Cannabis stocks are having a rough year: An index that tracks the industry lost almost two-thirds of its value, and the best performing company, Green Thumb Industries Inc., has slipped about 30%. A closer look at the numbers, though, and some firm stand out as measured by revenue growth, including SNDL Inc., OrganiGram Holdings Inc.. That's not to mention Jushi Holdings Inc., which also offers among the best values in the industry, as measured by its price-to-sales ratio,
The marijuana market is front and center this month as Americans cast their votes on cannabis ballot propositions across the U.S. Medical cannabis is already legal in 37 states, and 19 (along with the District of Columbia) permit recreational use, including 12 that have done so through the ballot box. As a result, cannabis is running out of jurisdictional terrain to conquer.
Among blue states, only Maryland, Delaware, and Hawaii haven't legalized recreational use. Maryland is one of five states set to vote on a ballot proposition to do so, and a recent poll suggests voters there will overwhelmingly endorse legalization by the state legislature. The outcome of cannabis ballot propositions in the four red states voting on the issue this year—Arkansas, Missouri, North Dakota, and South Dakota—is less certain. Recent polls show tighter races in these states.
Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have fallen 62% over the past 12 months compared with the 21% decline in the Russell 1000 Index's. These market performance numbers and all statistics in the tables below are as of Nov. 3.
Here are the top five marijuana stocks with the best value, the fastest growth, and the best performance.
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 and could eventually produce more profit when they achieve (or returns to) profit. The ratio shows how much you're paying for the stock for each dollar of sales generated.
|Best Value Marijuana Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/S Ratio|
|Cresco Labs Inc. (CL.CX)||CA$4.31||CA$1.3||1.1|
|Jushi Holdings Inc. (JUSH.CX)||CA$2.29||CA$0.4||1.4|
|Aurora Cannabis Inc. (ACB)||1.38||0.4||1.7|
|TerrAscend Corp. (TER.CX)||CA$2.14||0.5||1.7|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$15.10||2.8||1.8|
- Cresco Labs Inc.: Cresco Labs is a cannabis products company involved in growing, manufacturing, and distribution. The company operates in 10 states, including 75 production facilities and dispensaries. Its brands include Cresco, Remedi, High Supply, Wonder Wellness Co., Mindy's, Good News, Sunnyside, and FloraCal Farms. Cresco Labs' stock also trades OTC in the U.S. under the ticker CRLBF. On July 15, Cresco reported that Columbia Care Inc., a cultivator and maker of cannabis products, had obtained the final order from the Supreme Court of British Columbia approving its business combination with Cresco Labs. Cresco will acquire all outstanding shares of Columbia Care. The combination is expected to close in in the fourth quarter. At the time of the announcement, it was estimated that Cresco Labs is paying $2 billion for Columbia Care.
- Jushi Holdings Inc.: Jushi Holdings focuses on branded cannabis and hemp-based assets. The company is engaged in retail, distribution, cultivation, and processing operations. Its brands include: The Bank, focused on plant genetics and cultivation; The Lab, specializing in vape products and concentrates; Nira+, a producer of medicinal THC products; Sèche, which offers various branded ground and flower cannabis products; and Tasteology, a provider of THC-infused products. Jushi also trades OTC in the U.S. under the ticker JUSHF. In late October, Jushi announced the launch of cannabis-infused fruit chews under its Tasteology brand. The product was launched in Massachusetts and is expected to launch in Virginia, Ohio and Nevada early next year.
- Aurora Cannabis Inc.: Aurora Cannabis is a Canadian company specializing in the production, distribution, and sale of medical cannabis products. Its brands include Aurora, Aurora Drift, Daily Special, MedReleaf, Whistler, and more. The company's growth strategy targets medical cannabis markets across the globe as well as the U.S. hemp-derived CBD market and the Canadian recreational market. On Oct. 17, the company announced the launch of three proprietary cannabis strains: Electric Honeydew, Ultra Grape Kush and Organic BC White Grape OG.
- TerrAscend Corp.: TerrAscend is a Canada-based vertically integrated cannabis company with operations in Canada and the U.S. The company's brands and business lines include Gage Cannabis, The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, and Valhalla Confections. TerrAscend also trades OTC in U.S. markets under the ticker TRSSF.
