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The cannabis industry has experienced significant growth and evolution in recent years, presenting unique investment opportunities for those interested in marijuana stocks. As more regions legalize cannabis for medical and recreational use, companies operating in this sector have garnered increased attention from investors.

Key Takeaways:

• The U.S. Drug Enforcement Administration plans to reclassify marijuana.
• Legal changes could reduce financial burdens on companies, making state – compliant businesses more competitive against illegal markets.
• With the projected growth of the U.S. cannabis market to $31.4 billion by 2024, investing in top marijuana stocks offers promising opportunities for significant returns.

What are Marijuana Stocks?

Marijuana stocks refer to publicly traded companies that are involved in various aspects of the cannabis industry. These businesses may engage in:

• Cultivation and production of cannabis plants
• Manufacturing of cannabis-derived products
• Distribution and retail sales of marijuana products
• Development of medical cannabis treatments
• Provision of ancillary services to the cannabis industry

Cannabis Market Growth:

Global Cannabis Market Growth:

1. Market Size: The global cannabis market size is projected to grow from $57.18 billion in 2023 to $444.34 billion by 2030, at a compound annual growth rate (CAGR) of 34.03% during the forecast period.
2. Regional Dominance: North America dominated the global market with a share of 81.79% in 2022, driven by the growing legalization trends in the U.S. and Canada.

U.S. Cannabis Market Growth:

1. Market Size: The U.S. cannabis market size was valued at USD 13.2 billion in 2022 and is expected to expand at a CAGR of 14.2% from 2023 to 2030.
2. Medical Segment: The medical segment accounted for the largest revenue share of 77.0% in 2022, driven by the growing acceptance of cannabis for treating various chronic conditions.
3. Legalization Trends: The increasing legalization of cannabis and rising acceptance of its use for medical purposes are key factors driving the growth of the U.S. market.

These trends indicate a strong and growing demand for cannabis products globally and in the United States, driven by increasing legalization and acceptance of cannabis for both medical and recreational purposes.

Performance Comparison of Top Marijuana Stocks

7 Best Marijuana Stocks To Buy in 2024

The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q2 2024 report.

1. Village Farms International Inc (VFF)

Number of Hedge Fund Holders (Q2 2024): 7

Village Farms has been expanding its cannabis operations through its Pure Sunfarms subsidiary. The company’s low-cost production model and established distribution channels give it a competitive edge in the Canadian market. Its potential entry into the U.S. cannabis market could significantly boost growth prospects.

According to insidermonkey, Renaissance Technologies, founded by Jim Simons, holds a $1.4 million position in Village Farms International Inc (VFF), consisting of 1.37 million shares.

Village Farms International demonstrated robust performance in Q1 2024, with significant growth in its Canadian Cannabis segment. Net sales surged 49% to $37.4 million, driven by a 28% increase in retail branded sales and a 181% jump in non-branded sales. The company strengthened its market position, becoming the fastest-growing producer among the top five LPs in Canada.

The U.S. Cannabis division faced challenges, with net sales declining slightly to $4.5 million and adjusted EBITDA dipping to ($0.6 million). However, the Village Farms Fresh produce segment showed improvement, with sales increasing 4% to $36.1 million and adjusted EBITDA turning positive at $2.0 million.

Internationally, Village Farms began constructing its first indoor cannabis facility in the Netherlands, targeting production start in Q4 2024. The company is also poised to benefit from Germany’s recent cannabis legalization, having already established EU GMP certification and begun shipments to the country in 2023.

Looking ahead, Village Farms is focusing on strategic growth initiatives, including the launch of innovative products like Hi-Def Pre-Rolls and the expansion of its Super Toast brand. The company is also exploring new opportunities in Texas and evaluating alternative uses for its Monahans greenhouse facility.

According to Wall Street Analyst on VFF stock. Of the 6 analysts following the stock, all 6 give it a Buy.

