Top cannabis stocks this month include SNDL Inc., TerrAscend Corp., and Trulieve Cannabis Corp., which together lead the industry in revenue growth even as sales decline across many U.S. markets.
The ETFMG Alternative Harvest ETF (MJ), one proxy for cannabis stock performance, slid 56% in the last year, and even the best-performing weed stock dropped 33% compared with a 13% decline in the large-capitalization Russell 1000 Index.
Cannabis sales across many parts of the U.S. slowed in recent months after an early-pandemic boom. Regulatory setbacks contributed to oversupply, pushing down product prices. Looking forward, licensed retailers will face competition from the illegal market and could struggle to navigate the patchwork of laws restricting cannabis use across the U.S.
To be sure, the list of states allowing adult-use and recreational cannabis grew in 2022, and President Biden's signing of the Medical Marijuana and Cannabidiol Research Expansion Act in December could bolster the industry.
We look in more detail below at the top cannabis stocks in three categories: best value, fastest growth, and best stock performance. All data is as of Feb. 22.
Best Value Marijuana Stocks
Here are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio, a rough measure of companies in the early stages of development that could eventually produce more profit when they achieve (or return to) profit. The ratio shows how much you're paying for the stock for each dollar of sales generated.
|Best Value Marijuana Stocks|
|Price ($)||Market Cap ($M)||12-Month Trailing P/S Ratio|
|Acreage Holdings Inc. (ACRDF)||0.84||94.8||0.4|
|Columbia Care Inc. (CCHWF)||0.62||255.7||0.5|
|Ascend Wellness Holdings Inc. (AAWH)||1.18||222.5||0.6|
|Cresco Labs Inc. (CRLBF)||1.82||546.4||0.6|
|Charlotte's Web Holdings Inc. (CWBHF)||0.47||71||0.8|
- Acreage Holdings Inc.: Acreage Holdings operates in the U.S. cannabis industry as a cultivator of cannabis plants and distributor of branded products such as The Botanist, Prime Wellness, and Superflux. Acreage Holdings has entered an acquisition agreement with Canopy USA, a subsidiary of Canadian cannabis company Canopy Growth Corp. The companies expect the acquisition to be completed by the end of the year.
- Columbia Care Inc.: Columbia Care produces and distributes cannabis-related products under the gLeaf, Classix, and Press brands. Columbia Care has agreed to be acquired by competitor Cresco Labs, with the deal expected to close by June 30.
- Ascend Wellness Holdings Inc.: Ascend Wellness cultivates, produces, and distributes cannabis-related packaged goods. The company's product range includes edibles, vapes, and concentrates.
- Cresco Labs Inc.: Cresco Labs grows, manufactures, and distributes cannabis products, operating in 10 states. Its brands include Cresco, Remedi, High Supply, Wonder Wellness Co., Mindy's, Good News, Sunnyside, and FloraCal Farms. As stated above, Cresco Labs is in the process of acquiring Columbia Care.
- Charlotte's Web Holdings Inc.: Charlotte's Web Holdings grows, manufactures, and markets CBD products such as hemp extract oil tinctures and immunity recovery supplements.
Fastest-Growing Marijuana Stocks
These are the marijuana stocks with the highest year-on-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to increase revenue organically or through other means and find growing companies that haven't yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share (EPS). However, sales growth alone does not guarantee a strong business because a company must also control costs to make a profit.
|Fastest Growing Marijuana Stocks|
|Price ($)||Market Cap ($M)||Revenue Growth (%)|
|SNDL Inc. (SNDL)||1.99||469.6||1,448|
|TerrAscend Corp. (TRSSF)||1.66||428||36.0|
|Trulieve Cannabis Corp. (TCNNF)||6.44||1,197||34.0|
|OrganiGram Holdings Inc. (OGI)||0.76||239.9||33.0|
|Acreage Holdings Inc. (ACRDF)||0.84||94.8||28.0|
- SNDL Inc.: SNDL cultivates, processes, and sells cannabis through its own outlets, and also sells alcoholic beverages. Its brands include Sundial, Top Leaf, Palmetto, and Grasslands. On Jan. 17, SNDL completed the acquisition of cannabinoid biotech firm The Valens Co. for total consideration of about $138 million.
