Marijuana transformed at lightning-fast speeds from a mostly underground black market into a dynamic, booming, $20 billion a year industry full of public companies. And the best part about investing in legal marijuana right now is that we are still in the very early days.
The legal tides have already changed dramatically in a short time and we are on the verge of a truly seismic shift that will only happen once. Heading into 2022, there are multiple marijuana legalization bills being debated and reworked in Washington, D.C.
The U.S. is poised to introduce wide-ranging federal cannabis legalization in the near future, on the back of overwhelming bipartisan support. When this happens, the entire industry will change overnight and current projections that call for global marijuana sales reach to $90 billion by 2026 might look super conservative.¹
Legalization is Gaining Steam
Only a decade ago, recreational pot was totally illegal in the U.S. By the end of 2021, a total of 18 states and Washington, D.C. had legalized adult-use marijuana. Meanwhile, the number of legal medical cannabis states is fast-approaching 40.
On top of that, Canada legalized recreational marijuana in 2018, becoming the first major economy to do so. Since then, Mexico has made a series of legal changes that will soon see it operate a large legal pot market. Across the Atlantic, multiple European countries are prepared to legalize nationally.
The tiny European nations of Malta and Luxembourg legalized weed near the end of 2021. More importantly, Germany is reportedly ready to legalize marijuana under its new coalition government in the early months of 2022. Italy and a few other countries are showing solid potential to join the legal ranks in the near future. And with every new market, new marijuana firms are sure to emerge, as the dollars flow.
Huge Bipartisan Support
Global marijuana sales soared roughly 50% to a whopping $31 billion in 2021, based on some recent data, and the U.S. is by far the largest legal cannabis market. The expansion was driven by continued growth in legacy states such as Colorado and California, alongside a wave of relative newbies ranging from Illinois to Arizona. And more states are set to climb on the legal cannabis train in 2022.
More importantly, multiple bills are under debate in Washington to federally legalize marijuana. Furthermore, Republicans, the party traditionally opposed to weed, are in the midst of a dramatic, paradigm-shifting transformation at both the state and national level.
Multiple GOP lawmakers are pushing for marijuana legalization in states like Ohio and Pennsylvania. On top of that, the first major Republican-led federal legalization effort was introduced in November. The bill grabbed a huge amount of national media attention and could gain steam as more Republicans come on board.
The growing number of federal legalization efforts on both sides of the aisle make sense given mounting public support. A total of 68% of U.S. adults are now in favor of legal marijuana, including 50% of Republicans. This is up from just 50% of the entire country as recently as 2013. And just think how hard it is to find any issue nearly 70% of Americans agree on these days.
Continued . . .
Time to Buy Marijuana Stocks!
The floodgates are about to open. After waves of pot legalization at the state level, we’re 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. Global sales were already $20.5 billion back in 2020, and they’re expected to skyrocket to $90.4 billion by 2026.
Zacks recently closed trades of +39.7%, +94.5%, even +147.0% in as little as 4½ months.² 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 26.
Catch Zacks’ live buys now >>
Not Your Parents’ Pot
Smoking dried marijuana has historically been the most common way to consume weed, and it’s still widely popular. Yet, as cannabis emerged from the shadows, people and companies refined existing methods and invented various novel ways to use the plant. In doing so, they greatly expanded their potential clientele, while also raising price points and margins.
Marijuana scientists and industry professionals spent years figuring out how to precisely extract THC and non-psychoactive CBD from cannabis plants. These efforts birthed vaporized offerings, edibles, oils, topical creams, beverages, and other new-age marijuana products.
Marijuana edibles have come a long way since the stereotypical pot brownies. Today, they come in all shapes and sizes, from gummies in every imaginable flavor to chocolates, mints, spreads such as butter, and beyond. Meanwhile, consumers can buy THC-infused sodas, teas, and much more.
The non-smoking space provides consumers comfortable, effective, and extremely discreet alternatives to traditional pot that allow users to know exactly how much they are consuming. This also grants investors ample growth runway since edibles and other offerings cater to people who want THC, along with those looking for non-psychoactive CBD products, which have exploded in popularity as well.
