Top-Performing Marijuana Stocks in March 2024

In 37 states, medical cannabis is now permitted, and in 23 states, its use is fully legalized. However, at the federal level, its classification remains largely unchanged since the 1970s, grouping cannabis with heroin, ecstasy, and LSD.

After the U.S. Department of Health and Human Services recommended easing marijuana restrictions in August, there was a surge in cannabis stocks. Nevertheless, the pace of legalization has been slower than expected, highlighting both the growth potential and the uncertainty facing cannabis companies.

In 2018, Canada legalized marijuana nationwide, allowing numerous American cannabis firms to list their shares on Canadian exchanges.

For investors seeking opportunities amidst the volatile phase in the cannabis market, here are the Best cannabis stocks to watch. It’s crucial to acknowledge that these companies are fast-growing stocks with relatively modest market values, indicating they also come with considerable potential for losses.

Potential Risks of Investing in Cannabis Stocks

Investing in best marijuana stocks carries specific dangers that investors must fully grasp. These include uncertainties in legal and political realms, as well as unconventional financial constraints.

Legal uncertainties persist as marijuana possession and sale remain illegal under federal law in the U.S., with only four states maintaining complete prohibition. The remaining 46 states have implemented varied legalization frameworks governing cannabis.

Financial constraints arise due to federal prohibition, imposing strict limitations on banks dealing with cannabis-related businesses. Consequently, some U.S. marijuana enterprises face hurdles in accessing crucial financial services.

Fluctuations in supply and demand are prevalent in the cannabis market due to legal complexities and its rapid expansion. Canadian growers’ initial efforts to meet recreational marijuana demand led to oversupply, driving prices down and impacting corporate revenues.

Uncertainties in profitability loom large as the majority of listed top cannabis stocks are yet to turn profitable and carry significant debt burdens. This raises the risk of cash depletion, with growth-oriented stocks often resorting to capital raising through share issuance, potentially diluting existing shareholders’ value.

OTC market risks are notable as many cannabis stocks trade in over-the-counter markets, exempting them from regular financial disclosures and minimum market capitalization requirements. OTC stocks may have opaque financials and limited liquidity, posing challenges for trading.

March 2024’s Leading Cannabis Stocks

Curaleaf Holdings (CURLF)

Curaleaf is a big cannabis company that many people watch to see how the whole industry is doing. Recently, when the U.S. government suggested making marijuana rules less strict, Curaleaf’s stock price went up a lot, by 44% in just two days. But even with this rise, its stock has gone down by 34% over the last year, which shows how tough it can be to invest in cannabis compared to safer options like the S&P 500.

Still, Curaleaf is the biggest company in the cannabis business, making $1.3 billion in revenue last year, more than anyone else. Its price-to-sales ratio is a bit high, meaning it’s more expensive than others, but some investors think it’s worth it because the cannabis industry is risky.

Curaleaf is based in Wakefield, Massachusetts, but its stock is traded on the Canadian Securities Exchange (CSE) and in the U.S. through ADRs on the OTC market. If you want to invest in Curaleaf, make sure your brokerage account allows trading on the OTC market.

Green Thumb Industries (GTBIF)

Green Thumb Industries, an American cannabis retailer, operates over 80 stores and runs more than 15 factories across the United States.

Since its establishment in 2014, the company has experienced significant growth, achieving revenue surpassing $1 billion last year, marking an almost 14% increase from the previous year. It is now among the largest cannabis companies globally, open to investment from anyone.

Following positive remarks from the Department of Health and Human Services regarding the cannabis industry, the company’s stock surged by 37% within two days. Despite a decline of around 15% in the past year, it still outperforms many similar companies, ranking as the second best-performing stock on the list.

Despite its status as one of the largest cannabis companies available for investment, it remains relatively smaller compared to others. Like all cannabis companies, its stock experiences significant fluctuations; for instance, despite significant revenue growth in 2022, its stock price plummeted by over 60% in the same period.

Green Thumb Industries presents another opportunity for investment in the American cannabis market. Its stock, denoted by the ticker symbol GTBIF, is traded on the U.S. OTC market.

Verano Holdings (VRNOF)

Verano Holdings, which owns Encore, Alexia, and MUV brands in the U.S., faced challenges last year, experiencing a significant 42% drop in value, much like many other companies in the industry.

Despite being a relatively new player in the industry, Verano went public in February 2021. Although it’s a U.S.-based company, it’s listed on the Canadian Securities Exchange (CSE) through a reverse takeover. Nonetheless, it’s still possible to trade Verano’s stocks in the U.S. as an ADR on the OTC market.

Because of its short history, Verano Holdings lacks the long-term track record of consistent revenue growth seen in other companies on the list, all of which have demonstrated three years of positive and expanding revenue. However, its higher risk profile might appeal to some investors, especially considering that its revenue growth in 2022 ranked third highest among its peers.

Trulieve Cannabis (TCNNF)

Trulieve Cannabis has disappointed investors with its dismal performance, currently hovering around a $1 billion market cap, down by 56% over the past year. Despite experiencing significant sales growth of 32% last year, which tops the list in its industry, its stock performance remains troubling. However, this downturn has resulted in a more affordable valuation, reflected in its lower price-to-sales ratio compared to other major players in the sector. Additionally, TCNNF, another ADR listed on the CSE and traded on the OTC market in the U.S., is part of Trulieve’s offering.

Cresco Labs (CRLBF)

Cresco Labs holds the title of being the largest distributor of branded cannabis products in the United States, with operations spanning seven states. Their recent expansion efforts, including the opening of five new stores in the second quarter, have brought their total store count to 68. While this growth potential bodes well for the company’s stock, there are factors to consider.

