Cannabis Seed Companies Stock

Should you put your hard-earned money into marijuana stocks? We detail the investment opportunities, risks, and regulations in the cannabis space. Learn how to invest in marijuana stocks now. Compare our top recommendations for brokers and find your match to start trading today. These are the marijuana stocks with the best value, fastest growth, and best performance for August 2022.

Investing in Marijuana Stocks

The marijuana industry is expected to expand at a compound annual growth rate of at least 25% through 2030, and many investors are seeking to profit. As states and entire countries decriminalize or legalize cannabis and/or its components, there are growing opportunities for entrepreneurs and existing companies.

But, as in any nascent industry, there are also plenty of investment risks. Whether you’re a first-time investor or a seasoned veteran, it pays to understand how this industry works. This guide will get you up to speed quickly and includes our picks for the top marijuana stocks.

Best marijuana stocks to buy in 2022

Company Description
Green Thumb Industries (OTC:GTBIF) Marijuana grower and retailer
Cresco Labs (OTC:CRLBF) Marijuana grower and retailer
Innovative Industrial Properties (NYSE:IIPR) Ancillary provider
GrowGeneration (NASDAQ:GRWG) Ancillary provider
Scotts Miracle-Gro (NYSE:SMG) Ancillary provider
Jazz Pharmaceuticals (NASDAQ:JAZZ) Biotech company

1. Green Thumb Industries

Green Thumb Industries ranks as one of the largest U.S. multistate cannabis operators. It owns 77 retail cannabis stores in 15 states across the U.S. and operates 17 manufacturing facilities. Green Thumb holds licenses to roughly twice as many retail locations.

The company has been profitable since 2020. It also continues to deliver revenue and earnings growth and maintains a strong balance sheet even with macroeconomic headwinds. Green Thumb should have plenty of growth potential over the long term as the U.S. cannabis market expands.

2. Cresco Labs

Cresco Labs, like Green Thumb, is based in Illinois. It operates retail cannabis stores in 10 states, including six of the 10 most heavily populated states in the U.S. Cresco is the top wholesaler of branded cannabis products in the U.S.

The company is growing rapidly through acquisitions and opening new retail locations. Cresco’s pending acquisition of Columbia Care (OTC:CCHWF) will make it the largest multistate operator based on revenue. The acquisition is moving forward, with overwhelming approval by Columbia Care shareholders and a thumbs-up from the Supreme Court of British Columbia. Once the deal closes, Cresco will operate in 18 U.S. markets, including 12 states with annual cannabis sales of more than $1 billion.

3. Innovative Industrial Properties

U.S. cannabis companies can’t easily secure capital from banks or financial institutions since marijuana remains illegal at the federal level. Innovative Industrial Properties (IIP) helps to solve the cash shortage for growing marijuana companies. It buys properties owned by U.S. medical cannabis operators and leases the properties back to them. The property sale to IIP provides the cannabis operator with much-needed cash, and the lease agreements create a steady revenue stream for IIP.

Innovative Industrial Properties has grown significantly in recent years and now owns properties in 19 states. The company continues to generate strong revenue and earnings growth even with a recent default by one of its top tenants. Because Innovative Industrial Properties is organized as a real estate investment trust (REIT), IIP returns at least 90% of its taxable income to shareholders.

4. GrowGeneration

GrowGeneration is another ancillary provider and the largest specialty retail chain focused on the cannabis market. It operates 62 stores in 14 states and plans to add another three or four stores by the end of 2022.

Demand for the company’s hydroponics products has fallen due to an oversupply of cannabis in the U.S. This has caused short-term headwinds for GrowGeneration that are likely to continue throughout 2022 and possibly into 2023. However, the company’s long-term prospects remain bright. GrowGeneration should be in a position to significantly rebound when the market conditions improve.

5. ScottsMiracle-Gro

ScottsMiracle-Gro is facing the same market dynamics as GrowGeneration. The company’s Hawthorne Gardening subsidiary ranks as a leading supplier of hydroponic gardening products to the cannabis industry. Hawthorne should have a significant growth runway over the long term despite some near-term challenges.

