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4 Best Marijuana Stocks to Play the Green Rush


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Whether its eating a gooey, chocolatey brownie or taking a few hits off a freshly rolled joint, it's common knowledge that a lot of people like to get high. Many investors, however, have yet to "light up." Some hesitate from adding marijuana stocks to their portfolio on apprehensions that pot companies are involved in scams or that it's still deemed illegal by the federal government.

Let's not forget that this market has turned into a big money-maker. Not only is it one of the fastest growing industries in the U.S., but it also received a major boost after the 2018 midterm elections, where more states declared marijuana legal for recreational and medical purposes.

Marijuana sales have the potential to greatly add to the government's treasury as well, and it will be immensely helpful in medical fields. Nowadays, it is also easier for banks for provide services for legal marijuana businesses. Banking on this optimism, we have selected the largest, most stable, and legal cannabis related companies that will rake in high returns for you.

Focus on Legalization

When Americans headed to the polls during the last midterm election, weed was a big winner. Missouri and Utah legalized cannabis for medical use, while Michigan voted to legalize the recreational use of it. Nationwide, 33 states total have now legalized medical marijuana, and 10 states (plus Washington, D.C.) have legalized marijuana for recreational use.

In fact, the number of states legalizing marijuana has been rising at a steady pace since 2000. Prior to that year, only three states-California, Maine, and Oregon-had made medical cannabis legal. Now, a good portion of the U.S. population live in states where some form of marijuana use is legal.

Tax Revenue to Improve

Sales from legalizing marijuana could help significantly boost the government's tax revenues. In states like Colorado and Washington, the government collected roughly $70 million in tax revenue from recreational marijuana sales back in 2014, according to CNN and Time Magazine .

The legal marijuana industry is growing at a rapid pace, and gained 25% to $5.7 billion in 2015, making it one of the fastest-paced industries in the U.S., according to ArcView Group. The market research firm is also forecasting that global spending on legal cannabis is expected to grow 230% to $32 billion in 2020 compared to $9.5 billion in 2017.

This research projects that a majority of this growth (over $23 billion) will come from the United States, but this assumes that more states will vote in favor of legalization and business interest is sparked throughout more industries.

4 Marijuana Stocks to Consider

Given such bullish trends, the movement to legalize marijuana has definitely picked up steam. Below are four cannabis-linked stocks that are poised to benefit from legalization.

Together with its subsidiaries, GW Pharmaceuticals GWPH focuses on discovering, developing, and commercializing cannabis prescription medicines. In particular, its cannabidiol drug Epidiolex has been very successful in trials and studies in treating seizures associated with Dravet syndrome, a rare form of epilepsy that occurs in infants. Epidiolex was approved by the FDA in 2018, and is the first drug to be approved "that contains a purified drug substance derived from marijuana."

Innovative Industrial Properties IIPR is a REIT that went public in late 2016, and currently has a market cap of over $453 million. While there have been few other marijuana-related companies that have entered the market, IIPR is entirely different: it's focusing on the growth operation, specifically property management, and plans to buy buildings and lease them to growers of medical marijuana. IIPR has surged over 150% over the past one-year period.

You could also look to beverage giant Constellation Brands STZ , who is the third-largest beer maker in the U.S. and is best known for beer brands like Corona and Modelo. Recently, Constellation moved into the cannabis market by investing $4 billion in big-time Canadian pot player Canopy Growth CGC . Together, the two leaders plan to introduce a variety of cannabis-infused beverages in Canada, with hopes to enter the U.S. market when regulations allow.

And then there's Cronos Group CRON , which invests in Canadian-based pot companies that are involved in the country's medical marijuana industry. The company has three core assets: Peace Naturals; Original BC; and Whistler Medical Marijuana Company. All three assets produce and sell medical cannabis, while WMMC and Peace Naturals also focus on cannabis oils. Tobacco giant Altria MO announced in December that it is buying a 45% stake in Cronos, a deal that will give the company a big partner and cash to expand its operations.

Bottom Line

There is no doubt about the profit potential in weed. The industry is moving at a rapid pace, with new developments in growing technology and medical treatments popping up quickly and consistently.

While still not federally legal, the idea of marijuana legalization has come a long way in the U.S. over the past few decades. And now that Canada legalized recreational marijuana, the push to do the same here in the U.S. is growing stronger and stronger.

This desire for legalization is certainly having an impact on the whole marijuana industry. Investors used to have the slimmest of pickings to choose from, but now, the industry offers growth, legitimacy, and the potential for big profits.

Zacks 2019 Marijuana Investors' Summit: In addition to the companies you learned about above, we invite you to learn more about investing in pot stocks. On Tuesday, February 26, our team of experts will reveal what we believe is the single best way to make money from legal marijuana. Register Now for Free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Constellation Brands Inc (STZ): Free Stock Analysis Report

GW Pharmaceuticals PLC (GWPH): Free Stock Analysis Report

Altria Group, Inc. (MO): Free Stock Analysis Report

Innovative Industrial Properties, Inc. (IIPR): Free Stock Analysis Report

Canopy Growth Corporation (CGC): Free Stock Analysis Report

Cronos Group Inc. (CRON): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Stocks
Referenced Symbols: STZ , GWPH , MO , IIPR , CGC



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