When you think of fast-growing industries, things like technology and biotech probably come to mind. But don't forget about legalized marijuana.

According to cannabis-focused research firm BDSA, global legal weed sales are forecast to nearly double from $30 billion in 2021 to $57 billion by 2027. That's a compound annual growth rate of nearly 13%. By 2027, the U.S. is expected to account for three-quarters of worldwide weed revenue, with an estimated $42 billion in legal sales. This is why keeping an eye on state-level legalization can pay off.

Today (i.e., Election Day 2022), residents in five states will head to the voting booths to determine the fate of recreational marijuana ballot initiatives. Although anything could happen, three states look to have a good chance to add to the existing adult-use legalized total of 19 states (plus Washington, D.C.), while it's more iffy in two more.

A black silhouette outline of the U.S., partially filled in by bags of dried cannabis, rolled joints, and a scale.

Image source: Getty Images.

South Dakota

The Mount Rushmore State, which has already legalized medical cannabis, will look to green-light recreational weed use and distribution for persons aged 21 and older via Measure 27.

On one hand, early polling has suggested this is a vote that could be too close to call. A recently released survey from South Dakota State University found 45% support and 47% opposition for the measure, with 8% still undecided. 

On the other hand, South Dakota has history on its side. In November 2020, voters passed a similar recreational cannabis measure (Amendment A) by a vote of 54% to 46%. Amendment A was ultimately overturned by South Dakota's Supreme Court in February 2022. Nevertheless, with favorability toward cannabis improving for decades in the U.S., history would suggest that the votes will modestly favor recreational weed legalization.

Projected outcome: Passes by a narrow margin, once again.

Maryland

If there were such a thing as a surefire bet on Election Day when it comes to cannabis ballot measures, Maryland Question 4 might be it. Passage of Question 4 would amend the state constitution to allow for the use, distribution, regulation, and taxation of legalized cannabis for persons aged 21 and older beginning in July 2023.

Maryland looks like a shoo-in to legalize recreational marijuana for a few reasons. First, medical marijuana has been legal since 2013, and possession of 10 grams or less was decriminalized eight years ago. 

Furthermore, a recent Washington Post-University of Maryland poll found that 73% of Maryland voters favor the legalization of adult-use weed. The WP-UMD survey also saw especially strong support for the initiative among voters aged 40 and under (87% in favor). 

Projected outcome: Passes by a wide margin.

Missouri

A third marijuana ballot measure with a strong likelihood of becoming law is Missouri Amendment 3. Passage would amend the Show Me State's constitution to allow persons age 21 and up to use, purchase, and possess cannabis. It would also allow people convicted of nonviolent cannabis offenses the opportunity to petition for their release from incarceration, or to have their conviction expunged.

Similar to Maryland, history is on Missouri's side. In 2018, voters overwhelmingly approved a medical cannabis measure with close to 66% of the vote. Admittedly, medical marijuana garners higher favorability at the polls than recreational marijuana. Nonetheless, support has trended more favorably toward legalizing adult-use weed for persons 21 and up since 2018.

However, recent polling suggests the vote could be close. A 1,000-resident survey from Emerson College Polling-The Hill conducted two weeks ago found 47% favored Amendment 3, 39% opposed it, and a considerable 14% remained undecided. My suspicion remains that these undecided voters will err toward passage. 

Projected outcome: Passes by a relatively narrow margin.

A row of partitioned voting booths with attached pamphlets.

Image source: Getty Images.

Arkansas

On the other side of the aisle is the Land of Opportunity. Arkansas residents will be going to the polls to vote on Issue 4, which would amend the state's constitution to legalize the use and possession of up to one ounce of cannabis. It would also enact a 10% tax on weed sales (on top of already existing state and local taxes). 

In 2016, 53% of Arkansans voted in favor of Issue 6, which legalized medical marijuana in the state.  But even though cannabis favorability has, as noted, improved over the past six years, this was a narrow victory at a time when medical cannabis had considerably stronger nationwide support than the Issue 6 vote results showed.

Although polling can be wrong, recent surveys suggest the traditionally conservative-leaning state is fighting an uphill battle. Local news network KARK reported last week that the annual Arkansas Poll found only 41% support for Issue 4, compared to the 59% who opposed the measure. 

Projected outcome: Defeated by a very narrow margin.

North Dakota

Lastly, residents of the Peace Garden State, North Dakota, will head to the voting booths to determine if Statutory Measure 2 has legs. If passed, this measure would legalize the use and possession of marijuana for persons aged 21 and over, as well as allow people to grow up to three cannabis plants.

Whereas history is the friend of most cannabis initiatives on Election Day 2022, this isn't the case in North Dakota. Back in 2018, voters overwhelmingly rejected a proposal (Measure 3) that would have legalized adult-use weed with almost 60% of the vote. However, Measure 3 included an automatic expungement process for persons convicted of possession of a controlled substance that had become legal. The new measure (Measure 2) does not contain this clause, which is likely to help whatever chance it may have of passing. 

The other issue for North Dakota is that it's a historically conservative-run state. While the same can be said about South Dakota, Arkansas, and Missouri, voters in North Dakota have traditionally voted against progressive measures, such as legalizing recreational weed.

Projected outcome: Defeated by a sizable margin.

Cannabis will remain a buzzworthy growth story in the U.S.

No matter what happens at the polls, organic growth in legalized states is providing ample opportunity for multi-state operators (MSOs) to thrive. It's why we've seen Cresco Labs (CRLBF -6.98%) go on the offensive with the largest U.S. cannabis acquisition in history: Columbia Care (CCHWF -8.18%). When this deal is completed, the new Cresco will have well over 130 operating dispensaries in 18 legalized states.

The steady expansion of legal marijuana at the state level is also why we're seeing MSOs step out of their shell. Instead of simply being content dominating the Florida medical marijuana market, Trulieve Cannabis (TCNNF -5.97%) purchased Harvest Health last year to gain the top position in Arizona and establish its presence in a number of mid-Atlantic states.

Even Planet 13 Holdings (PLNH.F -8.91%) is breaking out of its mold of operating SuperStore dispensaries to focus on rolling out at least a half dozen neighborhood-styled stores in Florida's burgeoning medical weed market.

The future for U.S. marijuana stocks remains bright.