Best Cannabis Stocks to Buy in September 2024

Cannabis stocks surged late April as the Biden administration took a step to reclassify marijuana as a less dangerous drug, which would significantly reduce the tax burden on cannabis firms, lifting profits and unlocking funds for investment.

Marijuana, which has been a Schedule I drug, the same class as heroin and LSD, for more than 50 years, would get a Schedule III drug status, putting it alongside Tylenol with codeine and anabolic steroids, under the proposal by the US Drug Enforcement Administration.

US 280E tax code regulations currently prevent cannabis businesses from deducting normal business expenses, such as rent, salaries and advertising, from their taxable income.

There are 38 states and Washington D.C. that either allow medical marijuana or recreational marijuana sales, or both. Worldwide, cannabis is legal in neighboring Canada and 10 other countries.

We feature 10 cannabis stocks that are in the strongest position to gain if the reclassification is approved. Read on for our analysis of the best pot stocks.

A Closer Look at the Best Marijuana Stocks to Buy

Let’s take an in-depth look at the marijuana stocks included in our list and explore the investment case for each.

1. Glass House Brands – Best Cannabis Stock for Growth

Glass House has been able to succeed in one of the most difficult states for cannabis – California, where cannabis companies face high taxes and strong competition from an illicit market. CEO Kyle Kazan said that federal legalization of cannabis would end most challenges for legal cannabis retailers.

The company, which operates 10 stores in the state, had $160.8 million in 2023 revenue, up 89%. This year, the company said it expects revenue between $215 million and $220 million, up more than 35% over 2023. It finished 2023 with $32.5 million in cash, up 130% over 2022.

It isn’t profitable, but for the first time, it had a full year of positive adjusted EBITDA, including adjusted EBITDA of $3.8 million in the fourth quarter. Glass House applies low-cost production methods by building large greenhouses for economies of scale that benefit its wholesale business. 

2. Innovative Industrial Properties – Best Cannabis REIT Stock

Innovative has a diversified portfolio of cannabis tenants, with not one of them accounting for more than 16% of the company’s annualized rent. The 108 properties across 19 states it owns cover about 8.9 million rentable square feet. Five of the properties are still under construction. It collected 100% of the rent from the rest of the properties through February.

In 2023, the company increased revenue by 12% to $309.5 million and adjusted funds from operation (AFFO), a superior metric for profitability for a REIT compared to net income, rose 10% to $265.5 million.

It raised its dividend by 1% this year to $1.82, just a small increase, but since it began delivering a quarterly dividend in 2017, the company has increased it by 238%. The stock’s rise over the past year has lowered the yield on its dividend, but it’s still near 7%. Even with that high dividend, the payout ratio is only 80%, which isn’t high as REITs are expected to return 90% of taxable income to shareholders.

3. Green Thumb Industries  – Best Cannabis Stock for  Profitability

Green Thumb Industries has finished the last four years with positive net income. It opened 15 stores in 2023 and now has 92 across 14 states.

In 2023, it had revenue of $1.1 billion, up 4% and EPS of $0.15, an increase of 200%. It also bought back $40 million of its shares and its board approved an additional $60 million in share repurchases. It improved cash flow by 20% over 2022.

Because it is already turning a profit, it stands to gain more from developments in the cannabis industry, such any moves closer to legalization by the federal government, than other MSOs that remain unprofitable.

Green Thumb’s stock price has gained 46% over the past year and its average rating from Wall Street analysts is ‘Strong Buy.’ Up until this point, Green Thumb Industries has grown slowly, prudently, but it now may be able to supercharge its growth.

4. Tilray Brands – A Great Marijuana Stock for Diversification

Tilray Brands is a Canadian cannabis retailer, but given its status as the fifth-largest US craft brewer, it’s in a unique position to jump into the US market once federal decriminalization happens. The rescheduling of cannabis could open a path for Tilray to leverage its expertise in Canadian and European medical cannabis to sell medical cannabis in the US.

The company continues to increase revenue. Through the first nine months of fiscal 2024, it reported $559 million in revenue, rising 26.2% year over year. Though not profitable yet, it has significantly reduced its losses during those three quarters, with a loss per share $0.29, compared to a $2.20 loss per share in the same period in fiscal 2023.

Boosted by its purchase of Hexo last year, the company has the No. 1 share in Canadian cannabis sales at 11.6%. Tilray led Canada in sales of cannabis flower, oils, concentrates and THC beverages. The company is also the leading retailer of medicinal marijuana in Europe. 

5. Verano Holdings – Record Revenue Driven by Its Wholesale Business

Verano Holdings is a small marijuana stock with a market cap of $1.76 billion. It made our list of the best marijuana stocks because its sales extend well beyond its own 138 dispensaries in 13 states. Its brands are sold in more than 700 retail locations across the US with 32% of its revenue coming from wholesale sales. It launched 70 new products in 2023.

