While the vitriolic political matrix clashes red versus blue, we should actually talk about another color: green. That’s right! According to Barron’s, marijuana is on the ballot in four states. Another six will vote for governors that are either pro or anti-weed. Naturally, this has significant implications for marijuana stocks.
Of course, cannabis-based investments made a huge splash over the late summer months. Favorable legislation stateside and in Canada boosted marijuana stocks like Tilray (NASDAQ:TLRY) into the stratosphere. However, October has not been a kind month for the sector, and many high-flyers came down to earth.
That has many weed bears wagging their fingers, along with the requisite smug expression. Yet very few sectors have survived October’s broader market onslaught with their valuations intact. While the pain is extremely pronounced for pot stocks, I believe the political environment presents high-risk/high-reward contrarian opportunities.
Along with cannabis-based issues, multiple electorates will vote on ancillary criminal-justice propositions. Some states like Louisiana have antiquated, and overtly-racist legislation designed to demographically penalize minority communities. Voters in affected states now have the opportunity to bring sanity and rationality towards marijuana-related offenses.
All this is a net positive for marijuana stocks. The legislative momentum confirms what the Pew Research Center has consistently demonstrated: the majority of Americans today favor marijuana legalization. Not only that, as I discussed earlier this year, notable Republicans are also going green.
To ignore pot stocks because of their current underperformance is a disservice to what’s happening culturally and politically. As I stated earlier, this is a black market that has turned into a retail market. Better yet, the American people want more.
Here are 7 U.S. marijuana stocks to buy for the midterm elections:
CV Sciences (CVSI)
CV Sciences (OTCMKTS:CVSI) is one of the more well-known U.S.-based marijuana stocks. It also happens to be an incredibly controversial idea as well.
A few months back, Citron Research’s Andrew Left blasted CVSI stock, claiming that the underlying company advertised already-rejected patents. Left further asserted that CV Sciences’ management team may be engaged in securities fraud.
Because the noted short-seller has considerable public leverage, CVSI stock quickly tumbled in the markets. However, shares quickly started a recovery process which is currently ongoing. That at least tells me that the Street believes that those initial charges had little basis in facts.
Interestingly, CVSI stock is one of the very few pot stocks that haven’t lost any value for October. On a fundamental level, I’m excited about its product pipeline. While it’s just a lone therapy, their tobacco-cessation aid, which incorporates cannabidiol (CBD), has significant implications for the legal-weed industry. Such a product demonstrates that cannabis has uses that extend beyond its stereotypical image as a recreational drug.
Scotts Miracle-Gro (SMG)
As you can see perusing pot stocks, safe investments in this sector virtually don’t exist. The safest you’re going to get is Scotts Miracle-Gro (NYSE:SMG).
Unlike the sexy marijuana stocks that most investor newsletters advertise, SMG stock is an anomaly. Its primary business isn’t cannabis, but rather ho-hum gardening products. Scotts Miracle-Gro also pays out a dividend, and a fairly generous one at 3.2%. You’re just not going to get that in the cannabis market where capital resources are at a premium.
But that’s also what makes SMG stock compelling, especially at this juncture. Even if the worst-case scenario occurs and we see a marijuana crackdown in the U.S., Scotts will keep on going.
Finally, SMG stock trades at a nice discount right now. Since the first of October, shares are down nearly 14%. I expect the company to rise over the longer term as management resolves its earlier miscues involving its cannabis-centered business.
Whenever you’re dealing with pot stocks, it’s difficult to filter hype from reality. While I broadly consider the sector a paradigm-shattering opportunity, whenever money is involved, hucksters quickly follow. That’s why I appreciate what Marimed (OTCMKTS:MRMD) has to offer.
Primarily, I dig MRMD stock for the underlying company’s business model. Any new venture requires expert advice, whether it be legal, operational, or managerial. This is especially true for cannabis-related businesses in the U.S. While the midterm elections could make marijuana legal in a total of 11 states and the District of Columbia, the federal government still considers the plant a Schedule I drug.
Marimed helps cannabis firms navigate multiple potential pitfalls, making MRMD stock a utilitarian investment. More importantly, the company’s leadership and advisory team has professionals in the legal, financial, and law-enforcement sectors. That gives on-the-fence investors added confidence to take a shot.