Why We Picked Village Farms International Inc (VFF):

Village Farms stands out due to its unique position as an established agricultural company that successfully transitioned into cannabis. We chose VFF for its:

• Proven expertise in large-scale, low-cost greenhouse cultivation
• Strong presence in the Canadian cannabis market through Pure Sunfarms
• Potential for significant growth upon U.S. market entry
• Diversified revenue streams from both produce and cannabis sectors

2. Innovative Industrial Properties Inc (IIPR)

Number of Hedge Fund Holders (Q2 2024): 13

Innovative Industrial Properties Inc (IIPR) is a unique real estate investment trust (REIT) focused on the regulated cannabis industry in the United States. Founded in 2016, IIPR acquires, owns, and manages specialized industrial properties leased to state-licensed medical-use cannabis operators

According to insidermonkey, Zimmer Partners, led by Stuart J. Zimmer, holds 548,714 shares of Innovative Industrial Properties Inc (IIPR), valued at approximately $59.9 million.

Innovative Industrial Properties (IIP) released its second quarter 2024 results. The firm reported total revenues of $79.8 million and net income of $41.7 million, or $1.44 per share.

IIP’s adjusted funds from operations (AFFO) and normalized funds from operations (Normalized FFO) reached $65.5 million and $58.8 million respectively. The company maintained its strong dividend policy, distributing $1.90 per common share, a 4.4% increase from the previous quarter.

In terms of portfolio growth, IIP acquired a 16-acre property in Florida for $13 million and executed several lease amendments to fund improvements. The company also upsized its revolving credit facility to $50 million and entered a new at-the-market equity offering program.

As of June 30, 2024, it has $2.47 billion in total invested capital across 108 properties, spanning 8,998,000 square feet in 19 states. The REIT has 30 tenants, with each representing a parent company that may have multiple subsidiaries across properties. The company has declared a quarterly cash dividend of $1.90 per share, with an ex-dividend date of June 27, 2024, a record date of June 28, 2024, and a payment date of July 15, 2024.

According to Wall Street Analyst on IIPR stock. Of the 7 analysts following the stock, 2 give it a Buy and 5 has it at Hold.

Why We Picked Innovative Industrial Properties Inc (IIPR):

IIPR offers a distinctive approach to cannabis investment through real estate. We selected IIPR because of its:

• Steady income generation through long-term lease agreements
• Lower risk profile compared to direct cannabis operators
• Opportunity for capital appreciation as the cannabis industry expands
• Attractive dividend yield for income-focused investors

3. Emerald Holding Inc (EEX)

Number of Hedge Fund Holders (Q2 2024): nil

While not exclusively cannabis-focused, Emerald’s events in the cannabis sector, such as MJBizCon, have become industry staples. These events provide valuable networking opportunities and insights, potentially positioning Emerald to benefit from the industry’s growth without direct involvement in cannabis operations.

Emerald’s Q2 2024 financial results show a slight revenue decrease of 0.6% compared to Q2 2023, primarily due to discontinued events and scheduling changes. However, Organic Revenues increased by 3.3%, indicating underlying growth. The company’s net loss improved significantly, dropping from $8.1 million in Q2 2023 to $2.8 million in Q2 2024.

Adjusted EBITDA saw a modest increase, rising from $14.6 million to $15.3 million year-over-year. Emerald maintains a strong financial position with $193.2 million in cash and full access to its $110 million revolving credit facility.

Operationally, Emerald’s board announced plans to reinstate a regular quarterly dividend, declaring $0.015 per share for Q3 2024. The company reaffirmed its full-year 2024 guidance, expecting revenues between $415-425 million and Adjusted EBITDA of $110-115 million.

Cash flow improved in Q2 2024, with net cash provided by operating activities increasing to $9.8 million from $7.3 million in Q2 2023. Free Cash Flow, excluding event cancellation insurance proceeds, also saw growth, rising from $4.6 million to $7.1 million year-over-year.

According to Wall Street Analyst on EEX stock. Of the 2 analysts following the stock, all 2 give it a Buy.

Why We Picked Emerald Holding Inc (EEX):

Emerald Holding provides unique exposure to the cannabis industry through its event management business. We chose EEX for its:

• Reduced regulatory risk compared to plant-touching cannabis companies
• Potential to benefit from industry growth through networking events and trade shows
• Diversified business model with exposure beyond just cannabis
• Ability to adapt to market trends and emerging sectors within the cannabis industry

4. Turning Point Brands Inc (TPB)

Number of Hedge Fund Holders (Q2 2024): 21

TPB’s Zig-Zag brand is well-known in cannabis accessory markets. The company’s recent acquisitions in the vape sector and its expansion into CBD products demonstrate its commitment to diversifying within adjacent markets, potentially capturing more cannabis-related revenue.

