Voters Spoke and the Winner Is Cannabis

In a divisive political season, one sector that crossed party lines was support for cannabis. Some 70% of the U.S. population now lives in states where marijuana is legal for either medicinal or recreational purposes. Several leading advisors and contributors to MoneyShow.com highlight some top choices in the growing cannabis sector. Sean Brodrick, WealthWave In the recent election, a green wave advanced cannabis legalization across America. And that's just one of the forces powering up pot stocks right now. Voters in New Jersey, Arizona, Montana and South Dakota all legalized recreational cannabis. South Dakota also approved a medicinal marijuana program on top of recreational. Meanwhile, Mississippi voters approved a purely medicinal marketplace. A total of 15 states have now legalized adult-use, recreational marijuana. Add in those states that allow medical marijuana use, and that's a total of 36 states with some form of legal marijuana. After years of investment, more and more U.S. cannabis multi-state operators are edging toward profitability. The better ones are already there. Here are some examples. Grow Generation Corp. is a specialty garden center -- catering to the pot-growing crowd -- with 31 locations across 11 U.S. states. The company recently released their third-quarter earnings. Revenues rose 153% to $55 million. Earnings are projected to rise 229% this year and another 149% next year. Green Thumb Industries Inc. is headquartered in Chicago and operates in 12 states. It just reported a tremendous quarter with revenue increasing 131% to $157.1 million. Green Thumb should swing to a profit this year and profits are projected to catapult 805% in 2021. TerrAscend Corp. has vertically integrated operations in Canada, as well as Pennsylvania, California and New Jersey. It is forecast to lose money this year, then make a huge swing to profitability next year. Then again, earnings estimates for the current quarter have ratcheted up a whopping 89% in the past four weeks, so maybe it will get to profitability sooner than later. We've already had 50%+ gains on these stocks. And you know what? I think these stocks are going a lot higher from here. They're riding the great green wave. Grab a board and go along for the ride. Ryan Irvine, Internet Wealth Builder Trulieve Cannabis Corp. is a vertically integrated seed-to-sale company. It is the first and largest fully licensed medical cannabis company in Florida, owning over 50% of the market. The company cultivates and produces all of its products in-house and distributes them to Trulieve branded stores (dispensaries) throughout the state, as well as directly to patients via home delivery. Trulieve also has operations in California, Massachusetts, and Connecticut. Trulieve is a successful cannabis company, operating in highly regulated markets. That requires expertise in cultivation, manufacturing, retail, and logistics. The company has developed proficiencies in each of these functions and is committed to utilizing predictive analytics to stay abreast of sales trends, patient demographics, and evolving demand. In states that require cannabis companies to be vertically integrated, ownership of the entire supply chain mitigates third-party risks and allows Trulieve to completely control product quality and brand experience. This results in high patient retention and brand loyalty. Revenue has increased quarter over quarter, driven by Trulieve's increased customer base and continued dispensary openings. After a busy third quarter, Trulieve had 68 dispensaries nationwide and 66 in its home state of Florida. In September, Trulieve announced that it has entered into definitive agreements to acquire cultivator and producer PurePenn LLC and Pioneer Leasing & Consulting LLC as well as dispensary operator Keystone Relief Centers LLC, doing business as Solevo Wellness. This deal expands Trulieve's cultivation footprint with the addition of one of Pennsylvania's leading growers and producers. As well, it adds three fully operational dispensaries in premier Pittsburgh-area locations to Trulieve's rapidly growing retail footprint of 60 dispensaries nationally. As an emerging segment that is subject to significant regulatory risk, we consider cannabis-related stocks to hold a higher-than-average level of risk. Investments in this space are appropriate for investors with a higher tolerance for risk. Mike Larson, Safe Money Report There's not a lot Americans agree on these days. But the last few election cycles prove we're mostly in favor of legalizing cannabis use. And that opens up a significant income and profit opportunity for you. Amid the noise of the presidential election, ballot measures focused on marijuana usage passed in five states, from blue New Jersey in the East to red Montana in the West. Voters