The head of the biggest cannabis company in the United States said a draft bill to legalize cannabis in America is a "game changer" that could spur a rise in valuations for pot firms if it gets passed into law.
On Wednesday, a group of U.S. Democratic senators led by Majority Leader Chuck Schumer unveiled a cannabis reform bill that would deschedule the drug as a controlled substance which in turn would allow pot companies to uplist onto senior stock exchanges and provide safe harbour for larger investors to invest in marijuana companies. The draft bill is open for public comment until September before a final version would be formally introduced in the U.S. Senate for a debate and ultimately, a vote.
"I think nothing has been priced in," said Boris Jordan, executive chairman of Curaleaf Holdings Inc., in an interview Wednesday.
"I think that the valuation of these companies today is based on the fact that we have two hands tied behind [our] back. Even with the spectacular growth we're seeing, virtually no institutional money participates in the U.S. [multi-state operators] at this point in time. This bill will allow them to do that."
Jordan noted that the draft legislation would amend the U.S. tax code so that pot companies would see a reduction in taxes owed to as high as 25 per cent from the current 55 per cent to 60 per cent rates, while companies will also be allowed to use banking services that were mostly out of reach due to the current illegality of the drug. He also expects a final version of the Schumer-led bill to be passed by next April.
While industry executives like Jordan state that the draft legislation is not perfect, it would ultimately slash the cost of capital for U.S. pot companies and allow them to operate on a level playing field with other U.S.-based consumer-packaged-goods companies.
"All around, it's a game changer," Jordan said. "It is literally a very, very comprehensive bill but again, certain aspects of it may get pushed out a little bit."