Get Ready for a Green Rush in the Second Half: 3 Must Buys

Zacks Investment Research | Jul 06, 2020 06:33AM ET

It has been a rough year so far for marijuana stocks. In fact, in the trailing 15 months, a bulk of marijuana stocks lost 50% value, if not more. Marijuana stocks took a hit as the global economy came to a grinding halt amid the coronavirus pandemic.

But things are looking up for the cannabis industry in the second half of the year. The pandemic-hit market is slowly recovering, helping marijuana stock make a comeback. And whatever be the outcome of the upcoming U.S. presidential election, the legalization of weed at state level is not in jeopardy.

While dozens of states have proposed to legalize both medical and recreational marijuana, the New Jersey, Arizona, Mississippi and South Dakota states are expected to give the green signal as early as November.

Last year, New Jersey’s two legislative houses unanimously voted in favor of legalizing recreational marijuana in particular, in November. Monmouth University, in April, 61% of New Jersey voters were in favor of adult-use of cannabis. Similarly, a recent poll by Marijuana Moment showed that a staggering 65% of Arizona voters favor legalization of adult usage of marijuana, which is up from 54% support garnered last year.

Traditionally a more conservative state, Mississippi is now more likely to support the legalization of cannabis, in any form. In fact, when it comes to medical marijuana, nearly 67% of respondents have favored it, while 24% opposed per a survey conducted by Millsaps College and Chism Strategies at the beginning of this year.

Meanwhile, South Dakota also appears to be in favor of legalizing marijuana in some form. It’s because the state is one of the first to present a medical marijuana measure and a recreational initiative to voters at the same time.

By the way, racial injustice following the death of George Floyd has come into the forefront and experts believe that unequal enforcement of drug laws is an example of systemic racism. Thus, the need for marijuana decriminalization has increased by leaps and bounds. The Ohio Senate, in the meantime, approved a bill to double the amount of marijuana that is decriminalized in the state and at the same time lessen criminal penalties for many other drug-related crimes.

Last but not the least, decline in consumer outlays and mass layoffs amid the pandemic have resulted in less cash flow into federal, state and local tax coffers. However, legalizing marijuana could be a new source of employment and a way to increase cash flow for local communities. Thus, the requirement for marijuana legalization is now more than ever.

Talking about marijuana legalization, Canada has also legalized recreational marijuana in particular, with a number of dispensaries obtaining the permit to sell legalized cannabis. At the same time, mergers and acquisitions between large beverage, tobacco, pharma and cannabis companies should certainly help the weed market grow.

3 Marijuana Stocks to Play the Green Rush in 2H20

Like the rest of the broader market, the cannabis industry wasn’t immune to coronavirus. But it doesn’t mean it’s time to abandon pot stocks altogether.

With more states both in the United States and Canada expected to legalize marijuana, leading to more employment opportunities and calls for marijuana decriminalization growing louder, the cannabis industry is poised to bounce back in the second half. And these three marijuana related stocks are worth a buy among the industry –

First on the list is Scotts Miracle-Gro Zacks Investment Research

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Written By: Zacks Investment Research

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