Please ensure Javascript is enabled for purposes of website accessibility

Illinois on Track to Legalize Recreational Pot: 3 Stocks Poised to Profit

By Keith Speights - Updated May 7, 2019 at 11:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Land of Lincoln could soon be the land of legal recreational marijuana -- and these three stocks should be winners as a result.

Another big state appears to be headed toward legalizing recreational pot. Illinois Governor J.B. Pritzker and state lawmakers announced a proposal over the weekend that would legalize the use and sale of recreational marijuana in the state in 2020.

If the proposed legislation passes, Illinois will become the 11th state to legalize recreational pot. And it would be the second-largest potential recreational marijuana market in the U.S. based on population, trailing only California.

The proposed bill won't allow new large marijuana producers to establish operations in Illinois, though, at least initially. This means that already-established players in Illinois could be significant winners. Three stocks that appear to be especially poised to profit should the state legalize recreational pot are Cresco Labs (CRLBF -5.31%), Green Thumb Industries (GTBIF -5.25%), and MariMed (MRMD -2.00%). Here's what makes these three stocks stand out.

Now entering Illinois sign with a marijuana leaf on it.

Image source: Getty Images.

1. Cresco Labs

Cresco Labs is one of the largest multistate cannabis operators in the U.S. The company currently claims operations in seven states but also has pending transactions that would put it into three additional states.

Since Cresco is headquartered in Chicago, you might expect that Illinois would be one of its key markets. And you'd be right. Cresco is so far the only company in the state to reach the maximum number of dispensaries and cultivation facilities allowed. It's also expanding production capacity in Illinois, with additional space at its Lincoln facility anticipated to be operational within the next few months.

The company could also soon grow significantly through a key acquisition. Cresco Labs announced in April that it plans to buy Origin House. The deal would give the company a large cannabis distribution operation in California as well as an opportunity to enter the Canadian market via Origin House's ownership of 180 Smoke, a leading vape retailer in Canada.

2. Green Thumb Industries

Green Thumb Industries (GTI) is another Chicago-based company that should benefit from the legalization of recreational pot in Illinois. GTI has operations in 12 states, including, of course, Illinois. Three of the states where GTI conducts business already have legal recreational marijuana markets: California, Massachusetts, and Nevada.

The company is involved throughout the cannabis supply chain. GTI has 13 production facilities and holds 88 licenses for cannabis retail locations. It currently operates 18 cannabis retail stores, four of which are located in Illinois.

Earlier this year, GTI acquired luxury cannabis brand Beboe. Products bearing the Beboe brand are currently marketed in California and Colorado -- the two biggest legal marijuana markets in the U.S. In April, Beboe launched a line of cannabidiol (CBD) skin care products that are being sold in upscale stores including Barneys New York and Neiman Marcus.

3. MariMed

MariMed ranks as one of the largest cannabis and hemp operators in the U.S. The company initially focused on providing advisory services to cannabis businesses. Now, though, MariMed is buying up its customers to directly manage operations.

The company already operates a cannabis production facility in Illinois. In 2018, MariMed acquired Betty's Eddies, the most popular brand of cannabis edibles in the state.

Perhaps the biggest growth opportunity for MariMed right now is in hemp. Thanks to the passage of the farm bill in December, hemp is now legal in the U.S., and MariMed has taken several steps to position itself in the U.S. hemp industry. It invested in Kentucky-based, hemp-derived CBD producer GenCanna in November 2018. It established a subsidiary focused on the hemp CBD market in January. And just a few weeks ago, MariMed acquired a 70% stake in CBD company MediTaurus.

Unfinished business

While Cresco Labs, Green Thumb Industries, and MariMed should profit if Illinois legalizes recreational marijuana, there remains some unfinished business. The legislation proposed by Gov. Pritzker has to first pass both houses of the state legislature.

At this point, however, it seems pretty likely that Illinois will become the 11th state to legalize recreational pot. Pritzker's fellow Democrats enjoy majorities in the state's House of Representatives and Senate.

Illinois won't issue licenses for new growers, processors, and dispensaries until May 2020 at the earliest. However, Cresco, GTI, MariMed, and other companies currently operating in the state could begin seeing higher sales at the start of 2020 if the proposed legislation passes.  

Editor's note: A previous version of this article incorrectly stated that Cresco Labs, Green Thumb Industries, and MariMed would have to wait until May 2020 to be licensed for the recreational marijuana market in Illinois. The Fool regrets the error.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

MariMed Inc. Stock Quote
MariMed Inc.
$0.59 (-2.00%) $0.01
Green Thumb Industries Stock Quote
Green Thumb Industries
$12.08 (-5.25%) $0.67
Cresco Labs Inc. Stock Quote
Cresco Labs Inc.
$3.92 (-5.31%) $0.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.