the favorable vote in the company’s home state of Missouri will benefit the local economy.
“Missouri is poised to become a tent-pole for the industry in the Midwest, and we believe Missouri will be an $800 million to $1 billion market that will add over 5,000 new jobs in Missouri and roughly $50 to $80 million in new tax revenue,” Mueller said.
Safe Harbor Financial
SHFS,
-4.03%
CEO Sundie Seefried said her attention remains focused on the challenge posed by growth in the cannabis business, because many companies are still forced to conduct their business in cash due to federal restrictions on cannabis.
“While legalizing recreational marijuana in more states is certainly positive news for the industry, retailers may not be fully prepared for the massive incoming flow of cash expected,” Seefried said. “With a lack of financing and banking solutions available, many challenges lie ahead for potential sellers and producers in these markets.”
Companies with exposure to those medical markets include Verano VRNOF in Arkansas and Maryland, Columbia Care CCHWF in Maryland and Missouri, and Green Thumb Industries GTBIF, GTII in Maryland, said BTIG analyst Jonathan DeCourcey.
Companies poised to benefit include MariMed Inc. MRMD and Trulieve Cannabis TCNNF, both of which operate in Maryland.
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