One booming industry that is capable of taking investors to a new high is the cannabis industry. Analysts expect a minimum compound annual growth of 25% to continue right through 2030.
This translates to a rapid market expansion, which would essentially be doubling in size every four years.
As the trend toward legalization of marijuana, along with its various derivatives continues to be observed throughout the developing world, so too does the potential of this industry reveal itself.
The coming age reflects an exciting opportunity for entrepreneurs and large cannabis corporations to demonstrate how they aim to lead this dynamic growth industry.
It would be the best time for them to start looking at the best cannabis stocks.
Despite such attractive promises, many of the best cannabis stocks remain highly risky investment choices.
This is due to the early phase of the industry, where winners and losers are yet to be clearly distinguished.
In this article, we bring forward some of the best cannabis stocks to buy right now.
Best Cannabis Stocks
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GrowGeneration
We begin our list with the emerging cannabis star, GrowGeneration Corp., (NASDAQ: GRWG). GrowGeneration, in addition to being one of the leading names in the marijuana business, is also renowned for selling organic fruits and vegetables.
Although its largest customers remain companies looking to acquire cannabis products.
GRWG being one of the leading companies in the marijuana business surely can’t be forgotten while looking at the best cannabis stocks to consider.
GrowGeneration is a company that has significantly benefited from favorable cannabis market conditions.
This can be ascertained from its revenue figures in the prior years, which indicate a high correlation to the broader marijuana market.
GRWG offers investors an opportunity for direct exposure to the wider industry, through which they would not miss the cannabis boom.
As the use of the plant continues to become accepted in both legal and social contexts, the addressable market for GrowGeneration continues to see an expansion.
GrowGeneration is distinct from its competitors given its dynamic flexibility and commitment to radical innovation.
When the Covid-19 pandemic struck global industries, GRGW focused on strengthening its e-commerce platform.
Revenue through this platform alone rose by a whopping 119% to over $422.5 million in 2021.
Its strong proprietary brand in the market further boosts its longer-term sustainability.
At present GRGW is trading at $4.72, which is 88% below its prior-year figure of above $40.
This makes the stock a great investment opportunity to consider, given its strong prospects.
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Green Thumb Industries Inc.
The second name on our list is the Green Thumb Industries Stock (OTCQX: GTBIF).
There is a lot to judge the potential of the best cannabis stocks by, yet the most critical remains cash flow.
Green Thumb dominates the industry on this metric and thus is of the best choices a cannabis investor could presently park their funds in.
Cash flow reflects the operational and financial health of a company. In the cannabis industry, which has just taken off, this metric is essential.
Most cannabis companies burn more money than they are able to generate in order to set up cultivation operations and set up facilities.
This remains the norm in the industry as of yet. However, this could prove disastrous in the wake of a looming recession, which could see cash-negative firms struggling to survive.
Green Thumb Industries Stock remains number one in the industry in terms of operating cash flow, with a figure of $158 million.
It has managed to achieve this through its excellent cash flow management which includes choosing to pay tax in the current period as opposed to deferring it.
The company also benefits from its liquidity by paying the least amount of interest on its long-term debt, in comparison to its peers.
Clearly, Green Thumbs’ financial position along with its cash flow management delivers it a significant edge above its competitors struggling to turn in positive cash flow.
This edge may prove critical in the occurrence of a recession. Such a strong profile makes Green Thumb among the best cannabis companies to invest in
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Trulieve Cannabis Corp
Up next, we present Trulieve Cannabis Corp (OTCQX: TCNNF).
Trulieve is one of the most impressive cannabis stock names while looking at the best cannabis stocks, given the explosive financial growth, it reports.
Since the astronomical legislative milestone for marijuana in 2017, the company reports a compound average growth rate of over 160%.
This figure is extremely impressive considering that it is higher than that of much larger, and more established cannabis corporations.
Trulieve is capable of achieving such stellar growth figures in large part due to its highly sustainable business strategy.
Most cannabis companies aim to achieve domination of the markets throughout the US or North America.
Trulieve alternatively focuses on Florida alone, which ensures sustained and strategic expansion.
Unlike most cannabis companies that chase growth explosions without focusing on financial sustainability, Trulieve continues to reinforce that it is slow and steady that eventually takes the lead.
Across the cannabis industry, every dollar of additional growth comes at a hefty cost, which companies are willing to pay for without much thought, Trulieve is ensuring business expansion that is matched to its financial growth, making it among the best cannabis companies to invest in.
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TerrAscend Corp
The fourth stock on our list is TerrAscend Corp, (OTCQX: TRSSF).
TerrAscend is a Canadian-based cannabis company, which serves the North American market.