- Trulieve Cannabis Corp.: Trulieve is a vertically integrated cannabis company with operations in 11 states. The company's brands include Cultivar Collection, Muse, Sweet Talk, and Momenta. Trulieve shares trade OTC under the ticker TCNNF. On Aug. 10, Trulieve announced second-quarter results, including a net loss compared with net income for the prior-year quarter and solid revenue growth year-over-year (YOY). Wholesale, licensing, and other non-retail revenue declined over the period in question.
These are the marijuana stocks with the highest 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 can also be potentially misleading about the strength of a business because growing sales for money-losing businesses can be harmful if the companies have no plan to reach profit.
|Fastest Growing Marijuana Stocks|
|Price ($)||Market Cap ($B)||Revenue Growth (%)|
|SNDL Inc. (SNDL)||2.38||0.6||2,250|
|OrganiGram Holdings Inc. (OGI)||0.97||0.3||82.8|
|Jushi Holdings Inc. (JUSH.CX)||CA$2.29||CA$0.4||58.2|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$15.10||CA$2.8||54.6|
|Cronos Group Inc. (CRON)||3.06||1.2||47.6|
- SNDL Inc.: SNDL is a Canadian cannabis producer. The company operates cultivation and processing facilities, retail stores, and also sells alcoholic beverages. Its brands include Sundial, Top Leaf, Palmetto, and Grasslands. At its annual and special shareholder meeting in late July, the company officially changed its name from Sundial Growers Inc. The company reported in early November that it had completed the acquisition of the Zenabis Business, including a 380,000-square-foot growing facility and cannabis inventory. The terms of the deal weren't disclosed.
- OrganiGram Holdings Inc.: Organigram Holdings is a Canadian producer of medical
and recreational cannabis. Its subsidiaries include Organigram Inc., Laurentian Organic Inc., and The Edibles and Infusions Corp., and its brands include Edison Cannabis Co., SHRED, and monjour, among others.
- Jushi Holdings Inc.: See above for company description.
- Trulieve Cannabis Corp.: See above for company description.
- Cronos Group Inc.: Cronos Group is a Canadian cannabis company. Its brand portfolio includes Spinach, Happy Dance, and PEACE+. On Oct. 24, the company said it had reached final settlement agreements with the U.S. Securities and Exchange Commission and the Staff of the Ontario Securities Commission. The regulators investigated Cronos for restatements it made of its financial statements for the first three quarters of 2019 and the second quarter of 2021.
These are the marijuana stocks that had the smallest declines in total return over the past 12 months of the companies we examined.
|Marijuana Stocks With the Best Performance|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Green Thumb Industries Inc. (GTII.CX)||CA$16.90||CA$4.0||-30.3|
|Verano Holdings Corp. (VRNO.CX)||CA$7.25||CA$2.3||-42.8|
|Cronos Group Inc. (CRON)||3.06||1.2||-44.6|
|Jushi Holdings Inc. (JUSH.CX)||CA$2.29||CA$0.4||-48.9|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$15.10||CA$2.8||-51.1|
|ETFMG Alternative Harvest ETF (MJ)||N/A||N/A||-62.2|
- Green Thumb Industries Inc.: Green Thumb Industries is a cannabis retailer and consumer packaged products company. It markets products under brand names including Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles, and RYTHM. It has 77 open retail locations across 15 U.S. markets. Green Thumb stock also trades OTC under the ticker GTBIF. Green Thumb reported third quarter results on Nov. 2. Net income declined by more than half as revenue grew by 12% YOY. Increased retail sales in New Jersey and Illinois helped to drive revenue growth.
- Verano Holdings Corp.: Verano Holdings is a vertically integrated, multi-state cannabis operator. The company produces a wide range of medical and adult-use cannabis products. It owns and operates 13 cultivation and manufacturing facilities and owns over 100 dispensaries in a number of states throughout the U.S. The company's stock also trades OTC in the U.S. under the ticker VRNOF. Verano announced on Nov. 3 the launch of BITS cannabis gummies, a low-dose, high-function product aiming to make cannabis edibles more accessible to a wider audience.
- Cronos Group Inc.: See above for company description.
- Jushi Holdings Inc.: See above for company description.
- Trulieve Cannabis Corp.: See above for company description.
Trends to Watch in Cannabis Stocks
Marijuana stocks have given investors a wild ride over the past few years, staging big rallies and substantial declines. Those who invest 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 through the House in 2021—aims to address this by preventing the federal government from penalizing banks that offer financial services to the 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 $3.6 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 grace 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 companies entering into acquisition deals subject to its 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 will 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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