- Green Thumb Industries and Trulieve CEOs spoke at the exclusive Robin Hood Investors Conference last week.
- They discussed the generational opportunity of investing in cannabis and made predictions about the industry.
- The conference was closed to the press.
- See more stories on Insider’s business page.
Two CEOs of leading US cannabis companies spoke to an exclusive group of Wall Street’s most powerful investors last week, in a sign that institutions may be ready to back cannabis companies once federal regulations permit.
Green Thumb Industries CEO Ben Kovler and Trulieve CEO Kim Rivers spoke at JP Morgan’s Robin Hood Investors Conference, a yearly conference of investors, policymakers, and academics on June 16. GTI and Trulieve are two of the largest and best-performing US cannabis companies, known as multistate operators or MSOs. The conference is closed to the press.
“Change is happening in America. The most sophisticated investors are finally waking up to this once-in-a-lifetime opportunity,” Kovler said when reached for comment. Trulieve declined to comment.
Cannabis is federally illegal in the US, though a number of states have legalized the drug for medical and recreational use. That’s led to a crop of companies that cultivate, refine, and sell branded cannabis products in these states.
Both CEOs told the assembled group of investors that cannabis is a generational opportunity and that the industry could become a $100 billion market in the US by the end of the decade.
Companies like Trulieve and GTI are not yet able to list on major US exchanges and are forced to trade over-the-counter or on the Canadian Securities Exchange. Cannabis is federally legal in Canada, and institutional investors — many of whom were in attendance at the Robin Hood conference — aren’t able to invest in these companies despite the enormous growth potential.
Trulieve’s Rivers said she expects the demand for legal cannabis to skyrocket, likening it to investing in alcohol before the end of prohibition, according to information provided by a person in attendance. She said that companies and investors have an opportunity to build the industry from the ground up.
She predicted that in a few years, cannabis companies will have access to capital markets like any other legal industry, and the ability to borrow or raise money at regular rates. US cannabis companies are forced to pay high interest on loans as there are few banks willing to lend to the industry, though that is slowly changing.
GTI’s Kovler said that by 2025, he expects that Americans will be able to purchase and consume cannabis products in lots of different places — potentially in restaurants, bars, and grocery stores — rather than just dispensaries.
Kovler says that the US cannabis industry is around a $20 billion market, and expects that to double by 2025.
He added that over the past two years, the US cannabis industry’s market size has tripled, and he expects the industry to hit $100 billion by the end of the decade. Kovler said he’s never seen as good of an investment as the opportunity in US cannabis, as someone who had attended the Robin Hood conference in the past as a spectator.
He added that legalizing cannabis can help states dig out of pandemic-related budget deficits, help create generational wealth opportunities for minority entrepreneurs, and help combat the opioid epidemic by providing non-addictive pain treatments.
“Both Kim & Ben set the stage at the Robin Hood Conference that this is an opportunity of a generation,” Emily Paxhia, the managing partner of Poseidon Asset Management, a fund that invests in cannabis companies, told Insider. “It is an industry that is growing faster, with healthier EBITDA margins and is on path to profitability more than any other high growth consumer or wellness category.”
“This is in spite of the tremendous inefficiency of our patchwork regulations in the US, which drive fragmentation and friction at the corporate level where you would ordinarily see massive economies of scale,” she said.
Lawmakers are working on legislation that would open up capital markets to US cannabis companies as well as decriminalize cannabis federally. Until then, the majority of institutional investors will be locked out of the industry.