Cannabis was one of the big winners on election night as multiple states relaxed regulations. Additionally, President-elect Biden is expected to bring a new approach towards enforcing cannabis laws.

Even if recreational cannabis is not legalized on the federal level, the legalization movement will continue to progress on the state level. As an example, New Jersey is the latest state to legalize recreational cannabis. However, a Biden DOJ will likely not prioritize the enforcement of laws that have prevented cannabis companies from accessing financial services. This should be a benefit to the industry’s growth and maturation.
 
Here is a quick look at three cannabis stocks to consider adding to your portfolio in the aftermath of the election: Scotts Miracle-Gro Company (SMG), Canopy Growth Corporation (CGC), and Innovative Industrial Properties (IIPR).
 Scotts Miracle-Gro Company (SMG - Get Rating)

Often referred to as an ancillary cannabis business, SMG provides fertilizers and other products necessary to grow cannabis efficiently. This Marysville, Ohio-based company also makes consumer lawn and gardening products. From hydroponics to landscaping, lawn care, and beyond, SMG is involved with just about everything plant and yard-related.

SMG makes money from marijuana without any direct involvement in growing the controversial plant. SMG’s Hawthorne Gardening Company sells the hydroponics, lighting, herbicides, fertilizers, and pesticides used to grow indoor cannabis plants. The sales of these items spiked nearly 30% in the third quarter of 2020 alone.

The POWR Ratings show SMG has “B” grades in the Industry Rank, Buy & Hold Grade, and Trade Grade components. SMG is ranked in the top 12 of nearly 70 Home Improvement & Goods stocks. SMG has a fairly low forward P/E ratio of 18.88. The stock even provides a 1.6% dividend to boot.

Canopy Growth Corporation (CGC - Get Rating)

You have the opportunity to invest in the largest medical marijuana business in the world. CGC operates licensed marijuana production sites across nearly a dozen nations spanning five continents. CGC has an “A” POWR Rating grade in the Peer Grade component along with “B” grades in the Industry Rank and Trade Grade components. CGC is ranked in the top 20 of more than 240 Medical – Pharmaceuticals stocks.

CGC recorded record revenue in the second quarter, eclipsing the $135 million mark (CA), beating the analysts’ expectations of $117.2 million. The company’s quarterly revenue is up 77% on a year-over-year basis. Perhaps most important is the fact that CGC’s bottom line is improving. The company recently reported a net loss of nearly $97 million which is significantly better than the net loss of $128 million in the prior quarter.

CGC may reach profitability within a year or two. Buy CGC, hold it until it surpasses its 52-week high of $26.95 and you will make a pretty penny.

Innovative Industrial Properties (IIPR - Get Rating)

IIPR is clearly benefiting from the gradual expansion of legal recreational and medicinal cannabis. The company leases grow site space to growers of the plant, indirectly profiting from rising cannabis sales. IIPR is officially a real estate investment trust (REIT), providing a healthy 3.23% dividend.

Though IIPR may face increased competition should cannabis be legalized at the federal level, it will likely take a couple of years or possibly another presidential administration for recreational cannabis to be legalized across the land. IIPR has “B” grades in the Industry Rank, Buy & Hold Grade, and Trade Grade POWR Rating components.

The top analysts have set an average price target of $172 for the stock, meaning it has 12% upside to go. IIPR is a long-term keeper worthy of a position in every investor’s portfolio.

IIPR shares were unchanged in premarket trading Wednesday. Year-to-date, IIPR has gained 109.21%, versus a 12.29% rise in the benchmark S&P 500 index during the same period.