According to insidermonkey, Fort Baker Capital Management holds $24.89 million in Turning Point Brands Inc’s (TPB) 2.500% notes due July 1. The current market value of this position is $25.12 million.

Turning Point Brands reported strong Q2 2024 results, with adjusted EBITDA rising 7% year-over-year to $27.0 million. The company saw a 2.8% increase in total consolidated net sales, reaching $108.5 million. Notably, Zig-Zag Products and Stoker’s Products segments showed robust growth.

CEO Graham Purdy expressed satisfaction with the quarter’s performance, highlighting it as the highest quarterly EBITDA since Q2 2021. He noted sustainable growth in Zig-Zag and continued market share gains for Stoker’s MST. The company’s modern oral nicotine pouch, FRE, also demonstrated significant sequential growth.

Zig-Zag Products, comprising 47% of total net sales, increased by 8.0% to $50.5 million. Stoker’s Products, accounting for 39% of sales, grew 18.5% to $42.7 million. The company maintained strong liquidity, ending the quarter with $201.0 million available.

Based on these positive results, Turning Point Brands has raised its full-year 2024 adjusted EBITDA guidance to $98-$102 million, excluding Creative Distribution Solutions. The company continues to focus on growth initiatives and expanding its product portfolio.

According to Wall Street Analyst on TPB stock. Of the 2 analysts following the stock, all 2 give it a Buy.

Why We Picked Turning Point Brands Inc (TPB):

Turning Point Brands offers a balanced approach to cannabis-adjacent investments. We selected TPB due to its:

• Established presence in related markets like tobacco alternatives
• Strategic expansion into cannabis accessories and CBD products
• Strong brand recognition with products like Zig-Zag
• Diversified revenue streams reducing overall risk

5. Cronos Group Inc (CRON)

Number of Hedge Fund Holders (Q2 2024): 12

Cronos has been investing heavily in cannabinoid research, including rare cannabinoids like CBG. Its partnership with Ginkgo Bioworks for biosynthesis of cannabinoids could lead to more efficient production methods. The company’s focus on the Israeli medical market provides international diversification.

According to insidermonkey, Chescapmanager LLC, managed by Traci Lerner, holds a $18.5 million position in Cronos Group Inc (CRON), consisting of 7.95 million shares.

Cronos Group’s Q2 2024 performance showed significant improvement, with net revenue reaching $27.8 million, a $8.7 million increase from Q2 2023. This growth was primarily driven by higher cannabis sales in Canada, Israel, and other international markets. Gross profit also saw a substantial rise, reaching $6.3 million.

The company’s adjusted EBITDA improved by $4.9 million compared to the previous year, attributed to increased gross profit and reduced expenses in sales, marketing, and administration. This indicates a positive trend in operational efficiency.

Cronos announced an expansion of Cronos GrowCo, providing a $51 million credit facility to fund facility growth. This strategic move aims to address the rising global demand for high-quality cannabis flower and potentially enable expansion into new markets.

The Spinach® brand continued to perform strongly, particularly in the edibles and flower categories, holding a 15.6% market share in edibles and becoming the number one flower brand with a 6.2% share. Lord Jones® Hash Fusions pre-rolls rose to the top position in their segment. In international markets, PEACE NATURALS® maintained its momentum, introducing four new cultivars in Israel. Cronos GrowCo reported preliminary unaudited net revenue of $2.7 million to third parties in Q2 2024.

Why We Picked Cronos Group Inc (CRON):

Cronos Group stands out for its focus on innovation and international expansion. We selected CRON because of its:

• Strong emphasis on R&D, particularly in rare cannabinoids
• Strategic partnership with Altria providing financial stability and expertise
• Expanding global footprint, especially in medical cannabis markets
• Potential for breakthrough products through biosynthesis research

6. Aurora Cannabis Inc (ACB)

Number of Hedge Fund Holders (Q2 2024): 7

Aurora Cannabis Inc (ACB) is a Canadian-based company that operates in the medical and consumer cannabis markets globally. Founded in 2006, it has grown to become one of the world’s largest cannabis producers. Aurora’s portfolio includes a range of cannabis products for both medical and recreational use, including dried cannabis, cannabis oils, and vaporizers.