Despite its expansion, Cresco Labs’ revenue figures raise some concerns. While we typically focus on companies with positive and increasing revenue, Cresco barely meets this criterion, showing only a marginal increase last year. In an industry notorious for slim profit margins, this tepid revenue growth is worrisome.

On the bright side, the company boasts one of the lowest price-to-sales ratios among its peers, which could be intriguing if Cresco manages to ramp up its revenue growth in the future.

Cresco’s long-anticipated merger with Columbia Care fell through in July, which would have created the largest cannabis company in the market. However, amidst challenging economic conditions in the industry, Cresco chose to refocus on its core operations. While this decision may lead to a more stable stock performance in the future, it also means missing out on potential synergies from the merger.

It’s worth noting that Cresco Labs trades as a Canadian American Depositary Receipt (ADR) on the U.S. Over-the-Counter (OTC) markets.

Glass House Brands (GLASF)

Glass House Brands is a cannabis company in California that does everything from growing to selling. It’s one of the smallest companies in the industry, which makes it even riskier because the cannabis market is already pretty unstable.

But there’s a good side to it too. In the past year, its stock went up by 19%, which is way better than other companies in the same business.

Their earnings for the second quarter of the year were really good. The CEO even said it was the best quarter they’ve ever had. Their sales went up by 171% compared to last year, and their profit margin went from just 2% to 55%.

However, it might be hard for them to keep growing so fast. Their price-to-sales ratio is higher than that of other similar companies. When a company’s sales grow quickly, sometimes it’s tough to keep up that pace.

It’s pretty clear there’s a risk here, but Glass House Brands has been doing really well lately. It could be a good investment for people who are okay with taking big risks.

Glass House Brands is listed as a Canadian ADR on the U.S. OTC markets, which means it’s traded in the U.S. but it’s based in Canada.

The Cannabist Company Holdings (CBSTF)

The Cannabist Company, previously known as Columbia Care, terminated a significant agreement with Cresco Labs earlier this year, which would have formed one of the largest entities in the cannabis industry.

Moreover, Cannabist’s stock has plummeted by 79% over the past year, following a substantial 77% surge within 48 hours of the Department of Health and Human Services proposing relaxed regulations on marijuana in August.

On a positive note, revenue growth remains robust. Coupled with the declining stock price, this results in a very low price-to-sales ratio for CBSTF.

Now that the volatility and uncertainty surrounding the merger situation have been resolved, coupled with promising sales figures and a relatively inexpensive valuation, while there may be heightened risk, there’s also potential for significant upside.

The Cannabist Company trades as a Canadian ADR on the U.S. OTC markets.

WM Technology (MAPS)

WM Technology offers a new way for investors to get into the cannabis industry. They make technology and software for cannabis businesses.

MAPS is the smallest company here, so it’s riskier.

But it’s been growing, making more money last year. In the latest quarter, it did better than expected, making a small profit compared to a big loss last year. Also, its price compared to sales is low.

However, looking at its history, it’s risky. Its stock has dropped a lot since last year. But if you’re okay with risk, it’s on the Nasdaq.

Methodology of Identifying Optimal Cannabis Investments

The methodology involves selecting publicly traded marijuana companies traded on North American stock exchanges, meeting specific criteria:

• Market capitalization exceeding $75 million.
• Revenue will surpass $50 million in 2022.
• Consistently positive revenue growth over the past three years.
• Price-to-sales ratio below 2.50 during compilation.
• Direct involvement or investment in the cannabis sector.

Given the volatile nature of cannabis stocks, emphasis is placed on firms with sustained revenue growth, which serves as a proxy for profitability. Verano Holdings is an exception due to limited historical sales data.

Although the chosen companies are relatively small, a minimum market capitalization of $75 million is enforced, while those with sales below $50 million in the previous year are excluded. Some stocks are dual-listed on the Canadian and U.S. markets. It’s crucial to recognize the inherent risks associated with investing in cannabis firms, primarily characterized by their modest market capitalization.

For further insights into the rating process and editorial guidelines, refer to Forbes Advisor’s guide on evaluating investment products.

Note: The aforementioned marijuana stocks to buy were meticulously chosen by a seasoned financial analyst, yet their suitability for your portfolio should be thoroughly researched. Assess whether they align with your financial objectives and risk appetite before making any investment decisions.

The 2023 U.S. Cannabis Market Overview

The performance of the cannabis market in the United States during 2023 has disappointed investors, despite initial optimism. U.S.-based top herbe stocks, especially those of multi-state operators (MSOs), have encountered difficulties due to fierce competition, leading to price pressures and a decline in stock value.

There has been a noticeable drop in marijuana prices, with the cost of a gram decreasing by a significant 13% from $10.83 to $9.43 between Q3 of 2022 and the previous year, marking the most substantial decline observed within a year.

While cannabis legalization has advanced at the state level in the U.S., progress in federal cannabis reform has been limited. The Marijuana Opportunity Reinvestment and Expungement Act (MORE), which aims to decriminalize cannabis by removing it from the Controlled Substances Act, is still pending in the Senate.

Investment analysts believe that Canada presents greater potential for long-term cannabis investors. Since the nationwide legalization of recreational cannabis in 2018, Canada has witnessed a thriving market for public cannabis companies.

Several American cannabis companies, such as Curaleaf, Green Thumb Industries, and Trulieve, are listed on Canadian exchanges and trade as American Depository Receipts (ADRs) in the U.S. over-the-counter (OTC) market.