stocks to watch for cbd oil

Top Hemp Stocks to Watch in 2021

There’s a lot of confusion in the hemp sector. That’s because hemp is so closely related to marijuana — both are part of the cannabis plant.

But there are key differences between hemp and marijuana — and potential for both markets.

2018 was a landmark year for the hemp industry. That’s when hemp farming became legal in the U.S. again, paving the way for the resurgence of the hemp industry.

Although the industry’s had ups and downs, I think the hemp boom could be on its way.

Today we’ll dive into the hemp industry, look at some of the major players, and learn how to trade it.

Table of Contents

What Are Hemp Stocks?

The terms hemp and marijuana pop up a lot these days. It can make the distinction between marijuana and hemp confusing — even for lawmakers.

Although they both belong to the cannabis plant family, there’s a key difference.

Hemp contains 0.3% or less of the psychoactive chemical known as THC. Marijuana contains more THC. Basically, you can get high on marijuana but not on hemp.

Hemp stocks are the stocks of companies that deal with products and services centered around hemp.

How Are Hemp Plants Used?

Hemp is one of the fastest-growing plants. It has a long history of use for different products and used to be an extremely important crop.

In North America, it was used as early as the 1600s to manufacture rope, lamp fuel, clothing, and paper. Even the Declaration of Independence was drafted on hemp paper.

Unfortunately, concerns about the negative effects of marijuana grew in the first half of the 20th century. Hemp was guilty by association and lumped in as part of the problem.

In 1970, the Controlled Substances Act classified hemp as a Schedule I drug — making it illegal to grow and sell under most circumstances.

That changed in 2018. President Trump signed the 2018 Farm Bill, which opened the door for hemp products again.

Now, hemp popularity is on the rise because of the growing demand for cannabidiol (also known as CBD) products. These products are marketed as a natural remedy for different ailments with no psychoactive properties.

So hemp-based products rich in CBD are more accessible than marijuana due to fewer legal constraints.

CBD, hemp seed grain, and fiber are the three main forms for hemp distribution and use. You can find its fiber in industrial applications like bioplastics, superconductors, and car parts.

And hemp seed oil comes from the seed grain. Some manufacturers use CBD from hemp in food, supplements, lotions, and even makeup.

Can You Trade Hemp Stocks?

Companies are taking advantage of the farming and commercial uses of hemp. That can mean trading opportunities.

Let’s take a look at some of the top hemp stocks to watch in 2020.

Top Hemp Stocks to Watch in 2020

1. Canopy Growth Corporation (NYSE: CGC)

Canopy Growth is one of the most recognizable cannabis companies in the world.

In 2018, Constellations Brands made a huge $4 billion investment into the company. That investment helped make it become one of the largest companies in the sector and brought respect for the brand.

Canopy Growth entered the U.S. hemp market in 2019 when it invested in a hemp industrial farm in New York. In May of the same year, it purchased a CBD-derived skincare company called This Works.

With all that expansion and the potential for the sector, CGC is one to watch in 2020.

Canopy Growth Corporation (NYSE: CGC) 6-month (Source: StocksToTrade)

2. CV Sciences, Inc. (OTCQB: CVSI)

CVSI produces the top-selling CBD oil brand in the U.S. — PlusCBD Oil.

The highly successful product is already available in over 30 U.S. states and in over 2,000 retail locations.

Some analysts believe it’s only a matter of time before CVSI takes the top spot in the hemp-based market.

CV Sciences, Inc. (OTCQB: CVSI) 6-month (Source: StocksToTrade)

3. Cronos Group (NASDAQ: CRON)

Cronos is a CBD company with international production across several different continents.

It’s one of the most popular stocks in the hemp sector.

In November 2018, it received $1.8 billion in investment funds from Altria Group, Inc — the tobacco giant. The partnership meant a huge influx of cash for CRON. It also meant one of the top existing distribution platforms for its products.

In 2018, CRON signed another partnership … this time with genetic engineering firm Ginkgo Bioworks. The relationship will enable CRON to produce biosynthetic cannabis and cut growing costs.

CRON has been very strategic to position itself for the future by focusing its spending mostly on research development.

With all this going on, it’s smart to watch Cronos in 2020.

Cronos Group (NASDAQ: CRON) 6-month (Source: StocksToTrade)

4. New Age, Inc. (NASDAQ: NBEV)

New Age, Inc. wants to become the world’s leading healthy lifestyle company and they’re making big moves to get there.

They recently announced plans to acquire multilevel-marketing health and wellness company, ARIIX … That caused its shares to go up.

It also changed its name from New Age Beverages Corporation to New Age, Inc.