- TerrAscend Corp.: TerrAscend is a vertically integrated cannabis company that operates in the U.S. and Canada, with brands including The Apothecarium, Ilera Healthcare, and Kind Tree. The company announced on Jan. 19 that it had entered a multi-year partnership with edibles maker Wana Brands to be the sole manufacturer and supplier of Wana products in New Jersey.
- Trulieve Cannabis Corp.: Trulieve is a vertically integrated cannabis company with operations in 11 states. Its brands include Cultivar Collection, Muse, Roll One, Sweet Talk, and Momenta.
- OrganiGram Holdings Inc.: OrganiGram is a Canada-based producer of cannabis-derived products that retail under brands such as Monjour, Tremblant, and Edison Cannabis Co.
- Acreage Holdings Inc.: See company description above.
Marijuana Stocks With the Best Performance
These are the marijuana stocks that had the smallest declines in total return over the past 12 months of the companies we examined.
|Marijuana Stocks With the Best Performance|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|Cronos Group Inc. (CRON)||2.17||822.6||-35.6|
|Acreage Holdings Inc. (ACRDF)||0.84||94.8||-38.7|
|OrganiGram Holdings Inc. (OGI)||0.76||239.9||-47.6|
|Curaleaf Holdings Inc. (CURLF)||3.71||2,663.6||-53.3|
|Tilray Brands Inc. (TLRY)||2.84||1,748||-53.4|
|ETFMG Alternative Harvest ETF (MJ)||N/A||N/A||-62.2|
- Cronos Group Inc.: Cronos Group is a Canadian cannabis company that sells brands including Spinach, Happy Dance, and PEACE+.
- Acreage Holdings Inc.: See company description above.
- OrganiGram Holdings Inc.: See company description above.
- Curaleaf Holdings Inc.: Curaleaf produces cannabis products for retail and wholesale distribution, as well as providing similar professional services.
- Tilray Brands Inc.: Tilray cultivates, processes, and distributes cannabis for medical use. Tilray has operations in 20 countries. In early January, Tilray announced a brand refresh for cannabis wellness brand Solei as well as new pre-roll and softgel products.
Trends to Watch in Cannabis Stocks
Marijuana stocks have given investors a wild ride over the past few years, staging both big rallies and substantial declines. Those who invest in them should monitor these key trends as they will likely guide price direction in months and years ahead.
Financing: Most U.S. financial institutions avoid funding cannabis companies, as marijuana is still federally illegal, meaning lenders that provide loans could face possible prosecution. However, the Secure and Fair Enforcement Banking Act (SAFE)—which passed in the U.S. House of Representatives only in 2021—aims to address this by preventing the federal government from penalizing banks that offer financial services to the cannabis industry. Although the legislation has failed to gain support in the Senate, investors should monitor any amendments to the bill that could increase the chances of it gaining congressional approval.
Increasing Merger and Acquisition Activity: As of last year's fourth quarter, $8.5 billion of merger and acquisition (M&A) transactions had closed in the sector, significantly higher than the $3 billion of deals in 2020 and $3.7 billion in 2019. Increasing dealmaking indicates that institutional investors have growing confidence in the industry's future.
Potential U.S. Legalization: While several cannabis legalization bills are floating around the halls of Congress, bipartisan support remains difficult to achieve, creating a large amount of uncertainty for industry participants. However, several leading Canadian operators, such as Cronos and Tilray, are banking on the U.S. cannabis market, with both entering into acquisition deals subject to cannabis' decriminalization south of the border.
Advantages of Marijuana Stocks
Despite the underwhelming performance of marijuana stocks over the past year, the sector offers risk-taking investors significant growth potential. According to industry analysis firm MJBizDaily, U.S. cannabis sales were projected to surpass $33 billion in 2022 before reaching $52 billion by the end of 2026. Moreover, the global cannabis market is expected to reach nearly $200 billion by 2028, up from $28 billion in 2021.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
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