Most importantly, the markets believe in Marimed. While so many marijuana stocks faltered in October, MRMD stock actually gained double digits! This is a name you must keep a close eye on post midterms.
Innovative Industrial Properties (IIPR)
Among U.S.-based marijuana stocks, one of the most likely to benefit from favorable legislation is Innovative Industrial Properties (NYSE:IIPR). According to the company website, IIPR stock became the first cannabis-centric real-estate investment trust listed on the New York Stock Exchange.
Naturally, this has significant implications for Innovative Industrial, especially if the midterm elections go green. Expanding marijuana jurisdiction to more states means additional business opportunities. Essentially, an investment in IIPR stock represents collective capital which management can use to acquire viable cannabis producers.
Innovative Industrial specifically focuses on the medical-marijuana sector, which again would benefit from a favorable election season. If all the states voting on cannabis issues produce positive results, a total of 33 states would enjoy medical-marijuana access. That could swing the door wide open for IIPR stock.
Significantly, the markets feel the same way. Although shares had a rough go in October — IIPR stock is down 16% for the month — they’re still firmly inside an overall bullish trend channel.
Medmen Enterprises (MMNFF)
As they proudly state, when placing its dispensaries, Medmen Enterprises (OTCMKTS:MMNFF) doesn’t haphazardly throw money at random locations, hoping that cannabis alone would draw in crowds. Instead, management runs world-class retail centers. The only difference is that they happen to sell marijuana products.
Additionally, the company specializes in scalable growing facilities. And these aren’t just run of the mill cultivation plants: Medmen utilizes the latest agronomic technologies, producing premium-grade cannabis products. With public and legislative sentiment rising for medicinal and recreational usage, MMNFF stock has plenty of upside potential.
Medmen is also a staunch weed advocate. According to their website, “MedMen is the single largest financial supporter of progressive marijuana laws at the local, state and federal levels, giving directly to pro-legalization groups, industry organizations and political candidates.”
Lastly, the markets love MMNFF stock. Although incredibly wild, these shares are among the rare pot stocks to generate double-digit returns in October.
Insys Therapeutics (INSY)
On paper, Insys Therapeutics (NASDAQ:INSY) has a lot going for it that other pot stocks envy. For one thing, INSY stock is listed on the Nasdaq exchange while the majority of publicly-traded cannabis companies are traded in over-the-counter markets.
Another factor supporting INSY stock is the underlying company’s product pipeline. They currently list two products on their website. The first is Subsys, which is a sublingual spray designed to manage pain in adult cancer patients. Their other therapy is Syndros, an oral solution that addresses appetite loss in AIDS patients. Also, the drug alleviates sickness symptoms among chemotherapy patients.
I wish I could end the story there for INSY stock. Unfortunately, Insys has been shrouded in controversy. Most notably, federal law enforcement arrested company founder John Kapoor for involvement in a bribery scheme. This involved Kapoor offering kickbacks to doctors who agreed to prescribe Subsys.
As unsavory as this whole situation is, I can’t help but notice that INSY stock is holding its own. I’m speaking relatively, of course, but currently, shares are clawing back its October losses. Plus, the overall bullish trend line is somewhat intact.
It’s a big risk, but a favorable showing in the midterm elections could swing Insys even higher.
Out of all available marijuana stocks, KushCo (OTCMKTS:KSHB) definitely falls under the risky category. However, I believe KSHB stock has huge upside potential thanks to its diverse businesses.
Under its corporate umbrella, KushCo levers four distinct brands: Kush Supply, Kush Energy, The Hybrid Creative, and Koleto Packaging Solutions. With these subsidiaries, KSHB stock has exposure to personal-use products, hydrocarbon delivery, cannabis marketing and retail distribution.
As someone who follows cannabis-industry trends closely, I’m particularly interested in Kush Supply. This is the parent company’s marijuana-vaporizer division. The e-cigarette craze has taken over the adult-recreational market as it affords a healthier platform to “analog” platforms. With legal marijuana gaining significant ground, vaping enthusiasts have eyed cannabis as their flavor of choice.
Overall, the markets have responded well to KSHB stock. Despite taking an 18% hit in October, shares are up nearly 15% year-to-date. If the midterms go green, I expect KSHB to really take it out of the park.
As of this writing, Josh Enomoto is long MRMD.