3 Cannabis Stocks to Buy for the Future of Legalization

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Cannabis hasn’t been legalized at the federal level just yet. But give it time. With more U.S. states and countries worldwide legalizing its use, it’s only a matter of time. Accordingly, I think it’s also only a matter of time before cannabis stocks begin to see higher highs.

According to a Pew Research poll, 88% of U.S. adults support the legalization of marijuana for medical and recreational purposes. Only 10% oppose it. Also, Senate Majority Leader Chuck Schumer (D-NY) held another meeting on cannabis legislation for the new Congress, as noted by Marijuana Moment. Reportedly, he also convened a group of GOP senators to discuss the next steps.

If progress is made, cannabis stocks, like the three below, could see higher highs.

AFC Gamma
Innovative Industrial Properties
NewLake Capital Partners

AFC Gamma (AFCG)

hands at desk near laptop computer, with one hand holding a pile of hundred dollar bills

Source: shutterstock.com/CC7

With a dividend yield of just under 14%, AFC Gamma (NASDAQ:AFCG) is not a landlord. Instead, this company provides financing, such as mortgage and construction loans, to help cannabis companies. Due to federal laws, these cannabis companies can’t get traditional financing from banks. So, they turn to AFC Gamma.

Plus, with more states and countries throughout Europe looking to legalize cannabis for recreational and medicinal purposes, related stocks could see higher highs. Additionally, AFCG earnings have been impressive. In its third quarter, the company saw a net income of $11.5 million, or 57 cents per share – a 45% jump year-over-year.

Innovative Industrial Properties (IIPR)

hand of person in a suit dangling keys with a house symbol on the ring. Windows overlooking city skyline in background.

Source: ImageFlow/shutterstock.com

Another red-hot dividend-paying cannabis stock to consider is Innovative Industrial Properties (NYSE:IIPR), a real estate investment trust with 111 properties and approximately 8.7 million rentable square feet that it leases to state-licensed cannabis operators. Like the other names on this list, IIPR stock provides a substantial dividend yield, just under 8%.

While no one is sure what will happen near-term with the cannabis sector, IIPR is still delivering solid results. The trust’s revenue jumped 32% yearly in the third quarter to $70.9 million. Additionally, earnings per share growth of 10% year-over-year highlights this company’s strong financial foundation and ability to raise its dividend over time.

NewLake Capital Partners (NLCP)

A pink piggy bank wearing a grad cap sits on a wooden table in front of a chalkboard.

Source: Shutterstock

Another hot dividend-paying cannabis stock to own is NewLake Capital Partners (OTCMKTS:NLCP), which provides real estate capital to state-licensed cannabis operators. NewLake has “a portfolio of 32 cultivation facilities and dispensaries that are leased to single tenants on a triple-net basis,” meaning tenants are responsible for paying monthly base rent, insurance, maintenance, taxes, and utilities associated with leased properties.

The company recently announced a $10 million stock buyback program and reported a 50% jump in year-over-year revenue. Revenue totaled $12.1 million compared to $8.0 million, an increase of 50.0% year-over-year. Net income totaled $6.5 million, as compared to $2.7 million. And the company’s FFO totaled $10.3 million, as compared to $5.2 million.

Not bad at all.

On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.

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