The U.S. marijuana industry is booming as states all across the country continue to legalize medical and recreational cannabis.
U.S. marijuana sales are reportedly set to jump over 20% to $33 billion in 2022, which is up from just $9 billion five years ago and $3 billion in 2015.
Legal marijuana sales are projected to soar another 60% by 2026 to hit $53 billion, with that figure possibly on the low end considering the rapid pace of legalization throughout the U.S.—not to mention the rest of the world. Total international legal marijuana sales are projected to soar to well over $130 billion by 2030.
Two more U.S. states legalized recreational marijuana during the 2022 midterms to bring the total to 21, plus Washington D.C. Before we know it, half of the country will have legalized recreational marijuana in a rather short amount of time. On top of that, 37 states operate legal medical marijuana markets.
The state-by-state marijuana legalization wave shows few signs of slowing, with states of all political leanings, geographic regions, and other differences rolling out legalization efforts.
Plus, a large majority of the country is now in favor of Federal-level legalization, which could be possible down the line. In fact, President Biden is set to sign the first official stand-alone piece of marijuana legislation in early December.
All in all, the marijuana market offers investors plenty of long-term upside, with the U.S. legal recreational market only a decade old. Outside the U.S., other countries have legalized cannabis at the national level, including Canada. And some huge economies in Europe such as Germany are on a journey toward legalization.
Legalization is Gaining Steam
Washington state and Colorado first legalized marijuana use for adults 21+ back in 2012. Now, the U.S. heads into 2023 with recreational cannabis legal in 21 states, alongside D.C. and two U.S. territories after Maryland and Missouri voted to legalize marijuana during the 2022 midterms.
The states that currently operate legal recreational marijuana markets, or have voted in favor of legalization, span from California and Oregon all the way to New York and Virginia. The group of legal recreational states also include Alaska, Arizona, Illinois, Montana, Michigan, New Mexico, Nevada, and others in various parts of the country with different demographics and politics.
Medical cannabis offers huge opportunities, but there are hurdles to clear
The medical side of the market is spread across an even larger array of the country. At this time, 37 states and D.C. have legalized medical cannabis, with Texas, Idaho, Nebraska, and Wisconsin among the holdouts.
Many of the states that still haven’t legalized cannabis tend to lean more conservative and Republican, which is a group that’s traditionally been against marijuana. Thankfully, the tides are turning rather quickly, with Alabama, Mississippi, and South Dakota all having legalized medical cannabis within the last couple of years. The groundswell of public support is also highly encouraging and highlights the long-term momentum for the entire marijuana industry.
Growing Bipartisan Support
A huge majority, 68% of U.S. adults, support legal marijuana, along with 50% of Republicans, based on a Gallup poll. This is up from just 50% of the entire country back in 2013. It is worth stepping back quickly and thinking just how difficult it is to find any issue nearly 70% of Americans agree on.
On top of that, a new Pew Research poll published in late November found that 88% of U.S. adults say marijuana should be legal in some form. More specifically, 58% said that marijuana should be both recreationally and medically legal, with 30% favoring medical legalization only.
Only 10% of U.S. adults say marijuana should not be legal at all. The Pew data showcases that only 15% of people who identify as Republicans or lean Republican do not favor legalization, which is highly encouraging.
These two huge polls showcase the mounting bipartisan support for marijuana legalization. The pro-legalization push is why so many states have legalized medical and recreational cannabis and why more are likely to join the legal ranks in the coming years.
The Federal government realizes how much momentum is behind cannabis legalization at the state and local levels across the country. Congress is more focused on marijuana than ever, with multiple bills floating around Washington.
Cannabis Goes to Washington
Multiple bills have been introduced over the last few years in Washington to federally legalize marijuana. Furthermore, Republicans, the party that was traditionally opposed to cannabis, 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 Republican-led federal legalization effort was introduced last year. 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 because elected officials try to focus on issues that a large majority of their voters care about. Some of the top lawmakers in Washington are dedicated to passing some form of cannabis legalization as soon as possible. Of course, getting things done in D.C. is rarely straightforward.
As investors and many others wait for Federal legalization, they should take comfort in the fact that a medical cannabis research bill just became the first ever standalone marijuana-focused bill approved by both chambers of Congress.
The new effort, dubbed the Medical Marijuana and Cannabidiol Research Expansion Act, will make it far easier for scientists and medical professionals to study cannabis. This effort could prove key to a wide-ranging cannabis legalization bill finally happening in Washington down the road.
International Expansion
Canada legalized recreational marijuana in 2018, becoming the first major economy to do so. Since then, the tiny European nations of Malta and Luxembourg legalized cannabis near the end of 2021.
On top of that, Thailand officially legalized cannabis in the summer of 2022, which was the product of a slow effort that began in 2018. Hopefully, Thailand can start a larger legalization push in Asia.
Looking ahead, the country of Colombia recently began to make progress on a cannabis legalization bill. On top of that, German government officials earlier this year unveiled the groundwork for nationwide marijuana legalization. If the largest European economy were to legalize cannabis it would likely have huge knock-on effects throughout the continent.
Easy Way to Pursue Big Profits
The rapid state-by-state expansion and booming growth in established states have helped legal marijuana sales soar from $3 billion in 2015, to $27 billion in 2021 and $33 billion in 2022. Looking ahead, U.S. retail cannabis sales are projected to climb to over $50 billion by 2026, with some reports projecting total international legal marijuana sales will soar to $130 billion by the end of the decade.¹
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 37 states with 21 allowing recreational use. It's already legal in Canada and there's movement in Mexico and throughout Europe.
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% and +147.0%.