TerrAscend holds some of the most premium recreational marijuana brands. These include State Flower, Kind Tree, Gage, and Cookies.
All of these recreational cannabis products have a robust market throughout the US, as well as in Canada.
Having established itself as a premium marijuana company, TerrAscend enjoys heavy profit margins, that are typically much higher than that of its peers.
This is a result of the star status this company holds in the markets it operates, and its products that have a quality that is unmatched by any of its peers.
Another feature that places TerrAscend a cut above the industry is the caliber of its senior leadership.
TerrAscend, on the other hand, is led by some of the most brilliant minds in the corporate world.
Executive Chairman, Jason Wild is also the chief investment officer, as well as president of his $2 billion asset management firm, JW Asset Management.
Jason started this fund in 1998, which was worth a mere $100,000 back then. The man clearly has a knack for transforming fledglings into giant mammoths.
Similarly, chief operating officer Ziad Ghanem is another gem for the company.
He was an executive for 15 years in the health and beauty giant, Walgreens Boot Alliance.
He also held the post of all markets’ president at Parallel, the renowned multi-state operator.
Due to all these features, it is difficult to imagine TerrAscend remaining a mediocre name in the cannabis industry.
It has not only established itself as one of the best cannabis companies to invest in, but also holds all the hallmarks of a player destined to grow big and become a good option for investors who are looking at the best marijuana stocks to buy.
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Altria Group Inc
The final stock on our list, and far from being the least is the tobacco industry giant, Altria Group Inc (NYSE: MO), the company in charge of the globally renowned Marlboro brand.
Although Altria Group is not an exclusive cannabis stock, the company has been pushing to expand its exposure to the cannabis business.
In late 2018, Altria spent $1.8 billion to acquire a stake in the cannabis company, Crono.
Since then, Altria has been heavily advocating for relaxed regulations on the marijuana business.
It has even been actively lobbying for the industry within the halls of Congress.
Altria Group offers investors significant exposure to the cannabis industry.
It also holds some significant advantages that other marijuana stocks do not necessarily possess.
First of all, Altria is a global giant that has logistics and marketing expertise.
No other cannabis firm comes close to competing against it through this metric.
This is due to the early phase nature of the industry, where few mature players operate.
Secondly, the company has been in existence for over 200 years.
For this reason, it has established the machinery and operations that deliver it a substantial reach in the market.
Its peers would probably require decades to reach such a position.
For this reason, MO is one of the best cannabis stocks to invest in.
This is especially true for anyone looking to see their capital directly exposed to the gains of the cannabis industry.
Top Cannabis Stock Contenders to Consider
In this section, we unveil our carefully curated list of the 30 best cannabis stocks to buy that deserve your undivided attention and thoughtful consideration.
Each of these stocks reflects the potential of the green leaf towards outcomes such as growth, innovation, and high returns:
- Aurora Cannabis (ACB)
- Canopy Growth (CGC)
- Cronos Group (CRON)
- HEXO Corp. (HEXO)
- Tilray (TLRY)
- Aphria (APHA)
- CannTrust Holdings (CNTTF)
- AFC Gamma, Inc. (AFCG)
- Agrify Corporation (AGFY)
- Flora Growth Corp. (FLGC)
- Turning Points Brand Inc. (TPB)
- Ispire Technology Inc. (ISPR)
- SNDL Inc. (SNDL)
- OrganiGram Holdings (OGI)
- GrowGeneration Corp. (GRWG)
- Innovative Industrial Properties (IIPR)
- Bright Green Corporation (BGXX)
- 22nd Century Group, Inc. (XXII)
- BYND Cannasoft Enterprises Inc. (BCAN)
- High Tide Inc. (HITI)
- WM Technology, Inc. (MAPS)
- Incannex Healthcare Limited (IXHL)
- InterCure Ltd. (INCR)
- Forian Inc. (FORA)
- Village Farms International, Inc. (VFF)
- PharmaCyte Biotech, Inc. (PMCB)
- Hydrofarm Holdings Group, Inc. (HYFM)
- SHF Holdings, Inc. (SHFS)
- Astrotech Corporation (ASTC)
- SpringBig Holdings, Inc. (SBIG)
Trends to Watch in Cannabis Stocks
When it comes to the cannabis industry, there are some exciting trends that you should definitely keep an eye on.
This ever-evolving space is full of potential, and understanding the emerging trends can help you make informed decisions when considering marijuana stocks.
So, let’s dive into some key trends worth noting:
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Legalization Momentum
The global cannabis legalization movement is gaining serious steam, opening up new markets and investment opportunities.
