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 2016 election, where marijuana was declared legal for recreational and medical purposes in seven additional states.

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 presidential election, nine states-Arizona, California, Maine, Massachusetts, Nevada, Arkansas, Florida, and North Dakota-were set to vote on medical and recreational cannabis initiatives. Gallup polls ahead of the election showed that voters backing full legalization soared from a meager 12% in 1969 to 60% in recent times.

When the results came in, Maine, California, Massachusetts, and Nevada all passed measures to legalize recreational marijuana use, while Arizona's highly contested Proposition 205 recreational marijuana measure failed. Florida, North Dakota, and Arkansas all voted to legalize medical marijuana usage, and Montana voted to expand the state's medical marijuana laws.

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. In the last six years, however, around 15 states have officially authorized medical marijuana, and 25 states have adopted medical marijuana programs, including the District of Columbia. Just last year, medical marijuana was legalized in Ohio and Pennsylvania.

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 added that the industry was expected to grow by $7.1 billion last year. Financial behemoth Bank of American BAC even said that the U.S. marijuana market could reach a net worth of $30 billion annually by 2020, almost three times the yearly revenue of the National Football League.

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.

AbbVie Inc. ABBV is a biopharmaceutical company that already has a cannabis-based drug approved by the FDA. Called Marinol, the drug relieves nausea and vomiting in patients undergoing chemotherapy; it is also used for AIDS patients who have lost their appetites.

Corbus Pharmaceuticals Inc. CRBP , a biopharmaceutical company, focuses on the development and commercialization of therapeutics to treat life threatening inflammatory-fibrotic diseases. Its key product, the oral endocannabinoid-memetic drug Resunab, helps treat systemic sclerosis, a chronic autoimmune rheumatic disease.

Another leader in the industry is Insys Therapeutics Inc. INSY , known for developing and commercializing pharmaceutical products that target the unmet needs of cancer patients. Its first synthetic cannabinoid candidate, Syndros, was approved by the FDA as a treatment for anorexia associated with weight loss in AIDS patients, and nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional treatments.

Zynerba Pharmaceuticals ZYNE is a specialty pharmaceutical company that focuses on developing and commercializing proprietary synthetic cannabinoid therapeutics. It has developed a candidate temporarily named ZYN002, which is in clinical trials for the treatment of refractory epilepsy, Fragile X syndrome, and osteoarthritis.

Investors could also consider looking at the industry's first ETF from Horizons ETFs Management Inc., which is based in Canada. Horizons Medical Marijuana Life Sciences ETF trades on the Toronto Stock Exchange under the ticker 'HMMJ,' but provides exposure to North American-listed stocks that are involved with medical marijuana bioengineering and production. HMMJ has surged over 142% in the past one year.

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.

But it's important to recognize that many of these cannabis-based treatments are still in their trial stages, and have yet to translate to financial success for many of the biopharmaceutical companies listed above.

These therapies show great promise, but the future of marijuana in the medical and biopharma industries depends, of course, on legalization. If marijuana is ever rescheduled-check out how the United States schedules, or classifies, controlled substances here -and deemed to have medical benefits, these companies could finally see their synthetic or organic cannabis-based treatments enter the market, and most importantly, their bottom lines benefit.

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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.

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

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