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Alternative Market Briefing

Teneo Capital Management sees longterm opportunities for cannabis stocks in the US

Tuesday, June 01, 2021

Bailey McCann, Opalesque New York for New Managers:

Cannabis companies have boomed in recent years as legalization efforts at the state level in the US move forward. New York and New Jersey are the most recent states to approve recreational cannabis, while still others have it in their legislative pipelines. Federal approval for cannabis is ultimately the goal, but it remains unclear when or if supporters will be able to make it happen. In the meantime, a number of Canadian cannabis companies are setting up outposts in states where it is legal - creating new opportunities for investors.

"The real opportunities for cannabis reside in the US in the near term," says Michael Murphy, portfolio manager at Teneo Capital Management. Teneo Capital Management runs a long/short fund that invests in cannabis companies. "We believe there is a wall of institutional demand that wants to invest in the space and that could happen quickly as legalization progresses," he says.

According to Murphy, producers that set up operations early on in the first states to legalize have steadily grown over time giving cannabis stocks a unique growth trajectory. If legalization is finally approved, the investors that come off the sidelines will have access to well-established companies with operations in several markets.

"These companies aren't small anymore," adds Robert Leidy, founding partner, and prin......................

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