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As the cannabis legalization wave continues to spread across the U.S. and around the world, investors can tap into a wide range of pure-play and ancillary cannabis investments. If you want to expand and diversify your portfolio, consider the top marijuana stocks 2021 to buy or avoid.
5 Top Marijuana Stocks 2021
In 2021, the cannabis industry has continued to show strong growth potential despite the COVID-19 pandemic. If you are looking for long-term profitability, here are the top 5 marijuana stocks to consider in 2021.
1. Green Thumb Industries
Green Thumb Industries has dispensaries in 12 states and runs 13 manufacturing facilities. Out of its 96 retail licenses, it has only opened about half of those dispensaries. It has a promising future in its home state of Illinois, which legalized adult-use cannabis in 2020. GTI also has its sights on expansion in recently legal New York and New Jersey cannabis markets.
2. Trulieve Cannabis
Trulieve Cannabis has become a dominating cannabis grower and retailer in Florida's medical cannabis market. The company has captured nearly 50% of the market share and has been profitable since 2017, a rare achievement for cannabis companies. With its acquisition of Harvest Health and Recreation, it is set to expand its influence across several other states.
GrowGeneration is one of the biggest hydroponic grow suppliers in the country. Its massive retail footprint across the country and online store have made it a leader among hobby growers and multi-state operators alike. Its sales have increased due to customers increasingly growing weed at home, especially during the COVID-19 pandemic.
4. Curaleaf Holdings Inc
Curaleaf Holdings Inc is one of the best pure-play cannabis companies to invest in right now. This Massachusetts-based multi-state operator started in New Jersey in 2010 when it developed an innovative medical marijuana vaporizer. Now, it runs 108 dispensaries, 30 processing sites, and 23 cultivation sites across 23 states.
5. Innovative Industrial Properties
Founded in 2016, Innovative Industrial Properties (IIP) is a real estate investment trust (REIT) that focuses on buying properties owned by medical cannabis operators and leasing the properties back to them. This arrangement provides operators with a cash infusion and IIP with a multi-year lease agreement. So far, IIP’s business model has proved to be a success.
- Cresco Labs
- ETFMG Alternative Harvest ETF
- Ayr Wellness
- Columbia Care
- Jushi Holdings
- Verano Holdings
3 Cannabis Stocks to Avoid
While the cannabis industry is ripe with profit-generating investments, there are also many investment risks. If you want to avoid making a bad investment, here are the top 3 marijuana stocks to avoid in 2021.
1. Aurora Cannabis
Aurora Cannabis showed a promising start after cannabis became legal in Canada. The company boasted 15 production facilities and was set to be the largest global cannabis producer but management overpaid for too many bad acquisitions early on.
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In addition, its share count has increased from 1.3 million shares to 198 million shares in the period of just seven years. Still, the company has not been able to create positive cash flow from its business activities. Investors fear more share dilution is on the way.
Quebec-based Hexo is a consumer packaged goods cannabis company that distributes its products across the world. Initially, the company showed promise when it teamed up with Molson Coors Beverage and secured a 5-year wholesale deal with its home province.
Over time, however, Hexo has focused on acquisitions and in some cases paid too much for unnecessary production expansion such as when they sold their acquired New Strike cultivation facility for cheap.
Ever since it has issued more stock to acquire other cannabis companies and has increased its share count from 60 million to 201 million over a period of just two years. Hexo’s management team is not inspiring confidence among shareholders.
3. Sundial Growers
Sundial Growers is one of the largest vertically integrated cannabis companies in Canada and has become a popular meme stock among young investors. While management has raised nearly $1 billion in cash and the company has no debt, its focus has been on acquisitions and not plans that ensure its longevity.
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A major reason that Sundial has been able to raise so much capital is by issuing too much stock, essentially, diluting the value of shareholder’s investments. In addition, its sales have not been promising despite an overall increase in the Canadian cannabis market’s revenue.
Become a Master of Marijuana at Cannabis Training University
Understanding the inner workings of the cannabis industry can help you make smarter investment choices for the long haul. Enrollment in CTU’s marijuana courses online provides students of all skill levels with the knowledge they need to succeed in the industry.