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.
Placing bets
Maryland, Louisiana and South Dakota were the latest states to authorize sports gambling within their borders. Since the Supreme Court authorized states to legalize sports gambling within their borders, 25 states have put laws in place to facilitate the emerging segment of gambling.
Nebraska voters also approved changes to its state constitution to legalize and tax casinos. It's likely that it can make way for sports betting in the future, Cramer said.
That's a boost for Draftkings, MGM and Penn National.
"They're the ones with the best chance to profit from these new states," the host said.
Proposition 22
Voters in California backed ride-hailing companies Uber and Lyft in exempting the tech companies from adhering to a labor law that would have forced drivers to be classified as employees, not independent contractors.
Proposition 22 protects the two from having to provide benefits to drivers that would be granted to employees, but it does offer a compromise by entitling drivers to new benefits like minimum earnings and car insurance. Uber and Lyft spent over $200 million on the ballot measure to keep their drivers classified as independent contractors
Gig companies in Silicon Valley mustered up millions of dollars to lobby for the measure, and it paid off. Shares of Lyft and Uber shot up double digits Wednesday.
"I think the overwhelming success of Proposition 22 is a warning shot against state and local governments that try to crack down on ride-sharing," Cramer said. "If politicians want to come for Uber and Lyft, this referendum says that might not be the wisest move politically."
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