Cannabis company iAnthus Capital Holdings (iAnthus Capital Holdings Stock Quote, Chart, News: CSE:IAN) has announced a deal for its affiliate entity, Mayflower Medicinals, to open a medical marijuana dispensary in Lowell, Massachusetts, potentially representing the company’s third dispensary in the state. Analyst Russell Stanley of Echelon Wealth Partners says he views the announcement positively. In an update to clients on Tuesday, Stanley continues to rate iAnthus Capital a “Speculative Buy” with a 12-month target price of C$7.50.

Owner and operator of licensed cannabis cultivation, processing and dispensary facilities across six US states, iAnthus Capital says that if granted, the new Host Community Agreement (HCA) in Lowell would represent one of only two operating dispensaries in Lowell.

“The Commonwealth of Massachusetts and the City of Lowell have abided by high program standards that are firmly focused on patient care and regulatory compliance,” said John Henderson, Chief Development Officer of iAnthus, in a statement. “Mayflower is honoured to have successfully completed its host community agreement with Lowell, which adds significant value to the project by documenting a supportive relationship between the City and the development of the Registered Marijuana Dispensary site.”

Stanley says that the need to enter into HCAs is a real entry barrier in Massachusetts, a state where more than half of municipalities have banned cannabis dispensaries, and thus, iAnthus Capital’s HCA is “meaningful value creation.”

“As of this morning, US-operating cannabis companies trade at approximately 12.1x EV/C2019E EBITDA, representing a 42 per cent discount to the 20.8x multiple that Canadian operators trade,” says the analyst. “We attribute this multiple gap to the fact that cannabis is still federally illegal in the United States. The STATES Act would ensure that individual states could establish their own rules/regulations with respect to cannabis, free from federal interference. We therefore expect the multiple gap to close over time, which should benefit IAN investors.”

For IAN, Stanley predicts 2018 revenue and Adj. EBITDA of $15.4 million and negative $10.3 million, respectively, and 2019 revenue and Adj. EBITDA of $115.5 million and $33.9 million, respectively. (All figures in US dollars unless noted otherwise.)

The analyst’s C$7.50 target represents a projected return of 23 per cent at the time of publication.