The new name better reflects its strategy to represent a broader range of products and take advantage of opportunities in the market.

50% of the company’s portfolio will still be beverages … But the acquisition enables them to expand to products in beauty, wellness, and nutritional performance.

There are a few reasons to watch this stock in 2020…

First is its recent licensing partnership with Docklight Brands and Bob Marley’s family for a line of Marley+CBD drinks. This partnership could help NBEV get a jump on competitors.

And the FDA is slowly easing its historical anti-cannabis bias. The agency approved a cannabis-based drug to treat seizures in young children. Government regulation changes can mean big moves in stocks. Keep an eye on this one.

New Age, Inc. (NASDAQ: NBEV) 15-Day (Source: StocksToTrade)

5. Aurora Cannabis Inc. (NYSE: ACB)

ACB’s stock dropped heavily in the past year. And fundamentally, it might not look great.

But it’s still considered a sector leader and is popular with traders. It’s even been listed as one of Robinhood’s most widely held stocks.

If you know what you’re doing, there could still be potential. There’s a lot of news around this stock. And with the right news, we could see some price action.

Aurora Cannabis Inc. (NYSE: ACB) 3-month (Source: StocksToTrade)

Penny Hemp Stocks

Some traders focus solely on hemp penny stocks. Many of them have doubled or tripled in price over the past few years.

The sector’s stalled a bit, but again, with the right catalyst, things could move again. Fair warning: A lot of these penny stocks companies have terrible fundamentals. But that doesn’t matter to most traders. It’s about taking quick profits and moving on.

There can be opportunity with penny stocks. Just know what you’re getting into.

Hemp Textile Stocks

A large part of the hemp market is attributed to the textile industry. Hemp beats cotton even when it comes to environmental demands.

Hemp produces twice as much fiber than cotton. It’s more durable and takes less water to grow. And it’s grown virtually pesticide-free.

Popular clothing brand Levi Strauss & Co. (NYSE: LEVI) has a product line that uses a blend of hemp and cotton. It plans to transition the blend into the core of its product line.

Regulation of Hemp Stocks in the U.S.

Although hemp is non-psychedelic and legal, its use continues to be held back. It still has ties to marijuana, which is still largely illegal in the U.S.

The FDA’s scrutiny of the safety of CBD doesn’t help, either.

For the most part, mass retailers aren’t willing to take on products that are under regulatory scrutiny.

There’s good news, though. The FDA is easing its stance against CBD … but Congress may beat them to the punch.

Either way, if regulators continue to loosen restrictions, it can increase market confidence. That could mean huge movements in this sector.

Love knowing what’s up in the overall market? Join me every day on Instagram for my Daily Market Briefings at noon Eastern. It’s a free way for you to learn from me and get a taste of what I offer with my SteadyTrade Team mentorship. Follow me on Instagram here.

How to Identify Good Hemp Stocks to Trade

Identifying a good hemp stock to trade is no different than identifying any other potential stock to trade.

Do your research, plan your trades, and only trade it if the setup fits your strategy. Knowing which stocks to trade comes with a lot of practice, but here are key things to look for.

1. Big Movers

Look for big percent gainers to find stocks that are already moving.

Using scanning software like StocksToTrade helps tremendously. StocksToTrade has built-in scans that are specifically designed to find stocks that are moving the most.

2. Look for Catalysts

Once you find a stock that’s moving, find out if there’s a reason. If there’s no good reason for the move, it will probably fizzle fast.

If the move follows a news catalyst, however, it might have enough power to fit your setups.

Some sectors have specialized news catalysts. For example, biotechs could get FDA approval for a new drug … or complete a phase of a major study. This is why you gotta do your homework.

StocksToTrade has a brand-new feature to help you catch the news that can really move stocks. Find out more about our game-changing Breaking News chat room here!

3. Know Your Particular Chart Patterns

You must know chart patterns.

Don’t randomly enter a trade just because you think it’ll go higher. If you study charts long enough, you’ll see that there are patterns to price movements.

You can help limit your risks by recognizing particular patterns and entering trades at key positions.

Look for areas of support and resistance. This can help you see where it’s difficult for the price to break out. It’s a smart way to set your entries and exits. And it can prevent you from entering trades that have little chance of moving.

With StocksToTrade, you can use the news feature to see which catalysts caused certain moves on longer-term charts. You can then compare the movements of similar catalysts to help you make better trading decisions. Don’t use StocksToTrade? Sign up for a 14-day trial for just $7 today!

4. Watch for Volume

How bad would it be if you entered a trade and couldn’t get out of it?

