The 2 Best Alternative Marijuana Stocks to Buy Now

When I urged folks to consider marijuana stocks in 2014, I got laughed at on TV as being “toked up.”

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But every objection I hear — every hurdle to full, U.S. legalization — is just more proof that we’re still in the very early innings.

Marijuana is a key, long-term investment trend. I can’t pound the table often enough on this.

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As more states legalize recreational marijuana, it’ll be right up there with other “sin industries.” For example, wine alone is a $60 billion industry in the United States. Cigarettes are $77 billion. Beer is $110 billion.

So when Cowen & Co. projects U.S. marijuana sales at $75 billion by 2030 — I say that’s too low. Beer is already losing ground to marijuana in terms of sales growth. As pot stocks grab pieces of each competitor’s pie, I could easily see marijuana surpassing other sin industries.

That’s even before you consider medical researchers are studying treatments with cannabinoids — not the ones that get you high — for everything from cancer to multiple sclerosis, mental health and seizures.

But aside from major illness, over-the-counter products may soon be all over store shelves. The groundwork is there, with hemp production being legalized in the recent U.S. Farm Bill. And cannabidiol (CBD) supplements having been around since 2017.

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The idea is to use cannabis’ anti-inflammatory quality to ease joint pain, headaches and the like. We’ve even got Melissa McCarthy rubbing CBD oil on her foot before she walks the red carpet at the Oscars.

Now, I mentioned the hurdles many marijuana stocks currently face. As investors, we’ve got to consider that, without federal legalization, the NYSE and Nasdaq won’t list marijuana stocks that do business in the United States. (Hence the popularity of Canadian pot stocks â€¦ several of which do list on U.S. exchanges, in addition to the Toronto exchange.)

The Two Best Alternative Marijuana Stocks

But if you’re just looking for big, established, American investments, then there are a few secondary plays on marijuana to consider.

And before you let the word “secondary” get to you, realize that these are actually some of the best ways to play the long-term investment trend in marijuana. Specifically, this alternative approach to pot is a “picks and shovels” investment strategy.

If we go back a couple of hundred years to the California gold rush of 1849, it was — literally — the sellers of the picks and shovels that got rich.

We saw it ourselves, again, in the shale oil boom of the early 21st century. Besides the skyrocketing real estate prices in North and South Dakota, we saw energy equipment makers soar in value.

That same principle can be applied to marijuana. Secondary companies will never touch the plant … but they will still benefit from the growing industry.

This brings us to Scotts Miracle-Gro (NYSE:SMG), which is one of the best alternative marijuana stocks to invest in today.

It’s a $4.5 billion stock, and most people know the namesake Miracle-Gro product. You might be sprinkling it on your lawn, but SMG also offers products for pest and disease control, seeding and hydroponics.

So, it has become a major supplier to the booming marijuana industry, which relies on its products to boost cultivation output.

SMG stock had a rough 2018. Its cannabis-focused subsidiary, Hawthorne, was yet to be profitable and the long winter kept consumer gardening products from making up for it.

But that all changed in December, when the U.S. Farm Bill passed, and hemp production was legalized.

The company started 2019 strong, thanks largely to the cannabis business. Sales in the consumer lawn and garden segment were up 9% in SMG’s first quarter — but Hawthorne’s were up 84%. And share prices have promptly rallied 33% year-to-date.

SMG stock should see continued upside with the strong performance of the entire marijuana industry.