Creso Pharma Ltd (ASX:CPH) (OTCMKTS:COPHF) (FRA:1X8) has welcomed recent news of the US Democratic Party winning the balance of power in the US Senate – an outcome which increases the likelihood of the decriminalisation of cannabis and passing of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act.
The MORE Act aims to remove cannabis from the US Controlled Substances Act and aims to erase certain federal convictions and essentially decriminalise cannabis for the first time on a national level.
This bill has already passed in the lower chamber (228 to 164) on Friday, December 4, 2020, and will now move to the Democratic-controlled senate.
The company is well-positioned to benefit from potential legislative change with existing operations in North America allowing easy access to world’s largest cannabis market.
“Historic moment for cannabis industry”
The MORE Act is expected to encourage investors and larger corporate entities that have previously been hesitant to become involved in the US cannabis industry due to federal prohibition, to drive the cannabis industry forward in the USA.
Creso Pharma non-executive chairman Adam Blumenthal said: “The recent election result is a historic moment for the cannabis industry in the USA and these developments leave Creso very well placed to capitalise, should cannabis ultimately be decriminalised in the US through the passing of the MORE Act.
“Importantly, the decision reflects the changing sentiment towards cannabis and its CBD derived products in the USA.”
Well-placed to meet demand
The US cannabis market is estimated to be worth US$130 billion by 2024 and Creso is exploring several near-term opportunities upon this US federal legislation occurring.
The company’s fully licensed 24,000 square foot cultivation growing facility, Mernova, is only 220 miles from the US border in an ideal location to be able to cater to the Canadian and US market.
Creso Pharma is confident that Mernova could scale up operations to meet potential demand from the US market.
Blumenthal said: “Creso has established distribution footprints in place, as well as an established product suite that it is able to quickly rolled out to satisfy large unmet demand from US customers.
“Our proximity to the US, through our wholly-owned subsidiary Mernova, provides a significant advantage for the company and we look forward to any potential legislative changes that will unlock the US market.”
Notably, as a listed vehicle with access to capital, Creso is also an attractive partner for merger and acquisition opportunities.