Although Hawthorne Gardening has been a primary growth driver for Scotts, the company still generates the majority of its total revenue from consumer lawn and garden products. Higher commodity prices are currently squeezing margins for this business. However, the company’s consumer lawn and garden products provide a relatively steady counterbalance to its cannabis supply unit.

6. Jazz Pharmaceuticals

Ireland-based Jazz Pharmaceuticals acquired the cannabis-focused biotech company GW Pharmaceuticals in May 2021. GW’s drug Epidiolex is the first cannabis-based medicine to be approved by the U.S. Food and Drug Administration (FDA). Epidiolex, which treats two forms of childhood epilepsy and tuberous sclerosis complex, a rare disease where benign tumors grow on organs, has been a big commercial success, with sales of $658.3 million in 2021.

Jazz experienced a setback in June 2022 with cannabis candidate nabiximols failing to meet the primary endpoint of a late-stage study. The company continues to evaluate nabiximols in two other late-stage studies targeting multiple sclerosis-related spasticity. In addition to its cannabis products, Jazz markets sleep-disorder and cancer drugs.

A brief overview of the marijuana industry

Let’s cover some of the basics you need to know before investing in marijuana stocks.

  • The marijuana industry is divided into three broad categories: Marijuana growers and retailers cultivate and package cannabis products and sell them to consumers. Biotechnology companies develop and market cannabis-based pharmaceutical drugs. Ancillary marijuana businesses provide products and services to cannabis companies without touching the plant.
  • Cannabis can be medical or recreational:Medical cannabis patients use cannabis or cannabis extracts to treat health conditions and have recommendations or cannabis prescriptions from physicians. Recreational cannabis users purchase marijuana or cannabis extracts purely for enjoyment and must be 18 and older and living in a jurisdiction where recreational use of the plant is legal.
  • Geography matters: Medical cannabis is legal in many more countries than recreational cannabis. In the U.S., cannabis remains illegal at the federal level. However, a growing number of states have legalized medical and/or recreational cannabis. The rapid growth of the U.S. cannabis market is translating into impressive growth by U.S.-based cannabis companies, while marijuana companies in Canada — where the plant is already fully legal nationwide — are expanding more slowly. Canada is one of the global legal markets where supply is outpacing demand and leading to falling cannabis prices.
See also  Cannabis Seeds Arizona

Impact of COVID-19 on marijuana stocks

The COVID-19 pandemic affected nearly every part of the global economy, including the cannabis industry. In many U.S. states, cannabis dispensaries were designated as essential businesses. Cannabis sales boomed in some states during the first few months of the coronavirus outbreak, driven in part by more time spent at home and increased anxiety. Marijuana growers and retailers benefited, as did ancillary providers selling gardening supplies and other products to these companies.

However, not all cannabis companies fared well in the pandemic. Recreational cannabis retailers in tourist destinations such as Las Vegas saw their customer traffic dwindle, causing some of these dispensaries to start focusing on home delivery. In the medical segment, people delayed doctor visits, causing new patient starts to drop. Biotech companies experienced logistical challenges that affected sales and research progress.

To a large extent, the worst appears to be over for the cannabis market with respect to COVID-19, but some effects are still being felt.

Related investing topics

Pharmaceutical stocks

This huge industry holds opportunities for long-term investors, but there are risks too.

Biotech stocks

These companies create drugs and treatments for some of the biggest medical problems of our time.

Healthcare stocks

Healthcare is a universal need. Companies in this broad-based sector can produce healthy returns.

Consumer Staples stocks

No matter what the economy, we always need these products.

Should you buy marijuana stocks?

Just because there’s a trendy new sector with lots of press and potential growth doesn’t mean you need to invest in it. If you buy broad-based index funds, you’re covered no matter which sectors of the stock market do well. Conservative investors who prefer lower risk are likely better off avoiding investing in marijuana stocks.