Revenue climbed 7% in 2023 to $938 million, thanks to a full year of adult-use sales in New Jersey, as well as adult-use launches in Maryland and Connecticut.

It also cut down on its losses, with a net loss of $117 million in 2023, compared to a loss of $269 million in 2022. That allowed it to improve its cash position to $110 million compared to $94 million at the end of 2022.

6. Curaleaf – Best Cannabis Stock for Strong Revenue, International Scope

New York City-based Curaleaf Holdings is the largest publicly traded cannabis company, with a market cap of nearly $4 billion. It operates 145 dispensaries across 17 states selling branded cannabis products. It produced $1.35 billion in revenue in 2023, up 6% and more than any other MSO.

Curaleaf Holdings had a net loss of $281.2 million, or net loss per share of $0.39 for the year, compared to a net loss of $370.1 million in 2022, or a loss per share of $0.52.

The company has a strong international presence, and it recently completed a $16 million purchase of Canadian cannabis producer Northern Green Canada, which has an EU-GMP certification. The move improves Curaleaf’s edge in Germany, Poland and the United Kingdom and gives it a presence in Australia and New Zealand.

The stock price has risen 42% in the past year and Curaleaf is also one of the marijuana stocks carrying a ‘Strong Buy’ rating on average from analysts.

7. Ascend Wellness – Under-the-Radar Cannabis Bargain

Ascend Wellness opened six new dispensaries in 2023, bringing its total to 35 across Illinois, Michigan, Ohio, Massachusetts, New Jersey, Pennsylvania, and Maryland.

The company, for the first time, became cash-flow positive in 2023. It had 2023 revenue of $518.6 million, up 27.8% and trimmed its net income loss from $80.9 million in 2022 to $43.2 million. Full-year revenue increased 27.8% year over year to $518.6 million. It finished the year with $236.2 million in net debt, compared to $256.5 net debt in 2022.

The improved profitability was driven by growth in wholesale and retail revenue, thanks in a big part to adult-use sales beginning in Maryland and margin improvements in its wholesale businesses in Massachusetts and New Jersey. The stock price is up 10% in rhe past year, however, it has gained 25% so far this year, clearly benefiting from progress toward marijuana legalization. The shares are rated a ‘Strong Buy’ on average.

8. TerrAscend – Popular Cannabis Stock for Contrarian Investors

TerrAscend, like Ascend Wellness, is a small cannabis retailer. It operates 38 dispensaries across Maryland, Pennsylvania, New Jersey, Michigan, California and Canada. Like Ascend, it celebrated its first year of positive cash flow in 2023. It finished the year with $31.1 million in cash flow from continuing operations and has had six consecutive quarters of positive cash flow from continuing operations.

In 2023, it had $317.3 million in revenue, up 28%, and it trimmed its full-year net loss to $82.3 million, compared to a $299.4 million loss in 2022.

It has grown, but at a disciplined rate. In 2023, it bought four dispensaries in Maryland, the year before, it bought five in Michigan and in 2021, it bought three dispensaries to give it a presence in Pennsylvania.

TerrAscend’s stock price has risen only 4% this year but it has an average ‘Strong Buy’ rating from analysts, and its average price target implies a 76% upside potential 12 months from now.

9. New Lake Capital Partners – Hidden Gem of a Cannabis REIT

NewLake is a smaller cannabis REIT with 31 properties across 12 states. It directly benefits from the reclassification of weed because that will make it easier for its tenants to be profitable. It received 100% of its rent owed in the fourth quarter and has an average remaining term of 14.3 years.

NewLake has boosted its dividend more than 67% since its initial public offering in 2021. It has recently raised its quarterly dividend by 2.5% to $0.41 from the prior quarter and by 5.1% year over year.

In 2023, NewLake’s revenue rose 5.1% to $47.3 million, and its AFFO climbed 5.2% to $40.7 million. The one concern for NewLake is that it has one client, Curaleaf Holdings, that has 10 leases with it, accounting for more than 32% of its leases. That creates a high level of risk, but with Curaleaf’s revenue and profitability growing, that risk is contained.

10. Trulieve – Huge Gains Ahead if Florida Approves Adult Pot Use

The Florida Supreme Court is preparing referendum that would ask the state’s voters if they would want to allow adult-use marijuana sales. Florida has already legalized medical marijuana sales. If the initiative passes in November, as expected, Trulieve Cannabis would benefit more than any other company from expanding sales, due to its strong presence in the state.

Trulieve Cannabis has 197 dispensaries that sell branded cannabis products with 136 of them in Florida, with the rest in Arizona, Georgia, Pennsylvania, and West Virginia.