Aurora Cannabis offers a diverse range of high-quality products for both medical and recreational use. Their portfolio includes carefully cultivated flowers, innovative vapes, and precisely dosed edibles, catering to various consumer preferences and needs.

The company’s brands span across multiple categories, including concentrates, extracts, and CBD products. Each brand, from San Rafael ’71 to Greybeard, brings its unique identity and product offerings to the market, ensuring a wide selection for consumers.

According to insidermonkey, Alyeska Investment Group, led by Anand Parekh, holds a $3.79 million position in Aurora Cannabis Inc (ACB), consisting of 820,000 shares.

Aurora Cannabis reported a strong fiscal 2025 first quarter, with total net revenue increasing 12% year-over-year to $83.4 million. The company achieved positive free cash flow of $6.5 million and generated $4.9 million in Adjusted EBITDA, an 87% increase from the previous year.

Global medical cannabis revenue grew by 13% to a record $47.2 million, accounting for 57% of total net revenue. The plant propagation business also saw significant growth, with revenue increasing by 16% to $23.1 million.

Despite a 10% decrease in consumer cannabis revenue, Aurora maintained a strong adjusted gross margin of 43% across its operations. The company’s medical cannabis segment performed particularly well, with an adjusted gross margin of 69%.

Aurora ended the quarter with a debt-free cannabis business and a cash position of approximately $182 million. The company’s focus on high-margin international markets and cost reduction strategies contributed to its improved financial performance.

According to Wall Street Analyst on ACB stock. Of the 6 analysts following the stock, 1 give it a Buy and 5 has it at Hold.

Why We Picked Aurora Cannabis Inc (ACB):

Despite facing challenges, Aurora Cannabis remains a significant player in the global cannabis market. We chose ACB for its:

• Extensive international medical cannabis operations
• Ongoing cost-cutting measures aimed at improving profitability
• Focus on high-margin derivative products
• Potential for a turnaround as the company streamlines operations

7. OrganiGram Holdings Inc (OGI)

Number of Hedge Fund Holders (Q2 2024): 3

OrganiGram Holdings Inc (OGI) is a Canadian licensed producer of cannabis and cannabis-derived products. Based in Moncton, New Brunswick, the company focuses on producing high-quality, indoor-grown cannabis for both medical and recreational markets. OrganiGram is known for its three-tiered growing technology and commitment to organic cultivation practices.

According to insidermonkey, Renaissance Technologies, led by Jim Simons, holds a $1.26 million position in OrganiGram Holdings Inc (OGI), consisting of 816,948 shares.

Organigram’s third quarter fiscal 2024 results show significant growth, with net revenue increasing 25% to $41.1 million compared to the previous year. The company reported improved financial metrics, including a net income of $2.8 million and adjusted EBITDA of $3.5 million, marking a turnaround from losses in the same period last year.

The company maintained strong market positions across various product categories in Canada, holding the top spot in milled flower, hash, and pure CBD gummies. Organigram also achieved notable market share gains in key provinces, including Quebec and New Brunswick.

Expanding its international presence, Organigram made a strategic investment in Sanity Group, a German cannabis company, and signed new supply agreements in Australia and the UK. The company also progressed in its seed-based production efforts, aiming to increase this method to 30% of total production by the end of 2024.

Organigram continued to innovate, introducing 18 new SKUs to the market in Q3 Fiscal 2024. These included new pre-roll products, premium cannabis strains, and unique gummies featuring rare cannabinoids. The company was also recognized for its commitment to executive gender diversity for the fourth consecutive year.

According to Wall Street Analyst on OGI stock. Of the 7 analysts following the stock, 5 give it a Buy and 2 has it at Hold.