Aggressive investors with high risk tolerances will probably find a lot to like about marijuana stocks. The cannabis industry is still in its early stages, and the market opportunities are enormous, especially as more U.S. states legalize cannabis. Investing in the stocks is a high-risk but potentially high-reward proposition.

Keith Speights has positions in Innovative Industrial Properties. The Motley Fool has positions in and recommends Cresco Labs Inc., Green Thumb Industries, GrowGeneration Corp, Innovative Industrial Properties, and Scotts Miracle-Gro. The Motley Fool has a disclosure policy.

How to Invest in Cannabis Stocks

In the past 5 or 6 years, cannabis went from a buzzword to a billion-dollar industry.

Between 2014 and 2018, a multitude of cannabis companies went public in Canadian venture exchanges as well as in NYSE and NASDAQ, attracting billions in investments and opening the floodgates to an era of immense growth, media attention and investor excitement often called the “green rush”.

Late 2019 and early 2020 brought an overall loss of confidence from the investor front, prompted by an unfulfilled promise of profitability from many cannabis operators. The valuation of most public cannabis companies dropped, growth capital became harder to obtain and many companies were forced to make reductions and consolidate with others in order to navigate the bubble burst.

However, the COVID-19 pandemic showed that, while the initial flame of infatuation had pacified, the cannabis industry was here to stay. Facing social isolation measures, most jurisdictions with legal or medical programs declared cannabis an essential product, motivating a number analysts to grant the industry title of “recession-proof”.

Today, cannabis presents itself as a more established industry where expectations have become realistic. As rampant growth becomes secondary to profitability and positive balance sheets, many companies still present huge opportunities for investors of every kind.

Marijuana Stock Movers

Analyze marijuana stocks biggest gainers and losers before you invest.

Stock Movers

While smaller companies have delivered astronomic returns (and losses) in the past few years, more established firms have performed steadily. Still, it’s hard to hash out the good companies. So, how can you tell the difference between a legit weed company and a good old pump-and-dump?

The Over-the-Counter Issue

While multiple states in the U.S. have legalized cannabis for either recreational or medical uses, marijuana is still illegal at the federal level. Of course, this had made it more difficult for most companies to get listed on a mainstream exchange.

Some cannabis business have sought alternative avenues to raise capital. Many businesses have gone public in Canadian exchanges, while others have done so by trading on over-the-counter U.S. exchanges.

This means that many publicly-traded cannabis companies are not subject to the same level of scrutiny that major exchanges and the SEC impose — although those trading on the TSX and CSE are subject to heavy scrutiny.

420 Investor Alan Brochstein seems to differ on this point. “It’s extremely important not to rely solely upon company press releases, as these are typically positive spins,” he says. “It takes a greater effort to read and comprehend the SEC filings, but the effort is worth it, as these give a more complete perspective of the fundamentals.

Take a look at Alan Brochstein’s 420 Investor course, where he shows you his real marijuana portfolio.

How to Hash out the Bad Weed Stocks

While it’s always recommended that retail investors do their own due diligence, going over hundreds of filings and corporate documents can be hard and time-consuming. And you probably don’t have access to the resources needed to make an informed assessment of a company.

A safe option is to invest in Horizons Marijuana Life Sciences Index ETF and the ETFMG Alternative Harvest ETF. These instruments make it easy to invest in cannabis stocks that have already been pre-selected by teams of analysts who’ve conducted the necessary due diligence and decided to include certain companies in these ETFs.

Another option if you’re looking to build out your own portfolios is to investment advisors and stock pickers like Alan Brochstein or Jeff Siegel of Green Chip Stocks.

See also  Free Cannabis Seeds Samples

How to Invest in Cannabis Stocks

Investing in cannabis is not limited to growers or retailers.

There are numerous companies providing support services to the industry. There are pharma and biotech companies that make cannabinoid-based drugs. And service and product providers that used to operate outside the marijuana industry have gotten on board since legalization.

The variety of companies that form the industry mean you have your choice of stocks or ETFs.

Step 1: Research the company.

Always start by researching the company or companies you’ll be investing in. Check SEC filings and other documents required by diverse regulatory agencies.

