Marijuana Stocks to Watch After 7 States Legalize

marijuana-leaf-handSome of our favorite marijuana stocks to watch are poised to surge from the string of marijuana referendums that passed on Nov. 8.

We'll discuss these stocks in just a moment. But first, let's talk more about the marijuana referendums from Election Day - and which states passed new legalization measures.

These 7 States Just Passed Marijuana Referendums

As many as nine states voted to legalize recreational or medical marijuana on Nov. 8, and a whopping seven of those states just legalized marijuana in some form. As a note, one of these states - Maine - is still in the process of counting votes.

So far, states that have passed marijuana measures on Nov. 8 include:

California: Passed Proposition 64, which allows recreational marijuana use for Californians over the age of 21. Adults can now possess marijuana legally and even grow up to six plants in their home. The measure creates two taxes: one for growers and one for retailers. Additionally, businesses need an official state license to sell marijuana. As the world's sixth-largest economy in terms of gross domestic product, California could see a nearly $1.4 billion annual increase in state revenue from marijuana taxation, according to the California Tax Board.

Massachusetts: Legalized recreational marijuana and created a commission to regulate marijuana for retail sales for those over the age of 21. Adults will be permitted to grow marijuana plants at home. Like California, the state would also create new taxes for marijuana.

BRILLIANT: Average Americans Are Becoming Marijuana Millionaires.

Nevada: Legalized recreational marijuana for adults over the age of 21. The state created a system to hand out licenses to retail stores.

Florida: Passed medical marijuana, which guarantees residents the right to use marijuana to treat various diseases and ailments.

Arkansas: Passed medical marijuana, which allows residents to set up medical marijuana dispensaries.

Montana: Passed medical marijuana, allowing physicians to treat various stress and pain disorders with marijuana.

North Dakota: Passed medical marijuana, but will have a stricter law than most other states who have approved medical marijuana. Patients will need identification cards listing their specific medical issues before obtaining marijuana.

Together, these states now make up 33 U.S. states that have legalized marijuana in some form. And this is critical for investors...

That's because this surge in marijuana acceptance will help propel the industry to $10.7 billion in value by 2020, according to ArcView Market Research.

Money Morning Director of Tech & Venture Capital Research Michael A. Robinson sees several types of marijuana stocks taking the most advantage of these newly legalized states. In fact, one of these stocks is already up nearly 40% this year, partly from its latest acquisition of two firms that will profit substantially from the growing marijuana industry.

Check out Robinson's marijuana stocks to watch now...

These Marijuana Stocks to Watch Will Gain the Most

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According to Robinson, thinly traded over-the-counter (OTC) stocks will see the biggest moves after Nov. 8. That's because he said these are the firms "staking out turf like growers, dispensaries, edibles, finance, and land."

Robinson cautions, however, that these stocks aren't suitable for most retail investors and that readers "should only put in money you can afford to lose."

"But we are talking the potential for five and 10 baggers," he said.

In the long term, Robinson says investors can expect to see the steady appreciation of marijuana stocks, and that extends beyond pure recreational use. Robinson suggests looking for small-cap biotech firms that have ties to medicines based on cannabinoids, like Cara Therapeutics (Nasdaq: CARA). The small-cap firm has a marijuana-based drug candidate, called CR701, which has already been proven to significantly reverse a heightened sensitivity to pain.

Other, larger marijuana-based biotech firms like GW Pharmaceuticals Plc. (Nasdaq ADR: GWPH) are also smart plays, according to Robinson.

"GW Pharma is a bigger more established firm and has a great pipeline of cannabinoid compound," he said.

GW Pharma is one of the few marijuana drug companies to be granted orphan status by the Food and Drug Administration for a cannabis-based epilepsy drug, called Epidiolex. This is a unique designation that the FDA reserves for drugs that treat rare diseases, providing tax reductions to the company and an exclusive seven-year market priority in the United States.

For other back-end plays that touch on marijuana and will profit from newly legalized states, Robinson suggests Scott's Miracle Grow Co. (NYSE: SMG) and Microsoft Corp. (Nasdaq: MSFT).

SMG makes consumer lawn and garden products, and the stock is already up nearly 40% year to date. The company made its foray into the marijuana industry by purchasing an Arizona-based hydroponics firm called Botanicare. Robinson says hydroponics technology is important because it helps produce high-grade strains of marijuana without the need for soil.

In the case of Microsoft, the tech company is involved with software tracking for rules and regulations with startup KIND Financial. Microsoft was one of the first major tech companies to get into the marijuana business. A team of Microsoft analysts will work with clients to help navigate laws and regulations while helping to stop products from entering the black market.

With all of these great investments, cannabis is creating the Gold Rush of the 21st century.

But the opportunities don't stop there...

As a service to Money Morning readers, we're now making available a 90-page cannabis investing guide called "The Roadmap to Marijuana Millions." This "bible of weed investing" reveals the world's top marijuana stocks every serious investor should consider right now. Normally valued at $499, it can be yours absolutely free. To learn how to get your free copy, click here. This offer is only available to the first 500 people who respond today. So please go here now to reserve your copy.

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