The legal marijuana market has transformed from a tiny niche in only a few states 10 years ago, into a booming, multibillion-dollar business that spans over nearly half the country. U.S. marijuana sales soared from just $3 billion in 2015, all the way to $33 billion in 2022, with the legal marijuana industry set to grow another 60% over the next few years.¹
The best part is that even though legal marijuana is already pulling in more revenue than Starbucks in North America, it is still very young and has miles of upside ahead as the legalization movement expands rapidly in the U.S. and beyond.
On top of that, many marijuana stocks have been hammered in 2022, alongside technology and all things growth. This means tons of cannabis stocks are trading near what could turn out to be close to rock-bottom levels.
The marijuana industry, along with stock market conditions, appear ripe for investors who can handle some risk to reap the near-term and long-term upside potential of the global legal marijuana industry that’s projected to skyrocket to $130 billion by the end of the decade.¹
Rapid U.S. Expansion
The floodgates have been kicked wide open since Colorado and Washington first legalized adult-use marijuana in 2012. As the calendar turns to 2023, recreational cannabis is legal in 21 states, alongside D.C., after Maryland and Missouri joined the ranks after the midterms.
The states vary widely in terms of geographics, demographics, population, and most crucially, politics. Adults can now walk into high-end shops and buy legal marijuana from California and Oregon all the way to Massachusetts and many states in between, including Illinois, Montana and Michigan.
On top of that, 37 states and D.C. have legalized medical cannabis. And the tides are turning quickly, as traditionally conservative states, such as Alabama and Mississippi, legalized medical cannabis within the last couple of years.
More . . .
Time to Buy Marijuana Stocks!
The floodgates are about to open. After waves of pot legalization at the state level, we could be on the verge of bipartisan legislation at the Federal level. Many U.S. marijuana companies can then list on exchanges like NYSE and Nasdaq, and the money will flow. U.S marijuana sales are predicted to skyrocket from $27 billion back in 2021 to an expected $53 billion by 2026.
Zacks recently closed trades of +39.7% and +147.0%,² and a new stock will be released Monday morning that could rival or surpass these performances.
Deadline to gain access to our Marijuana Innovators recommendations is midnight Sunday, December 4.
Catch Zacks’ live buys now >>
Huge Majority Support in a Politically Divided Country
A vast majority, 68% of U.S. adults, support legal marijuana, including 50% of Republicans, based on a Gallup poll. This is up from just 50% of the entire country back in 2013. It is worth stepping back quickly and thinking how hard it is to find any issue roughly 70% of Americans agree on.
Another poll by Data for Progress that was published at the end of November, found that 74% of likely voters back federally legalizing marijuana. Digging deeper, this includes 65% of Republicans, 76% of Independents and 81% of Democrats.
The widespread support has spurred many state and local politicians to push for marijuana legalization. Their counterparts in D.C. are starting to get the memo as well.
Multiple bills, including from GOP members of Congress, have been introduced over the last few years in D.C. to federally legalize marijuana. As investors and many others wait for Federal legalization, they should take comfort in the fact that a medical cannabis research bill just became the first-ever standalone marijuana-focused bill approved by both chambers of Congress.
U.S. legalization is occurring at something close to lightspeed, considering that politics and sweeping legal changes are required to roll out these markets. Investors will also be pleased to know that marijuana is growing outside of the U.S. as well.
Canada became the first major country to legalize recreational marijuana in 2018. Tiny European countries have legalized since then. Thailand’s legalization in 2022 could spark wider adoption in Asia. Plus, the German government is on a path toward nationwide marijuana legalization that could force other European nations to play catch up.
Different Ways to Play the Marijuana Market
Investors have a chance to invest in many different areas of the cannabis market. This includes the pure-play growers and retailers who are aiming to become household names in the industry, as they would in any other retail and consumer packaged goods segment.
There is a ton of consolidation happening in the market at the moment and a few companies are really starting to separate themselves from the pack.
Outside of the more straightforward cannabis stocks, investors have a growing assortment of areas to pick from. Hydroponics companies and high-tech farming firms play key roles in industrialized, mass-produced marijuana. On top of that, there are companies that operate on the cannabis testing side of the business, which is critical given the strict regulations and standards.
Beyond that, there are a few pharmaceuticals and biotech companies innovating within cannabis-based medicine. Two of these companies were bought by pharmaceutical giants within the last few years as the industry gains serious momentum helping treat everything from inflammation to seizures.
The Marijuana Trend Presents a Lucrative Opportunity
Cannabis stocks have certainly gone through their growing pains. But the brutal downturn for all things growth in 2022, coupled with industry consolidation, offers investors a fantastic chance to get in on a legal marijuana industry that’s already grown at an insanely rapid pace and shows few signs of slowing down.
At Zacks, we're monitoring political developments very closely as well as tracking individual stocks. We're on the brink of legalizing marijuana on the federal level, and this bipartisan push would open the floodgates. Many U.S. companies could then list on exchanges like the NYSE and the Nasdaq, and money will flow.
The trend is unstoppable. Medicinal marijuana is legal in 37 states with 21 allowing recreational use. It's already legal in Canada, and there's movement in Mexico and throughout Europe.
Our approach to this fast-emerging industry is responsible and vigilant, but we look for aggressive growth. Recently, we closed gains of +39.7% and +147.0%.²
Right now you can follow the live buys and sells inside Marijuana Innovators, and be among the first to get in on a new buy that could surpass those performances. I’ll be posting it Monday morning at 11:05 a.m. ET.
Bonus Report: And speaking of adding firepower to your portfolio, you are also invited to download our Special Report, Midterm Election Profits: 5 Stocks Set to Soar, which reveals five stocks with strong earnings outlooks that are likely to benefit from billions in government spending.
Our election reports have recommended some impressive gains. Previous versions of this report have pointed readers to stocks that have climbed as much as +71%, +83% and +185% in the months after the election.²
We can't let everyone in on our marijuana portfolio, so your chance to gain access must end at midnight this Sunday, December 4. Sorry, no extensions.
See Zacks Marijuana Innovators Trades and Midterm Election Report Now >>
Ben Rains develops strategies that enable investors to profit from the growing legal market in the U.S. and beyond. He uses his extensive experience and concentrated industry study to direct our unique portfolio service, Zacks Marijuana Innovators.
¹ Sources for marijuana industry growth estimates: MJ Biz Daily, and Research and Markets
² The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.
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