Cannabis Industry To Scale New Highs Amid Legalization Woes

Legalization of cannabis is the most discussed topic at present. The move is likely to boost the cannabis market as well as increase its popularity and distribution over the next few years. However, concerns over legalization persist.

Research reveals that the cannabis industry in the United States is slated to rise at a double-digit clip. Per New Frontier Data, total legal cannabis sales in the states that have legalized cannabis is expected to witness growth at 14% compound annual growth rate (CAGR) over the next six years and reach $30 billion by 2025.

The report shows that there is immense potential in the untapped legal cannabis industry. While annual revenues from medical cannabis is expected to grow at a 17% CAGR through 2025, sales from adult-use are forecast to reach $16.6 billion, growing at a CAGR of 16%. Therefore, the hemp stocks likely to benefit from legalization.

Currently, medical use of cannabis is legal in 33 states. Moreover, 11 states as well as Washington DC have legalized its recreational use.

President Trump has reiterated that his administration will enable the states to legalize the use of cannabis. Further legalization of cannabis is likely to drive its commercial distribution and boost growth of companies operating in this space, including Aurora Cannabis Inc. (TSX:ACB) , Cronos Group Inc. (NASDAQ:CRON) and Canopy Growth Corporation (NYSE:CGC) . The companies have a combined market cap of around $17 billion.

Our 3 Top Picks

Given the significant growth opportunities in the cannabis market over the next few years, we have short-listed some top-ranked players in the space. These companies are likely to benefit from positive developments in the cannabis industry. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

GW Pharmaceuticals plc (NASDAQ:GWPH) discovers, develops and commercializes novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas.

The company has a market cap of roughly $3.9 billion and sports a Zacks Rank #1. The Zacks Consensus Estimate for the current year has moved up 91.1% in the past 60 days. The company’s shares have also rallied 32.3% year to date.

The Scotts Miracle-Gro Company (NYSE:SMG) is one of the largest marketers of branded consumer products for lawn as well as garden care in the world. Its fully-owned subsidiary, Hawthorne Gardening Company, is a leading provider of lighting, nutrients and other materials used in the hydroponic growing segment.

The company has a market cap of $5.6 billion and also flaunts a Zacks Rank #1. The Zacks Consensus Estimate for the current fiscal has moved up 3.9% in the past 60 days. The company’s shares have surged 63% year to date.

Innovative Industrial Properties, Inc. (NYSE:IIPR) is focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities.

The company has a market cap of around $1.1 billion and carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the current year has moved up 2% in the past 60 days. The company’s shares have skyrocketed 114.4% year to date.

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GW Pharmaceuticals PLC (GWPH): Free Stock Analysis Report

The Scotts Miracle-Gro Company (SMG): Free Stock Analysis Report

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

Aurora Cannabis Inc. (ACB): Free Stock Analysis Report

Canopy Growth Corporation (CGC): Free Stock Analysis Report

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

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