Canopy Growth discusses growing momentum for legal weed in red states

Canopy Growth discusses growing momentum for legal weed in red states
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Canopy Growth CEO David Klein gives his forecast for the legal weed market in America as the domino effect expands and more states move to end prohibition. Subscribe to CNBC PRO for access to investor and analyst insights:

CNBC’s Jim Cramer on Wednesday broke down how ballot initiatives in multiple states across the country could have an impact on the stock market.

The cannabis, sports betting and ride-sharing companies caught a boost on Election Day after voters approved new proposals that would expand markets or put in place regulations favorable to businesses, the “Mad Money” host said.

“This was a great night for those three industries with market-moving implications,” he said.

Pot proposals

Arizona, New Jersey, South Dakota and Montana voters all moved to end marijuana prohibition, making way for recreational use to be acceptable within their jurisdictions. South Dakota, which asked two separate cannabis questions, also joined Mississippi in legalizing marijuana for medical purposes.

Recreational use, while still prohibited federally, is now legal in 15 states in the U.S. and in Washington, D.C. More than half of the country has opened up the medicinal market for marijuana.

The cannabis cohort, however, took a tumble on the market Wednesday, as investors saw that a blue wave, which could’ve had more implications on weed at the federal level, was not likely to happen, Cramer said. The MJ ETF, which tracks global companies dealing in the legal weed business, dropped 3%.

“If the Canadian growers don’t benefit and the U.S. growers don’t trade here, how are you supposed to play all these new states that have legalized weeds? Simple: you go with the picks and shovels plays. Think of them as the plausible deniability marijuana stocks,” he said.

Hydroponics retailer GrowGeneration and real estate investment trust Innovative Industrial Properties, two stocks Cramer recommended back in October, climbed 3.7% and 8.7%, respectively.

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