With a potential cannabis retail market of $4 billion across eight states in the US, the sky’s the limit for Chicago-based Green Thumb Industries (CSE:GTII), says analyst Robert Fagan of GMP Securities.

On Thursday, Fagan initiated coverage of GTI with a “Buy” rating and C$18.00 target price, representing a projected return of 93 per cent at the time of publication. (All figures in US dollars unless otherwise noted.)

GTI, which began trading on the CSE on June 13, is a vertically integrated cannabis company that runs seven manufacturing facilities and has licenses for 50 retail locations in the US.

Fagan says his positive stance towards GTII is based on three themes: it has twice the state exposure than its closest peers and a production footprint roughly 4.5 times larger than its peers; the potential for revenue upside from opioid replacement programs across various states including Illinois, Pennsylvania and New York; and a fragmented market that puts GTI in a highly accretive M&A environment.

“With a presence in eight states (IL, MD, NV, MA, PA, FL, OH, and NY), the majority of which feature limited-license frameworks with medical-only access, we believe GTI is exposed to some of the industry’s most attractive markets, offering good barriers to entry and certain protections against price deflation,” says Fagan. “All told, GTI’s platform provides access to ~95 million people and an estimated retail market of ~$4.0 billion in 2020.”

“GTI offers amongst the widest range of products (300 SKUs) we’ve encountered to date in the US cannabis sector, which speaks to the significant depth and breadth of the company’s processing and manufacturing capabilities, which we believe is amongst the most advanced in the industry. We expect GTI’s strong product quality and wide offering should be an important growth driver going forward,” he says.

Fagan thinks GTI will generate EBITDA and revenue in 2018 of negative $1.3 million and $61.0 million, respectively, followed by EBTIDA and revenue in 2019 of $40.3 million and $177.5 million, respectively. In 2020, he predicts EBITDA and revenue of $148.5 million and $373.9 million, respectively.

The analyst’s target price is based on a 13.5x multiple applied to his 2020 EBTIDA forecast. GTII began trading on June 13 at C$8.21 and is currently trading at C$9.60 as of Friday afternoon.