Logic suggests tons of potential recreational users might not want to smoke anything. And some recent growth numbers back that up. Edibles showcased massive expansion in 2020 (the most recent available data) in the largest U.S. recreational market, according to California-based marijuana delivery company Eaze.
Edibles ended the year as the #1 category on its platform, grabbing 22% of all sales, with edibles ranked as the most popular product line in San Francisco, Los Angeles, and San Diego ahead of flower and vapes.
In fact, marijuana’s evolution beyond smoking joints inspired international alcoholic beverage firms to buy pot companies because of the potential crossover, promotions, and other synergies. On the flip side, the growth of legal marijuana has propelled publicly traded Canadian marijuana growers to expand into alcohol, sports drinks, and other consumer products.
Meanwhile, the expansion potential for edibles and non-smoking marijuana products on the medical front is largely untapped. Canada didn’t even legalize cannabis edibles until a year after it first rolled out recreational marijuana in 2018.
One of the country’s biggest pure-play pot companies only launched its first medical cannabis edibles in August of 2021. As a whole, the edibles and non-smoking arenas are the logical endgame for the entire medical marijuana world because of the ability to consume precise amounts, while not inhaling smoke.
Due to the current legal standing, only Canadian pot growers can list on major U.S. exchanges, with huge American companies left to trade over the counter, if at all. Federal legalization will transform the already-massive industry in the blink of an eye.
The move will allow U.S. growers to list on the NYSE and the Nasdaq. This will then prompt billions of dollars to start flowing in from institutional investors and other large money managers who have stayed away because of the legal grey area. Legalization is also sure to spur a wave of major mergers and acquisitions, as companies aim to capture more market share through consolidation.
U.S. cannabis growers will add to the already constantly-expanding number of pure-play pot stocks to invest in right now. And the Canadian companies have already completed creative deals that provide them instant access to the U.S. market upon federal legalization.
Potential investors should also be excited to know that nearly all of the currently-public pure-play marijuana stocks are trading near all-time lows heading into the new year. The entire industry was beaten down in 2021, along with other former covid high-flyers and growth stocks.
The downturn recalibrated countless marijuana stocks to enticing levels, especially considering many are projected to post 100% or higher revenue growth in 2022. And that’s not even taking into account the potential for U.S. legalization and beyond.
There will, of course, be winners and losers because pure-play pot stocks operate in a hyper-competitive space akin to other consumer packaged goods where marketing, branding, and packaging are paramount. Luckily, the timing is ideal for investors to cash in on the companies that could become the Coca-Cola or Starbucks of marijuana.
Easy Way to Pursue Big Profits
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 NYSE and Nasdaq, and money will flow.
The trend is unstoppable. Medicinal marijuana is already legal in 36 states with 18 allowing recreational use. It’s already legal in Canada and there’s movement in Mexico and throughout Europe.
As mentioned earlier, global revenue for legal marijuana is expected to explode from $20.5 billion in 2020 to $90.4 billion by 2026.
Plus, most marijuana stocks are still trading at big discounts. For investors, this presents a massive opportunity – what are you waiting for?
Our approach to this fast-emerging industry is responsible and vigilant, but we look for aggressive growth. Recently, we closed gains of +39.7%, +94.5%, even +147.0% in as little as 4-1/2 months.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’m posting it Monday morning at 11:05 am ET.
Bonus Report: And speaking of industries with explosive growth potential, when you check our marijuana recommendations you are also invited to download Zacks’ new Special Report, One Semiconductor Stock Stands to Gain the Most. From 35 semiconductor stocks, you can get an early look at Zacks’ top pick during today’s chip shortage crisis.
We can’t let everyone in on our marijuana portfolio, so your chance to gain access must end at midnight this Sunday, December 26. Sorry, no extensions.
See Zacks’ Marijuana Innovators Trades and Bonus Semiconductor 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 Source for marijuana industry growth estimate: 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.
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
To read this article on Zacks.com click here.
Zacks Investment Research