Why We Picked OrganiGram Holdings Inc (OGI):

OrganiGram distinguishes itself through its focus on quality and efficiency. We selected OGI due to its:

• Innovative three-tiered growing technology for consistent product quality
• Increasing market share in the Canadian adult-use market
• Strategic partnership with BAT for product development
• Efficient production processes contributing to competitive pricing

CHECK OUT OTHER STOCKS

How to Invest in Marijuana Stocks

There are mainly two option to invest in Marijuana Stocks (Investing in Individual Marijuana Stocks and Investing in Marijuana ETFs)

Investing in Individual Marijuana Stocks:

Investing in individual marijuana stocks can offer high potential returns but also comes with significant risks. Here are some steps to consider when selecting individual stocks:

1. Research the Company:
   • Examine the company’s financial statements, management team, and growth strategy.
   • Look for companies with strong balance sheets and clear paths to profitability.
   • Consider the company’s market position and competitive advantages.
2. Evaluate the Regulatory Environment:
   • Understand the legal status of marijuana in the company’s operating regions.
   • Stay informed about pending legislation that could impact the industry.
3. Assess Growth Potential:
   • Look for companies expanding into new markets or developing innovative products.
   • Consider partnerships or acquisitions that could drive future growth.
4. Diversify Your Portfolio:
   • Don’t put all your eggs in one basket. Invest in companies from different segments of the industry.
5. Monitor Performance:
   • Regularly review your investments and stay updated on industry news.
   • Be prepared to adjust your portfolio based on changing market conditions.

Some popular individual marijuana stocks to consider include:

• Canopy Growth Corporation (CGC)
• Tilray (TLRY)
• Aurora Cannabis (ACB)
• Cronos Group (CRON)
• GW Pharmaceuticals (GWPH)

Investing in Marijuana ETFs:

For investors seeking broader exposure to the marijuana industry with potentially lower risk, exchange-traded funds (ETFs) can be an attractive option. Marijuana ETFs invest in a diverse portfolio of cannabis-related companies, offering several advantages:

1. Diversification: ETFs spread risk across multiple companies and sectors within the marijuana industry.
2. Professional Management: Fund managers actively select and manage the portfolio.
3. Lower Costs: ETFs generally have lower fees compared to actively managed mutual funds.
4. Liquidity: ETFs can be bought and sold throughout the trading day like individual stocks.

Popular Marijuana ETFs include:

1. ETFMG Alternative Harvest ETF (MJ):
   • One of the largest and most liquid marijuana ETFs.
   • Focuses on companies involved in the legal cultivation, production, marketing, or distribution of cannabis products.
2. AdvisorShares Pure Cannabis ETF (YOLO):
   • Actively managed ETF focusing on cannabis and hemp-related companies.
   • Includes both domestic and international stocks.
3. Horizons Marijuana Life Sciences Index ETF (HMMJ):
   • Tracks the North American Marijuana Index.
   • Invests in large-cap stocks of life sciences companies with significant cannabis-related activities.
4. The Cannabis ETF (THCX):
   • Tracks the Innovation Labs Cannabis Index.
   • Focuses on companies with at least 50% of their revenue from the cannabis industry.

Conclusion

These 7 marijuana stocks show great promise for the future. As the U.S. moves to reclassify cannabis, opportunities in this industry will grow. Each company listed has its unique strengths and potential for growth.

Investing now could lead to significant rewards as the market expands. Keep an eye on these companies as you explore your investment options in the budding marijuana sector.

FAQs

1. What are marijuana stocks?

Marijuana stocks are shares in companies that grow, sell, or work with cannabis. This includes businesses like biotech companies making cannabis drugs and real estate investment trusts (REITs) involved in the cannabis industry.

2. Why should I think about buying marijuana stocks?

With more places making adult-use cannabis legal and the possibility of federal legalization, these stocks might grow fast. They could be a way to make money as the industry expands.

3. Can I find marijuana stocks on big stock exchanges?

Yes! You can find some of the best marijuana stocks on big exchanges like NASDAQ under symbols like TLRY for Tilray’s and NYSE:SMG for Scotts Miracle-Gro Company, which works with cannabis growers.

4. Are there safer ways to invest in marijuana without picking individual stocks?

Sure! Exchange-traded funds (ETFs) let you invest in a bunch of different marijuana companies at once. This spreads out your risk but still lets you be part of this growing market.

5. How does legalization affect marijuana stock prices?

When a place legalizes cannabis, it usually means more sales and growth for businesses in that area, which can make their stock prices go up.