The pot retailer has had 24 consecutive quarters of positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), though 2023 was a rough year. Its revenue declined 7% to $1.3 billion and Trulieve Cannabis posted a loss of $2.79 per share, compared to a loss of $1.31 per share in 2022.

Trulieve’s stock price has risen 92% in the past year and 111% this year, helped by the reclassification of marijuana. The stock also has a ‘Strong Buy’ average rating.

How to Invest in Marijuana Stocks

You can invest in cannabis stocks using an online stock broker. While there are many brokers to choose from, eToro stands out as the best option for buying cannabis industry stocks.

At eToro, you can find a wide selection of cannabis stocks and ETFs. The broker offers trading in shares of Innovative Industrial Properties, Aurora Cannabis, Canopy Growth, Jazz Pharmaceuticals, Trulieve Cannabis , Cresco Labs and others. eToro also carries cannabis exchange traded funds (ETFs) like the ETFMG Alternative Harvest ETF.

Trading cannabis stocks and ETFs at eToro is commission-free through your brokerage account. On top of that, the broker charges no deposit fees (except FX fees for non-USD deposits) and you can open an account with only $100 (country dependent) making eToro one of the most competitive platforms around.

eToro uses sentiment tracking to help you identify the best marijuana stocks to buy now. You can see at a glance whether other eToro users are net buying or net selling shares of any cannabis stock or ETF.

In addition, eToro has a powerful charting platform with dozens of built-in technical indicators. You can use this platform to find the opportunities to buy cannabis stocks on a dip or sell at a peak.

eToro also includes a handy copy trading feature that allows you to track and mimic other more experienced traders on the platform.

eToro is available in more than 100 countries. The brokerage is regulated in the US.

Why Invest in the Stocks of Cannabis Companies?

The global market for legal weed will grow to $49.56 billion by 2029 from $42.89 billion in 2024, increasing at a compound annual growth rate (CAGR) of 2.89%, according to Statista. There are other reports that put the potential growth rate for cannabis sales much higher.

Regardless of the opportunity, the uncertainties about the legal framework, and the small market caps of most cannabis companies add a great deal of risk into the equation.

It’s also worth noting that while the largest marijuana companies are listed on the New York Stock Exchange, many marijuana stocks trade over the counter and OTC stocks can be riskier than traditional stocks. OTC companies aren’t held to the same reporting standards set out by the SEC as stocks listed on major exchanges.

Investing in cannabis has the potential to create great wealth, but investors need to do their research into cannabis companies and diversify their portfolio of marijuana stocks.

Where to Get Tips and Insights on Marijuana Stocks

To find out more about cannabis stock picks, we recommend checking out AltIndex, a subscription service that uses artificial intelligence (AI) and alternative data. It even has a separate ranking for best cannabis stocks.

This means that it analyzes social media and other websites, app downloads, customer satisfaction ratings, and other data regarding a company.

The data AltIndex gathers over time is then compared to other companies while using machine learning to come up with investment insights. Stocks are given a score from of 1 to 100, simplifying the analytical process for investors.

With more than 10k members, AltIndex is a widely used and trusted service. It provides over 100,000 unique daily stock insights and alerts, and has a very impressive win rate of 75% from its AI stock picks.

You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well many other useful features.

Conclusion

All cannabis companies are in the early stage of their growth cycles, presenting a great opportunity for investors, with a caveat. The risk is quite high as well. With the cannabis industry so new and so few companies showing a profit, it’s hard to tell if a particular stock is priced too high – or too low.

However, if you do find the right cannabis stock, it is likely to benefit from trends that point to legal cannabis sales growing at a fast pace over the next decade.

References

• Innovative Industrial Properties Reports Fourth Quarter and Full-Year 2023 Results – Innovative Industrial Properties
• Green Thumb Industries Inc. – Green Thumb Industries Reports Fourth Quarter and Full Year 2023 Results (gtigrows.com)
• Tilray : Tilray Brands, Inc. Reports Q3 Fiscal 2024 Financial Results
• Curaleaf Completes Acquisition of Northern Green Canada – Apr 22, 2024
• AWH ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS | Ascend Wellness Holdings (awholdings.com)
• NewLake Capital Partners Reports Fourth Quarter and Full-Year 2023 Financial Results; Raises First Quarter 2024 Common Stock Dividend to $0.41 per Share :: NewLake Capital Partners, Inc. (NLCP)
• Cannabis – United States | Statista Market Forecast
• https://www.globenewswire.com/en/news-release/2022/03/23/2408755/0/en/New-Frontier-Data-Projects-Annual-U-S-Cannabis-Sales-to-More-Than-Double-to-72B-by-2030.html
• https://etfdb.com/themes/marijuana-etfs/

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