- By Ryan Vanzo
Whether you like or not, marijuana represents a growing opportunity for investors. Last year, the legal cannabis market grew by 17% to $5.4 billion. This year, growth estimates have expanded to 25% to reach $6.7 billion.
So far, four U.S. states and the District of Columbia have legalized the recreational use of cannabis. This is in addition to the 24 states that permit medical marijuana. Nine more states will vote on legalization this November (North Dakota was not able to garner enough signatures for the issue to be put on the ballot).
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According to Bank of America's (BAC) Merrill Lynch division, the market " could at least double" if some of these states pass legalization this year. That could be great news for companies like AbbVie (ABBV) which has exposure to cannabinoids medication, Cara Therapeutics (CARA) which has experience developing drugs that target CB2 receptors and GW Pharmaceuticals (GWPH), which is already licensed to grow marijuana plants by the U.K. government.
Here are the five biggest states voting, along with the likelihood that the motions pass.
1. California
The Public Policy Institute of California found that 60% of voters favored recreational legalization. Just 37% opposed the initiative, a big margin. Its previous poll found just 54% favored recreational marijuana, so the momentum is towards legalization.
2. Nevada
The Las Vegas Review-Journal revealed an 88% support for recreational marijuana's legalization.
3. Maine
A Marijuana Policy Project survey showed that 55% favor the legalization of recreational marijuana. Opposition came in at 41%.
4. Massachusetts
Massachusetts is where the legalization train will likely end. A Suffolk University/ Boston Globe poll found that just 43% favored legalizing recreational marijuana compared to 46% that opposed it. Their 2014 poll found that 48% of respondents favored legalization and 47% opposed it, so momentum is not on the side of legalization.
5. Arizona
The odds of legalization drop off considerably with Arizona. O.H. Predictive Insights found that 39% of Arizonans support recreational cannabis compared to 53% that oppose it.
Disclosure: I have no positions in any of the stocks mentioned above and no intention to initiate a position in the next 72 hours.
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This article first appeared on GuruFocus.
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The intrinsic value of BAC