clearly believe that the tax revenue, as well as the medical and criminal justice advantages of legalization, offset potential downsides. Rather than make a value judgment, my focus is on capitalizing on the legalization trend in a Safe Money fashion. My recommendation? Buy Innovative Industrial Properties . IIPR is a unique real estate investment trust, or REIT, that owns and leases back industrial and greenhouse buildings to legal and state-licensed growers of medical-grade cannabis. As of October, it owned 63 properties in 16 states, with roughly 5 million square feet of rentable space already available or under development. The average lease was for more than 16 years, and roughly 99% of its space was rented. In the second quarter, adjusted funds from operations (AFFO, a REIT industry benchmark similar to earnings for traditional corporations) jumped to $21 million, or $1.19 per share. IIPR recently declared a third quarter dividend of $1.17 per share. That was up 10% from the second quarter and a hefty 50% from year-ago levels. Bottom line? With a 2.5% yield, Innovative Industrial looks like a solid play for our Dynamic Income model portfolio. Mark Skousen, Fast Money Alert During his campaign, Joe Biden proposed the decriminalization of cannabis on a federal level. Also, in several state elections, voters overwhelmingly moved toward legalizing cannabis. This is a welcome trend, in our opinion, not because we advocate the use of drugs (we do not), but because we advocate the freedom for a citizen to make choices as long as those choices do not impinge upon another citizen's freedom. This is what liberty means, in the real world, and we are champions of liberty. We also are champions of making money with the right stocks and options in this service and making it fast by taking advantage of where the fast money is headed. Cannabis stocks could be at the beginning of a big move higher. Our favorite cannabis play here at this juncture is Canopy Growth Corporation . The Canadian company has support from and is partially owned by beverage giant Constellation Brands . In fact, Constellation upped its stake in CGC in May 2020 after its initial investment in 2017, but that's just one thing to like about it. Another thing to like is Canopy Growth's recent earnings report, where the company posted a smaller quarterly loss, lower production costs and more demand from what it said was people turning to cannabis to cope with the coronavirus lockdowns. More importantly, Canopy's CEO David Klein said that he expects the company, which is the world's largest pot producer, to become profitable in fiscal 2022. Wall Street likes this message, as CGC recently hit a new 52-week high. Still, the stock has plenty of room to move up to its multi-year high in late 2018. Given the political tailwinds at its back, and the strong market leadership in CGC, now is the time to get back on the cannabis trail with a stock that represents a victory for liberty. Bob Ciura, Sure Dividend Scotts Miracle-Gro is a strong business with significant competitive advantages; it is also an indirect play on the marijuana market. SMG manufactures lawn and garden care products. Its family of brands includes Scotts, Miracle-Gro, Ortho, and more. Not only that, the company owns a minority interest in TruGreen, the largest residential lawn care service business, and in Bonnie Plants, the largest retail marketer of edible gardening plants. SMG also has a subsidiary, The Hawthorne Gardening Company, which services the hydroponic growth segment. These brands lead their respective categories, and SMG has the financial strength to advertise its brands to retain their leadership positions. Consumers remain willing and able to spend more on their lawns and gardens. If the housing market does not enter a downturn over the next several years, the stock has a positive growth outlook going forward. The company recently wrapped up its fiscal year, and had an outstanding performance for the year. The core U.S. Consumer segment grew sales by 24% for the fiscal year. Adjusted earnings per share of $7.24 for the year represented a 62% year-over-year increase. Separately, Hawthorne sales soared 68% in the most recent quarter, and 61% for the full fiscal year, making the stock a stealth play on the emerging growth story of marijuana. Earlier this year, the company raised its regular dividend by 7%, and also approved a special dividend of $5 per share. The stock has a dividend yield of 1.5%. Scotts Miracle-Gro is benefiting from the resilience of the U.S. housing market and the growing demand for indoor growing products.

Voters Spoke and the Winner Is Cannabis

A 'green wave' has advanced cannabis legalization across America. And that's just one of the forces powering up pot stocks right now.

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