That’s why it’s important to watch trading volume.

Just because a stock is moving doesn’t mean there are enough traders in it. And if no one’s around to buy your shares when you want to sell, you’re out of luck.

Check the volume and make sure you can enter and exit trades easily. Also, the more volume the stock has, the more powerful the moves can be.

How to Buy Hemp Stocks

It’s just like buying any other stock. You need a computer, an internet connection, and an online brokerage account to get started.

There are tons of brokers to choose from, so be sure to do your research. Here’s a post to get you started.

Should You Trade Hemp Stocks?

A lot of investors and traders entered the hemp market because of all the potential it had. I think it still has potential. Make your watchlist and keep an eye out for news. The way the market has moved in 2020 is unlike any other. Any moves could be big.

The sector has slowed down and had unforeseen challenges, but there’s still a growing demand for hemp products.

The COVID-19 pandemic has caused a lot of stress for people. Cannabis sales jumped significantly this year.

The markets constantly change. I think it’s a matter of time before the right catalysts get the sector moving again.

Conclusion

Now it’s time to start your own list of top hemp stocks to watch in 2020. Maybe the stocks here will make your list or inspire you to find your own.

Keep an eye on the industry and its stock leaders so you can be prepared when the sector heats up again.

We’re all about finding the best opportunities in this market and any market with the SteadyTrade Team. That’s our mentorship and trading education community. I offer twice-daily webinars to help you understand how to navigate the market every trading day.

We also have tons of resources to help you find the strategy that works best for you and your schedule. And if you need help managing your trading emotions, we have support for that too with our trading coach Kim Ann Curtin.

I’m so proud of our community. Join us and see how the right mentorship can help you trade smarter every day. Mike “Huddie” Hudson, Kim, I do just that.

Love hemp stocks? What’s on your list of top hemp stocks to watch? Leave a comment!

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CBD – Charlotte’s Web

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I want to start how do I start I’m new to this

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Top Marijuana Stocks for February 2022

GRWG is top for value and growth, and ARNA is top for momentum

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 investing in equipment to speed up revenue growth.

Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have dramatically underperformed the broader market. MJ has provided a total return of -48.7% over the past 12 months, well below the Russell 1000’s total return of 13.5%. These market performance numbers and all statistics in the tables below are as of Jan. 24, 2022.

Below we look at the top five marijuana stocks with the best value, the fastest growth, and the most momentum.

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
GrowGeneration Corp. (GRWG) 8.08 0.5 1.2
Village Farms International Inc. (VFF) 5.29 0.5 1.7
Hydrofarm Holdings Group Inc. (HYFM) 19.83 0.9 1.7
Cresco Labs Inc. (CL.CX) CA$7.70 CA$2.1 2.0
Ayr Wellness Inc. (AYR.A.CX) CA$19.90 CA$1.3 2.6
  • GrowGeneration Corp.: GrowGeneration is a distributor of agricultural products and one of the largest hydroponics suppliers in the country, operating retail hydroponic and organic specialty gardening retail outlets. Though GrowGeneration is not a pure-play cannabis company, many of its products are used in cannabis cultivation. It sells thousands of products, including plant nutrients, farming soils, advanced lighting technology, and hydroponic and aquaponic equipment. It owns and operates 62 retail and distribution centers. GrowGeneration recently announced that it has acquired for $9.4 million the assets of Mobile Media Inc. and MMI Agriculture, a mobile shelving manufacturing and warehouse facility. The company also announced in mid-December the retirement of Tony Sullivan, the company’s executive vice president and chief operating officer (COO). The company mentioned no plans to fill the COO position, saying that the current operational team was sufficient to expand the company “in 2022 and beyond.” GrowGeneration hired four people to fill high-level executive or operating positions in 2021.
  • Village Farms International Inc.: Village Farms International is a Canada-based vertically integrated greenhouse produce company. The company produces cannabis in addition to growing, producing, and distributing fresh produce to national grocers in North America. The company’s brands include: Village Farms Fresh, a vertically integrated greenhouse grower; Pure Sunfarms, a cannabis producer; ROSE LifeScience, a cannabis producer and distributor; Balanced Health Botanicals, a CBD brand with an e-commerce platform; Village Fields Hemp, a hemp grower; and VF Clean Energy, a subsidiary that converts landfill gas to clean energy. The company announced in mid-November that it has acquired 70% of ROSE LifeScience, a vertically-integrated branded cannabis producer, for CA$46.7 million ($37.0 million) in cash and Village Farms shares.
  • Hydrofarm Holdings Group Inc.: Hydrofarm Holdings Group is a holding company that, through its subsidiaries, makes and distributes hydroponic products to customers throughout the U.S., Canada, and Europe. The company offers hundreds of brands. It has a total of nine distribution centers, offering a product line of more than 5,000 items. The company announced in early November that it has completed its acquisition of Innovative Growers Equipment Inc., a manufacturer of horticulture benches, racking, and LED lighting systems. The $58.0 million acquisition was announced in late October.
  • Cresco Labs Inc.: Cresco Labs grows, manufactures, distributes, and packages cannabis products. The company operates in 10 states, including production facilities and dispensaries. Its brands include Cresco, Reserve, Remedi, High Supply, Wonder Wellness Co., Mindy’s, Good News, Sunnyside, and FloraCal Farms. Cresco Labs’ stock also trades over the counter (OTC) in the U.S. under the ticker CRLBF. The company recently announced that it has terminated its agreement to purchase Blair Wellness LLC, a Maryland-based medical cannabis dispensary. Cresco Labs said that the agreement was terminated because of the failure to meet certain closing conditions. There were no termination fees associated with the transaction, which had originally been expected to close in Q4 2021.
  • 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, seltzers and tinctures, edibles and vape products under brands including Kynd, Origyn, Stix Preroll Co., Levia, Road Tripper, Entourage, Haze, Wicked, Secret Orchard, and Cannapunch. Ayr Wellness also trades OTC in the U.S. under the ticker AYRWF. The company announced in November that it agreed to acquire Gentle Ventures LLC, which owns and operates two licensed retail dispensaries in Chicago and does business under the name “Dispensary 33”. Under the terms of the deal, Ayr Wellness will pay $55 million upfront with an earnout payable if certain adjusted EBITDA performance is achieved through Q3 2022.