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Product Innovation
Get ready for a wave of creative cannabis products, from tasty edibles to refreshing beverages, as companies lead the charge in developing exciting new offerings.
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Medical Breakthroughs
Ongoing research is uncovering incredible medical applications for cannabis, with potential treatments and therapies driving market demand and growth.
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International Expansion
Keep an eye on companies exploring international markets, as successful expansion strategies can bring in substantial revenue and broaden investment horizons.
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Sustainability and Social Responsibility
Investors should look for companies committed to eco-friendly cultivation practices and ethical business conduct, as sustainability and social responsibility take center stage in the industry’s maturation.
Advantages of Cannabis Stocks
Investing in the best cannabis stocks can be a game-changer for your portfolio. Here are the key advantages to consider:
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Lucrative Market Potential
The cannabis industry is growing rapidly, thanks to legalization.
With a vast customer base and increasing revenue opportunities, the market has enormous potential.
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Acceptance and Legalization
Cannabis reform is gaining momentum globally.
More countries and states are legalizing cannabis, creating a favorable regulatory environment for businesses to thrive.
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Diverse Revenue Streams
Beyond cultivation and sale, the industry offers ancillary services like technology providers, biotech firms, and consumer goods manufacturers.
This diversity allows you to choose from a wide range of investment options.
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Medicinal Potential and Research
Scientific studies show cannabis has medical benefits for chronic pain, epilepsy, and more.
Investing in research-focused companies can tap into the promising medical cannabis market.
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Innovation and Product Development
The cannabis industry is constantly evolving, with advancements in extraction techniques, delivery methods, and formulations.
By investing, you can be part of these cutting-edge developments.
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International Expansion Opportunities
As more countries reform their cannabis laws, investing in companies with global ambitions can lead to substantial growth.
Being an early mover in new markets has its advantages.
What Are the Risks of Investing in Marijuana Stocks?
While it is true that the cannabis industry has been buzzing with potential, it is crucial to have a clear understanding of the challenges that come along with it.
In this spirit, we bring forward key risks for investors to keep in mind:
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Legal Risks
Laws surrounding cannabis can be complex, impacting market and company valuations.
Stay updated, avoid investing in illegal regions, and play it safe within the bounds of the law.
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Political Risks
Political decisions can create hurdles for the industry, so stay tuned, adapt your strategy, and be prepared for the rollercoaster ride.
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Supply and Demand Risks
Consumer preferences, product quality, and pricing dynamics fluctuate, affecting the demand for cannabis.
Be vigilant, as oversupply can lead to price reductions and fierce competition.
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Over-the-Counter (OTC) Stocks
OTC stocks are exciting but unpredictable. Watch out for lower liquidity, volatility, and looser reporting requirements.
Do thorough research and invest in credible and financially stable companies.
How to Invest in Marijuana
When it comes to investing in the cannabis industry, there are several ways for investors to gain exposure.
Whether you’re an experienced investor or just dipping your toes into the world of the best cannabis stocks, it’s important to understand the different avenues available to you.
The following are the main ways you can invest in marijuana:
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Individual Cannabis Stocks
If you like to hand-pick your investments and believe in the potential of specific cannabis companies, investing in individual stocks is for you.
It’s like selecting your team of cannabis champions.
For this, market players would need to know both how to buy cannabis stocks, as well as where to buy cannabis stocks from.
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Cannabis Exchange-Traded Funds (ETFs)
If you prefer a more diversified approach and want to spread your risk across multiple cannabis companies, consider investing in cannabis ETFs.
Think of them as a basket of the best cannabis stocks, allowing you to participate in the growth of the industry as a whole. The best ETFs ensure minimal risk.
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Mutual Funds
Not a fan of managing your own investments? No worries! Mutual funds are here to save the day.
These funds are managed by professionals who carefully select a mix of the best cannabis stocks to buy to create a diversified portfolio.
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Ancillary Businesses
Now, let’s think outside the box for a moment.
While most investors focus on cannabis producers and distributors, there’s another side to the industry: ancillary businesses.
These are companies that provide services or products to support the cannabis sector.
From hydroponics equipment manufacturers to packaging suppliers, technology providers, and consulting firms, investing in these businesses can offer a different angle to gain exposure to the industry.
Methodology
The cannabis industry is booming, presenting investors with plenty of exciting opportunities. But just like any investment, you need a solid game plan.
So, let’s dive into the methodology that will help you navigate the world of the best marijuana stocks and make those savvy investment decisions:
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Research and Understand the Market
Do your homework and get to know the cannabis industry inside out.
Learn about different segments like medical marijuana, recreational marijuana, and CBD products.