Read the latest news on these companies in site likes Yahoo Finance and Benzinga, and get a feel for the market sentiment using Twitter or Stocktwits.

Step 2: Determine the amount to invest.

As a rule of thumb, never invest more than you can afford to lose. While good research will often lead to strong returns, this will not necessarily be the case. Stocks are volatile and contingencies sometimes unpredictable.

In relation to this point, Brochstein says, “I find many people place too much confidence in just 1 or 2 ideas. In a start-up industry, which is what legal cannabis is in many ways, it’s not easy to pick the winners. If you go back to the late 1990s, a lot of the companies that many expected to be winners didn’t even survive three years. My longer-term focused model portfolios typically have a dozen names in them.”

Step 3: Decide on your timeline.

Deciding on when to buy and when to sell is crucial. Try and figure out what your thresholds are beforehand. So, for instance, establish a rule: “If the stock falls below X or surges above Y, I’ll sell.”

Step 4: Pick a broker.

Once you’ve gone through the initial steps, you’ll be ready to actually buy your shares. You can go old-school, with a brick and mortar broker like Scottrade or sign up for an online broker such as TradeStation or TD Ameritrade. Both options will allow you to buy and sell stocks once you’ve registered and funded your account.

Top Marijuana Stocks for August 2022

AYR.A.CX, CRON, and FFNT.CX are top for value, growth, and performance

The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal, and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON), and Tilray Inc. (TLRY). Many big marijuana companies have continued to post sizable net losses as they focus on investments needed to speed up revenue growth. 37 U.S. states now permit the use of marijuana in some form.

Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have vastly underperformed the broader market. MJ has provided a total return of -63.7% over the past 12 months, well below the Russell 1000 Index’s total return of -7.1%. These market performance numbers and all statistics in the tables below are as of Aug. 8, 2022.

Here are the top five marijuana stocks with the best value, the fastest growth, and the best performance.

Best Value Marijuana Stocks

These are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in the 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 P/S 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
Ayr Wellness Inc. (AYR.A.CX) CA$6.36 CA$0.4 0.8
GrowGeneration Corp. (GRWG) 5.50 0.3 0.9
Cresco Labs Inc. (CL.CX) CA$4.52 CA$1.3 1.2
Jushi Holdings Inc. (JUSH.CX) CA$2.63 CA$0.5 1.8
Aurora Cannabis Inc. (ACB) 1.65 0.5 1.9
  • Ayr Wellness Inc.: Ayr Wellness is a cannabis company involved in the cultivation, manufacturing, and dispensing of cannabis and cannabis-derived products. The company’s product portfolio includes flowers, tinctures, edibles, and vape products under brands including Kynd, Origyn, Stix Preroll, Levia, and Road Tripper. Ayr Wellness also trades OTC in the U.S. under the ticker AYRWF. In late July, Ayr announced the opening of dispensaries in Pennsylvania and Florida. The company now has nine medical dispensaries in Pennsylvania and 49 dispensaries in Florida.
  • GrowGeneration Corp.: GrowGeneration operates hydroponic garden centers across North America. The company markets and distributes a variety of hydroponic gardening products, including growing media, nutrients, lighting, ventilation equipment, and more. It operates over 60 retail and distribution centers nationwide. GrowGeneration reported on Aug. 4 earnings results for Q2 2022. It posted a net loss of $136.4 million compared with net income for the prior-year quarter. Revenue fell year-over-year (YOY). The net income results include a $127.8 million impairment expense for goodwill and other intangibles.
  • Cresco Labs Inc.: Cresco Labs is a consumer-packaged cannabis products company involved in growing, manufacturing, and distribution. The company operates in 10 states, including more than 70 total 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. Per the agreement, Cresco will acquire all outstanding shares of Columbia Care. The combination is expected to close in Q4 2022. Terms of the deal were not disclosed,.
  • Jushi Holdings Inc.: Jushi Holdings is a holding company focused 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. On Aug. 8, Jushi announced it had reached a confidential settlement agreement with Curaleaf Holdings Inc. and Edward Kremer, former chief financial officer (CFO) of Jushi. The agreement resolves Jushi’s claim against Kremer for breach of employment agreement and against Curaleaf for tortious interference. As part of the agreement, Kremer received a limited waiver of his non-compete deal to enable him to accept employment at Curaleaf.
  • Aurora Cannabis Inc.: Aurora Cannabis is a Canada-based company specializing in production, distribution, and sales 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.
See also  Female Cannabis Plant Producing Seeds