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, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.

Fastest Growing Marijuana Stocks
Price ($) Market Cap ($B) Revenue Growth (%)
GrowGeneration Corp. (GRWG) 8.08 0.5 110.9
Verano Holdings Corp. (VRNO.CX) CA$13.91 CA$2.8 106.0
Jushi Holdings Inc. (JUSH.CX) CA$4.60 CA$0.8 104.9
Ayr Wellness Inc. (AYR.A.CX) CA$19.90 CA$1.3 100.0
Village Farms International Inc. (VFF) 5.29 0.5 68.3
  • GrowGeneration Corp.: See above for company description.
  • Verano Holdings Corp.: Verano Holdings is a vertically integrated, multistate cannabis operator. The company produces a wide range of medical and adult-use cannabis products, which it sells through its portfolio of brands, including: Verano, Avexia, Encore, and MÜV. It owns and operates 12 cultivation and manufacturing facilities and 93 retail locations in a number of states throughout the U.S. The company’s stock also trades OTC in the U.S. under the ticker VRNOF. Verano announced in early January the appointment of Brett Summerer as chief financial officer (CFO). Summerer has over 21 years of financial management experience, including at General Motors Co., Kraft Heinz Co., and Corning Inc. He replaces Brian Ward.
  • 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 maker of hemp-based CBD products that are physician formulated; 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. The company announced in mid-November that it has agreed to acquire NuLeaf Inc., a Nevada-based, vertically-integrated operator, for $62.5 million. The acquisition is expected to close during the first half of 2022.
  • Ayr Wellness Inc.: See above for company description.
  • Village Farms International Inc.: See above for company description.

Marijuana Stocks with the Most Momentum

Momentum investing is a factor-based investing strategy in which you invest in a stock whose price has risen faster than the market has as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stock’s outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the stocks that had the highest total return over the past 12 months.

