The cannabis industry is expected to double in total value over the next 3 years, with legal products sales estimated to top $43 billion. That said, right now is prime time to invest and venture capitalists are taking note. Naturally, being an incipient market, there are numerous investment risks to take into consideration so it is important to have a good understanding of industry operations and patterns beforehand.
It can take some time to get educated in all the innerworkings of the complicated and everchanging cannabis industry, so until then, you can check out some of the current top stocks from our list and see if any are a right fit for you.
The cannabis industry is still relatively new, but growing at exponential rates. That’s why now is the perfect time to consider investing. If you’d like to learn more about the industry, make sure to subscribe to The Medical Cannabis Weekly Newsletter, your top-source for all things cannabis-related including more articles like this one and exclusive deals on various legal products.
1. Innovative Industrial Properties
Innovative Industrial Properties (NYSE:IIPR) is probably a name you’re already familiar with, as it’s well known, well performing, and somewhat unique in the industry. This company doesn’t deal directly with cannabis products nor is it really an ancillary company. Rather, it’s a real estate investment trust that specializes in the management of cannabis cultivation facilities, which it leases to growers across the US.
As of now, they only offer property contracts to growers that are licensed to cultivate for medical purposes. The medical market is stable, more widely accepted, and according to recent data collected by Global Market Insights, expected to surpass $15 billion in valuation over the next few years. IIP has a large portfolio in this sector that includes properties in Arizona, California, Colorado, Florida, and Illinois.
Now let’s take a quick look at the numbers. In 2020, the company reported a 162% increase in revenue, as well as a net income boost of 191 percent. In the first half of 2021, they company continued to see growth by 101% in the first quarter and 119% in the second.
In 2020 alone, the company reported that its revenue increased 162% and net income rose by 191% from the prior year. In the first half of 2021, the company’s revenue and net income surged by 101% and 119%, respectively, from the same period in 2020. The company raises its payout on a regular basis and recently announced a 28% year-over-year increase. Additionally, IIR is yielding 2.6% percent, compared to the average of 1.3% noted by S&P 500.
2. Jushi Holdings
When it comes to the type of cannabis stocks most investors think of when considering the marijuana industry, Jushi Holdings (OTC:JUSHF) is one of the first that comes to mind. Jushi is a multi-state cannabis operator has a large portfolio of dispensaries across the US in states such as California, Illinois, Virginia, Massachusetts, and Pennsylvania, its largest market where it current has 15 stores.
Jushi Holdings (OTC:JUSHF) is the kind of stock that most investors think of when looking at the marijuana industry. The multi-state cannabis operator has a fast-growing portfolio of dispensaries and retail locations that run from coast to coast.
Jushi Holdings has locations in Pennsylvania, Illinois, California, Virginia, and Massachusetts. The company’s most substantial presence is in Pennsylvania, where it has 15 stores. Additionally, they recently acquired an 8,000-square-foot medical cannabis production facility in Ohio, where they already sell a large percentage of their products.
Jushi Holdings reported a 220% year-over-year revenue increase in the most recent quarter, as well as 194% raise in gross profits from 12 months prior. Shares are up 80% since last year but they are still affordable enough for even novice investors to consider.
3. Cresco Labs
Cresco Labs (CRLBF), is another multistate operator with business in 10 different states. Their portfolio includes 44 ancillary retail businesses, 18 production facilities, and 32 dispensaries. National brands they represent include Cresco, Reserve, Remedi, and Mindy’s Edibles.
In April of this year, Cresco Labs announced the launch of a new line of low-dose cannabis-based edibles: Wonder Wellness. For now, this brand is only available in Illinois, but they will so be on store shelves in the all the states in which Cresco currently operates.
Cresco reported a 123% increase in sales during Q2, as well as an adjusted EBITDA of $45.5 million, which was 98% higher than the same time last year. In total, they reported a net profit of $2.7 billion, a 106% increase from 12 months ago – making it one of the safest and most reliable stocks in the industry.
GrowGeneration (GRWG) is the largest operator of hydroponic garden centers in the United States. Although they have been on a bit of a roller coaster ride this year as far as stock prices rising and falling, overall, they have been on a steady rise with shares doubling annually over the last 3 years.
In July 2021, GrowGeneration announced the acquisition of Michigan-based company HGS Hydro. In total, HGS operates seven stores and they are the third largest retailer of hydroponic products in the US.
In total, GrowGeneration operates 65 stores in 12 different states, and they are currently looking to expand into many of the newer markets such as Missouri, Illinois, Arizona, Pennsylvania, New York, and New Jersey. By 2023, they plan to operate over 100 stores across the country.
Current numbers for GrowGeneration boast a year-over-year revenue increase of 190%, and a net income rise of 161% compared to last year. They also experienced 60% same-store sales growth and raised their full-year sales guidance. Despite some minor setbacks and occasional drop in prices, GrowGeneration is moving up again and stock prices are quite reasonable heading into fall.
5. ETFMG Alternative Harvest ETF
As far as industry stocks go, ETFMG Alternative Harvest ETF (MJ) is a well-known name in the world of cannabis investing and the first ETF to target the industry. Since launching in December 2015, MJ has accumulated an estimated $1.4 billion in total assets, and the company is expected to grow to $66.3 billion in annual revenue within the next 3 years. MJ has an impressive portfolio of Canadian holdings including Canopy Growth and Cronos Group.
According to Kiplinger’s Investment Outlook, “The Prime Alternative Harvest Index looks to embrace a broad strategy that not only invests in companies that grow or manufacture cannabis-related products, as well as CBD stocks; it also invests in those businesses that are likely to benefit from increased cannabis use worldwide. For example, a company such as Scotts Miracle-Gro (SMG) will benefit from the sale of lawn care, gardening and hydroponics equipment to cannabis enthusiasts. It represents 2.9% of MJ’s total portfolio, putting it outside the top 10 holdings.”
That being said, one slight setback to buying MJ stock is that their expense ratio is a bit high at 0.75%. But despite that, it’s an affordable, solid stock with tremendous growth potential.
Final Thoughts on Fall Cannabis Stocks
Right now is the perfect time to invest in cannabis. The market has solidified it’s place in our culture, so we know it’s here to stay, but the industry is still in its infancy so stock prices are affordable and seeing a lot of forward momentum.
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