How New Yorkers could send ASX cannabis shares higher

Investing in ASX cannabis shares may not be for everyone. But the best placed pot stocks have delivered solid share price gains.

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It wasn’t too long ago that the very idea of ASX cannabis shares was laughable.

Aside from a few smoky hash bars in the Netherlands, cannabis use was prosecuted vigorously across most countries. While billions of dollars were earned in global black markets, ASX investors had no means to tap into the underground industry.

But the 21st century has brought a lot of change, albeit slowly.

Today a growing cadre of nations have legalised medicinal cannabis use, including Australia. While recreational use remains illegal in Australia, the list of nations (and states within the United States) giving the green light for recreational pot smoking also grows inexorably.

New York’s legal cannabis bill eyes $460 million tax revenue

In the US, New York looks to become the latest state seeking to capitalise on the tax benefits of legalised cannabis use while lightening the burden on its legal system.

The state’s Legislature is scheduled to vote on legalising the sale and use of cannabis this week.

As Bloomberg reports:

The expansive bill would allow dispensaries to open as soon as next year, and includes special cannabis taxes, permission for home growers to cultivate their own marijuana, and as well as limits on the number of licenses that can go to large corporations.

According to New York’s governor Andrew Cuomo, legalising the sale of marijuana could bring in US$350 million (AU$460 million) in taxes every year. He also said it might create 30,000–60,000 new jobs.

The proposed legislation will also see people previously convicted for cannabis crimes that will no longer be illegal have their convictions expunged.

Two leading ASX cannabis shares

New York’s move on legal cannabis alone is unlikely to have an immediate, large impact on most ASX cannabis shares.

But for longer-term investors, the state’s move highlights the continuing trend towards global legalisation. And with that trend, the best-placed ASX cannabis shares could see their share prices run far higher.

There are a growing number of cannabis shares on the ASX. For the purposes of this article, we’ll look at 2.

First up, Creso Pharma Ltd (ASX: CPH). The company develops pharmaceutical-grade cannabis treatments for human and animal healthcare.

Creso Pharma has a market cap of $220 million. The Creso share price is down 10% since Friday after the company announced the intent for an $18 million capital raising at 19 cents per share. Despite that fall, Creso shares are still trading at 22 cents per share at the time of writing.

Over the past 12 months, the Creso Pharma share price has soared 275%. That dwarfs the 36% gain posted by the All Ordinaries Index (ASX: XAO). So far in 2021, Creso shares are up 25%.

The second ASX cannabis share we’ll look at today is Althea Group Holdings Ltd (ASX: AGH). With a market cap of $139 million, the company produces and supplies pharmaceutical-grade medicinal cannabis in Australia and the United Kingdom.

Down 0.96% today, despite announcing additions to its medicinal cannabis product line, the Althea share price has also outperformed over the past 12 months, up 115%.

Year-to-date, Althea shares have gained 17%, compared to a 1% gain on the All Ords.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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