Fastest-Growing Marijuana Stocks

These are the marijuana 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 organically or through other means and find growing companies that have not yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share. 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 profitability.

Fastest-Growing Marijuana Stocks
Price ($) Market Cap ($B) Revenue Growth (%)
Cronos Group Inc. (CRON) 3.58 1.3 98.5
Ayr Wellness Inc. (AYR.A.CX) CA$6.36 CA$0.4 90.6
OrganiGram Holdings Inc. (OGI) 1.19 0.4 82.8
SNDL Inc. (SNDL) 2.81 0.7 77.9
Verano Holdings Corp. (VRNO.CX) CA$7.00 CA$2.1 67.4
  • Cronos Group Inc.: Cronos Group is a Canada-based cannabis company focused on advancing cannabis research, technology, and product development. Its international brand portfolio includes Spinach, Happy Dance, and PEACE+.
  • Ayr Wellness Inc.: See above for company description.
  • OrganiGram Holdings Inc.: Organigram Holdings is a Canada-based 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. On July 14, Organigram reported earnings for Q3 FY 2022 ended May 31. Its net loss narrowed YOY as revenue surged to record quarterly levels. The company attributed revenue growth to new product listings, increased retail sales momentum, and growing international shipments.
  • SNDL Inc.: SNDL is a Canada-based cannabis producer. The company operates cultivation and processing facilities, retail stores, and sells alcoholic beverages. Its cannabis 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. to SNDL Inc. It also effected a share consolidation under which 10 pre-consolidation common shares were consolidated into one post-consolidation common share, effective July 25.
  • 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. On Aug. 5, the company announced the opening of its 54th dispensary location in Florida.

Marijuana Stocks With the Best Performance

These are the marijuana stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.

Marijuana Stocks With the Best Performance
Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
4Front Ventures Corp. (FFNT.CX) CA$0.71 CA$0.4 -50.0
Cronos Group Inc. (CRON) 3.58 1.3 -51.0
OrganiGram Holdings Inc. (OGI) 1.19 0.4 -55.8
Innovative Industrial Properties Inc. (IIPR) 93.65 2.6 -57.5
Jushi Holdings Inc. (JUSH.CX) CA$2.63 CA$0.5 -59.6
Russell 1000 N/A N/A -7.1
ETFMG Alternative Harvest ETF (MJ) N/A N/A -63.7
  • 4Front Ventures Corp.: 4Front Ventures is a cannabis operator and retailer operating across multiple states. It owns, operates, or manages cultivation and manufacturing properties in five states and employs over 600. Its stores attracted more than one million unique customers in 2021. 4Front also trades OTC under the symbol FFNTF.
  • Cronos Group Inc.: See above for company description.
  • OrganiGram Holdings Inc.: See above for company description.
  • Innovative Industrial Properties Inc.: Innovative Industrial Properties is a real estate investment trust (REIT) that engages in the acquisition, disposition, development, and management of industrial facilities leased to tenants in the regulated medical cannabis industry. The company’s portfolio consists of specialized industrial and greenhouse buildings leased to state-licensed, medical-use cannabis cultivators across the U.S. It reported Q2 2022 earnings results on Aug. 3. Net income climbed by 37.1% YOY while total revenues grew by 44.3%. The acquisition and leasing of new properties and additional improvement allowances both contributed to growth During the quarter, IIP established new tenant relationships with a variety of cannabis companies including Maryland Cultivation and Processing LLC, Texas Original Holdings LLC, and TILT Holdings Inc.
  • Jushi Holdings Inc.: See above for company description.

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.