Medical and recreational cannabis use has been legalized in a growing number of U.S. states and on a national level in Canada, fueling a burgeoning legal cannabis industry in recent years. Cannabis stocks are now a prime focus for investors seeking potentially explosive sales and stock growth. But there are certain considerations associated with marijuana stocks that investors should keep in mind.
To begin with, cannabis stocks face higher-than-normal risk and volatility due to a long list of factors. Many publicly traded cannabis companies are young, unproven enterprises that face a complicated, fast-changing market that includes different laws across many local, state and regional jurisdictions. Also, cannabis use is still illegal at the U.S. federal level. The challenges are particularly great for marijuana penny stocks, and investors should be especially cautious and perform more than their usual due diligence when investing in these companies. Some up-and-coming names in the marijuana penny stock category include High Tide Inc. (HITI.V) and Vireo Health International Inc. (VREOF).
Marijuana stocks, represented by the ETFMG Alternative Harvest ETF (MJ), have solidly outperformed the broader market. MJ has provided a total return of 61.1% over the past 12 months, ahead of the Russell 1000’s total return of 43.2%. Note that MJ targets a broad assortment of cannabis industry stocks, including penny stocks. These market performance numbers and all statistics in the tables below are as of July 2, 2021.
Here are the top three marijuana penny stocks with the best value, the fastest growth, and the most momentum.
These are the marijuana penny stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The price-to-sales ratio shows how much you’re paying for the stock for each dollar of sales generated.
|Best Value Marijuana Penny Stocks|
|Price ($)||Market Cap ($M)||12-Month Trailing P/S Ratio|
|Greenlane Holdings Inc. (GNLN)||4.38||77.3||0.4|
|TILT Holdings Inc. (TILT.CX)||CA$0.60||CA$194.8||1.1|
|Harborside Inc. (HBOR.CX)||CA$1.82||CA$63.3||1.1|
- Greenlane Holdings Inc.: Greenlane Holdings is a holding company which, through subsidiaries, distributes vaporization products and accessories to smoke shops and other distribution vehicles. On July 6, the company announced that the company and KushCo Holdings Inc. (KSHB) have begun their proxy solicitation for their proposed merger. Both companies will hold meetings with their respective shareholders on Aug. 26. If approved, the transaction is expected to close this quarter.
- TILT Holdings Inc.: TILT Holdings is a cannabis industry technology and infrastructure company. The company provides same-day delivery for retailers, wholesalers, and consumers in the U.S., Canada, Puerto Rico, and Jamaica.
- Harborside Inc.: Harborside is vertically integrated cannabis company that sells vape cartridges, concentrates, edibles, and topicals. The company markets its products in the U.S. and Canada. On July 6, the company reported the completion of its acquisition of California-based cannabis manufacturing company Sublimation Inc. for $43.8 million.
These are the marijuana penny stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.
|Fastest-Growing Marijuana Penny Stocks|
|Price ($)||Market Cap ($M)||Revenue Growth (%)|
|The Green Organic Dutchman Holdings Ltd. (TGOD.TO)||CA$0.35||CA$181.9||162.8|
|Fire & Flower Holdings Corp. (FAF.TO)||CA$1.09||CA$363.3||90.7|
|4Front Ventures Corp. (FFNT.CX)||CA$1.54||CA$912.4||71.3|
- The Green Organic Dutchman Holdings Ltd.: The Green Organic Dutchman Holdings is a Canadian holding company that, through subsidiaries, produces organic and farm-grown cannabis for medical use. Its customer base is global.
- Fire & Flower Holdings Corp.: Fire & Flower Holdings, through its subsidiary Fire & Flower Inc., operates an independent retail store selling cannabis products for recreational use. The company operates retail locations throughout Alberta, Manitoba, Ontario, Saskatchewan, and Yukon. Fire & Flower announced on June 28 that it had partnered with Canada-based cannabis accessory company Humble & Fume to offer an expanded product catalogue online and in-store.
- 4Front Ventures Corp.: 4Front Ventures is a U.S.-based company that owns, operates, and manages cannabis cultivation and production facilities. 4Front posted a widening net loss for Q1 2021, although sales and product adoption across retail locations exceeded company projections.
These are the marijuana penny stocks that had the highest total return over the last 12 months.
|Marijuana Penny Stocks With the Most Momentum|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|Harborside Inc. (HBOR.CX)||CA$1.82||CA$63.3||203.3|
|Cansortium Inc. (TIUM.U.CX)||0.94||125.0||176.5|
|4Front Ventures Corp. (FFNT.CX)||CA$1.54||CA$912.4||170.2|
|ETFMG Alternative Harvest ETF (MJ)||N/A||N/A||61.1|
- Harborside Inc.: See company description above.
- Cansortium Inc.: Cansortium produces and sells medical cannabis products to customers in the U.S. and Canada. Its biggest U.S. market is Florida, and it is expanding into Texas, Michigan and Pennsylvania, where it has secured licenses and started operations.
- 4Front Ventures Corp.: See company description above.
YCharts. “Financial Data.” Accessed July 6, 2021.
Greenlane Holdings Inc. "Greenlane and KushCo Announce Commencement of Proxy Solicitation in Connection with their Previously Announced Merger." Accessed July 6, 2021.
- Harborside Inc. "Harborside Completes Acquisition of Sublime, California’s Award-Winning Infused Pre-Roll Brand." Accessed July 6, 2021.
Newsfile. "Fire & Flower and Humble & Fume to Offer Expanded Online Product Catalogue of Cannabis Accessories to North American Consumers." Accessed July 7, 2021.
4Front Ventures Corp. "4Front Ventures Reports First Quarter 2021 Financial Results and Provides Business Update." Accessed July 6, 2021.