by Ian Cooper

Cannabis stocks could see higher highs on multiple catalysts.

For one, earlier this year, President Biden asked federal officials to start a review process of how marijuana is “scheduled”, or classified, under federal law. Presently it falls under the same classification as heroin and LSD and in a higher classification than fentanyl and methamphetamine, as noted by Reuters.

Two, last week, the President signed a marijuana research bill, which, according to Marijuana Moment, is the “first piece of standalone federal cannabis reform legislation in U.S. history.”

“The law gives the U.S. attorney general 60 days to either approve a given application or request supplemental information from the marijuana research applicant. It also creates a more efficient pathway for researchers who request larger quantities of cannabis.” This takes us a step closer to federal legalization, and a potentially massive cannabis boom.

Now, Sen. John Hickenlooper (D-CO) just set up a bill called The Preparing Regulators Effectively for a Post-Prohibition Adult-Use Regulated Environment Act (PREPARE), which “would direct the attorney general to create a commission charged with making recommendations on a regulatory system for marijuana that models what’s currently in place for alcohol,” as noted by Marijuana Moment.

While there are no guarantees, these actions could get us even closer to federal legalization. And if that’s the case, you may want to consider owning cannabis stocks, such as:

Advisor Shares Pure US Cannabis ETF (MSOS)

ETFs are always a great way to trade booming sectors, like cannabis. Not only do they offer diversification, but they do so at less cost. In fact, MSOS offers us exposure to dozens of cannabis stocks at just $13.71 share. With an expense of 0.60%, the ETF offers exposure to Green Thumb Industries, Curaleaf Holdings, Trulieve Cannabis, Cresco Labs, Planet 13 Holdings, Innovative Industrial Properties, and many more.

Canopy Growth (CGC)

While recent earnings haven’t been much to write home about, don’t write the stock off just yet, we noted last week. With global expansion efforts, a potential $50 billion opportunity in the U.S., and the potential for further state, and hopeful federal legalization, CGC could be a solid long-term bet.

In its most recent quarter, Canopy Growth posted a loss of 1.46 Canadian dollars (US$1.15) for its fiscal fourth quarter, while analysts had expected a loss of 30 Canadian cents. Net revenue for the three months ended in March was C$111.8 million, below analysts’ expectations of C$130 million. But again, give it time, especially with multiple catalysts in front of it.

Innovative Industrial Properties (IIPR)

Innovative Industrial Properties, Inc. is a real estate investment trust (REIT) focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities. IIPR also carries a dividend yield of 6%.

U.S. regulated cannabis sales grew over 50% in 2020 to $20 billion, and are expected to grow to over $45.9 billion annually by 2025, according to Marijuana Business Daily. Also, as of June 2022, the REIT owned 110 properties comprising an aggregate of approximately 8.6 million rentable square feet (including approximately 2.5 million rentable square feet under development or redevelopment) in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington.

The company is exposed to a generational wealth opportunity, with the industry expected to soar from $24 billion in 2021 to more than $45.9 billion by 2025.