Green Thumb Industries (GTBIF) (CSE: GTII) said a new Illinois law to allow cannabis as an alternative pain medication to opioids is expected to have a material positive effect on the legal cannabis business.
The Chicago and Vancouver-based cannabis wholesaler and retailer said the signing of the opioid replacement bill by Gov. Bruce Rauner on Tuesday and similar moves in other states signal a potential tidal wave of growth in the budding industry.
Green Thumb Industries founder and chairman Benjamin Kovler said the company is adding wholesale capacity in Illinois because the new law will "materially impact consumer access to cannabis and grow demand in the state."
Kovler did not provide any specific earnings or revenue targets on its financial performance related to the Illinois law and other measures. But he remained bullish on prospects for cannabis to combat America's opioid epidemic.
Data showing drops in opioid deaths in states with legal cannabis programs has fueled legislative and regulatory changes in Pennsylvania, New York
and Ohio -- all markets where Green Thumb Industries is currently present.
"We think the effect of this is just being learned across the country," Kovler said Tuesday on the company's first analyst call since going public in June on the Canadian Securities Exchange. The company's shares began trading on the U.S. OTC market in July.
Kovler reiterated his bullish comments on cannabis as an opioid substitute in a phone call with Real Money.
In Illinois, the new measure will allow any patient with a prescription for opioids to have access to legal cannabis. The state embraced the law after nearly 2,000 people died in 2016 from opioid overdoses.
On the analyst call, Kovler said he's working to grow market share in the U.S. cannabis business, which could be worth well into the tens of billions a year. Cannabis as a substitute for alcohol and opioids will fuel demand as the business shifts from the illegal market to the legal market, he said.
Looking back at Green Thumb's second-quarter, revenue jumped 291%, year over year, to $13.6 million, and rose 25% from the previous quarter. Second-quarter net income was $400,000, up from a loss of $1.6 million in the first quarter of 2018. Adjusted EBITDA was $500,000 in the second quarter.
During the quarter, Green Thumb added two new directors to its board. Glen T. Senk is the ex-CEO of Urban Outfitters URBN who scaled the Anthropologie retail strategy. Wes Moore is the CEO of Robin Hood, a large New York City poverty-fighting organization. Also on the personnel front, the company hired 150 people during the quarter.
As of June 30, Green Thumb generated wholesale revenue in three out of its eight markets in Illinois, Maryland and Pennsylvania. Nevada, Massachusetts, Florida and New York are in various stages of production.
Green Thumb's retail business is centered on Rise, which currently has 13 stores operating in five markets, with potential expansion for 59 stores.
Looking ahead, the company is building its presence in Florida, Massachusetts, New York and Ohio. It's applying for licenses to operate in New Jersey
and Virginia and studying new markets, including California.