Stay up-to-date with trends, regulations, and emerging markets. Get familiar with key players, their business models, and financial performance.
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Assess the Legal and Regulatory Landscape
Stay informed about the ever-changing legal status of cannabis in your regions of interest.
Understand licensing requirements, compliance obligations, and potential risks.
Keep an eye on proposed regulatory changes that could impact the industry.
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Evaluate Company Fundamentals
Dig deep into the financials of cannabis companies you’re interested in. Look at revenue growth, profitability, and debt levels.
Assess their market position, product portfolio, and ability to innovate.
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Understand Risk Factors
Acknowledge the risks involved in cannabis investing. Stay mindful of regulatory changes, legal uncertainties, market volatility, and competition.
Assess individual company risks such as supply chain issues or quality control problems.
Stay informed and evaluate the potential impact of these risks on your investments.
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Diversify Your Portfolio
Spread the risk by diversifying your cannabis investments.
Invest in different segments of the industry, across various geographies, and in cannabis companies of different sizes.
Diversification helps protect your portfolio from significant losses and reduces the impact of any single investment underperforming.
This would optimize your income from this equity investment.
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Monitor and Adjust
Stay engaged with your cannabis investments by regularly monitoring company performance and cannabis industry updates.
Be prepared to adjust your strategy based on new information or changing market conditions.
The State of the U.S. Cannabis Market in 2023
The U.S. cannabis market is booming in 2023, with legal sales expected to reach $37 billion, up from $30 billion last year.
This growth is fueled by more states legalizing cannabis, the rising popularity of cannabis products, and increased acceptance by consumers and businesses.
It’s an industry on the rise, already surpassing craft beer and poised to outsell the chocolate industry by 2024.
With over 300,000 jobs created, the cannabis market is not only generating economic activity but also providing tax revenue of $10 billion for state and local governments.
The key trends of 2023 include continued legalization, the popularity of edibles, concentrates, and topicals, and the growing acceptance of cannabis by businesses and consumers.
The future looks bright as more states consider legalization and the industry continue to thrive.
Investors should consider the potential rewards of this dynamic and rapidly expanding market.
Impact of COVID-19 on Marijuana Stocks
When it comes to the cannabis industry, the COVID-19 pandemic left no stone unturned, including marijuana stocks.
It’s important to understand how the pandemic affected this sector and what it means for potential investors.
The following are the most direct impacts the pandemic laid on marijuana stocks:
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Increased Demand
In the early stages of the pandemic, when everything seemed uncertain, cannabis dispensaries were seen as essential businesses, allowing them to stay open.
This led to a surge in demand for cannabis products, which, in turn, drove up the value of marijuana stocks. It was a glimmer of positivity in a difficult time.
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Supply Chain Disruptions
Unfortunately, the closure of borders and travel restrictions created significant challenges for cannabis companies.
Importing and exporting products became increasingly difficult, causing disruptions in the supply chain.
This resulted in shortages of certain products and price fluctuations in the market.
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Economic Downturn
As marijuana consumers faced financial uncertainties, their spending habits changed.
This had a direct impact on the cannabis industry, as people were less inclined to purchase cannabis products, causing a decline in sales.
Conclusion
One industry that has been feeling the winds of change in the last decade has been that of cannabis and marijuana.
What had once been a social taboo is now making it into the mainstream, with some truly dynamically innovative companies taking charge of the industry.
Cannabis is poised to undergo explosive growth, as continues to achieve milestones in terms of legalization and deregulation.
The stocks mentioned in this article are some of the most promising names that will help you fly high.
Frequently Asked Questions
Why Are Marijuana Stocks Unique and Risky?
Investing in marijuana stocks is unique due to the rapidly evolving legal landscape and emerging industry, but it carries inherent risks like regulatory uncertainties and market volatility.
How Do I Choose Marijuana Stocks?
When selecting marijuana stocks, consider factors such as company fundamentals, market positioning, regulatory compliance, management expertise, and long-term growth potential.
Do Marijuana Stocks Have a Future?
Marijuana stocks hold significant potential as the global cannabis market expands, driven by shifting attitudes, increasing legalization, and growing consumer demand.
What Should I Look for In a Marijuana Stock?
Key factors to consider when evaluating marijuana stocks include revenue growth, profitability, competitive advantages, product innovation, strategic partnerships, and regulatory compliance.
Where Are Marijuana Stocks Listed?
Marijuana stocks are primarily listed on major stock exchanges, such as the New York Stock Exchange (NYSE), NASDAQ, Toronto Stock Exchange (TSX), and Canadian Securities Exchange (CSE).