Marijuana Stocks with the Most Momentum
Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Arena Pharmaceuticals Inc. (ARNA) 89.95 5.5 15.8
Innovative Industrial Properties Inc. (IIPR) 194.63 4.7 2.9
OrganiGram Holdings Inc. (OGI) 1.46 0.5 -15.1
Sundial Growers Inc. (SNDL) 0.46 0.9 -28.7
Green Thumb Industries Inc. (GTII.CX) CA$23.71 CA$5.4 -39.4
Russell 1000 N/A N/A 13.5
ETFMG Alternative Harvest ETF (MJ) N/A N/A -48.7
  • Arena Pharmaceuticals Inc.: Arena Pharmaceuticals is a clinical stage biopharmaceutical company that is developing a diverse portfolio of therapeutic candidates focused on the areas of gastroenterology, dermatology, and cardiology. It does not currently have any medicines or products that have been approved for use by regulators. The company is working on developing a drug for treating pain related to gastrointestinal disorders called Olorinab, which uses cannabinoids. The company announced in mid-December that it has agreed to be acquired by Pfizer Inc. for approximately $6.7 billion. Pending approval by regulators, the deal is expected to close in the first half of this year.
  • 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. Innovative Industrial Properties announced in mid-December that it has acquired a portfolio of 27 properties in Colorado, Pennsylvania, and North Dakota that are 100% leased for use as regulated cannabis facilities. The aggregate purchase price of the properties was approximately $72.7 million.
  • OrganiGram Holdings Inc.: OrganiGram Holdings is a Canada-based producer of medical and recreational cannabis focused on producing high-quality, indoor-grown cannabis. It is the parent company of Organigram Inc., a producer of cannabis products, and The Edibles and Infusions Corp., a cannabis-infused, soft-chew and confectionary manufacturer. Its brands include The Edison Cannabis Co., Indi, Bag o’ Buds, SHRED, and Trailblazer. OrganiGram’s stock also trades in Canada on the TSX under the ticker OGI.TO. The company recently announced that it has acquired Laurentian Organic Inc., a licensed cannabis producer, for CA$36 million ($29 million) plus an earnout if certain EBITDA thresholds are surpassed by Laurentian in 2022 and 2023.
  • Sundial Growers Inc.: Sundial Growers is a Canada-based diversified cannabis company engaged in the cultivation, manufacturing and processing, and retailing of various cannabis products. The company focuses on inhalables for the Canadian adult-use market. Its branded products are available in flower, vape, pre-roll, and other forms. The company’s brands include Sundial, Top Leaf, Palmetto, and Grasslands. Sundial announced in November that its board of directors has approved a new share repurchase program authorizing the company to repurchase up to CA$100 million ($79 million) of its outstanding common shares. The repurchase program will expire on Nov. 19, 2022.
  • Green Thumb Industries Inc.: Green Thumb Industries is a consumer-packaged cannabis products company and retailer. It manufactures and distributes a variety of branded cannabis products through its portfolio of brands, including Beboe, Dogwalkers, Dr. Solomon’s, Good Green, incredibles, and Rythm. The company also owns and operates retail cannabis stores called Rise. Green Thumb has 16 manufacturing facilities and scores of retail locations, with operations across 14 U.S. markets. The company’s stock also trades OTC in the U.S. under the ticker GTBIF. Green Thumb Industries announced in late December that it has acquired LeafLine Industries, a Minnesota-based licensed cannabis cultivator. The acquisition provides Green Thumb with access to patients within the Minnesota medical cannabis market. Financial terms of the transaction were not disclosed.

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.

Best Medical Marijuana Stocks to Watch

The global medical marijuana market is projected to grow at an annualized rate of nearly 18% through 2028, according to Data Bridge Market Research. Much of this growth will likely be in the U.S., where 35 states have already legalized medical cannabis. Medical cannabis products sold in the U.S. include dried flower, vaping concentrates, cannabis-infused edibles, and topical products such as lotion.

Investors who opt to buy individual medical marijuana stocks can choose among Canadian or U.S. companies. Canadian medical cannabis companies can legally list on U.S. stock exchanges, while U.S. medical cannabis companies operating legally at the state level can legally list on Canadian stock exchanges and over the counter (OTC).

Before you invest in medical cannabis companies, find out what you need to know about this growing sector.

Image source: Getty Images.

Top medical marijuana stocks

These five medical marijuana stocks are top buys for 2021:

Market Capitalization

Description

Canopy Growth (NASDAQ:CGC)

$7.7 billion

Grows, produces, and sells medical cannabis products primarily for the Canadian and European markets

Jazz Pharmaceuticals (NASDAQ:JAZZ)

Trulieve Cannabis (OTC:TCNNF)

Innovative Industrial Properties (NYSE:IIPR)

Data source: Yahoo! Finance. Data current as of July 26, 2021.

1. Canopy Growth

Canopy Growth serves the Canadian medical and recreational marijuana markets and distributes medical cannabis to international markets, including Germany. The company has strong global distribution channels with subsidiaries, joint ventures, and strategic partners that market its products around the world.

Canopy Growth can’t yet compete in the huge U.S. medical cannabis market, but it is poised to quickly enter if cannabis is federally legalized. The company already has a deal in place to acquire Acreage Holdings (OTC:ACRGF) , which operates cannabis dispensaries in 13 U.S. states.

Canopy Growth isn’t consistently profitable because it’s focused on growth. The company has a strong cash position as a result of a $4 billion investment from alcohol giant Constellation Brands (NYSE:STZ) . Its ties to Constellation, along with the cash from the deal, give Canopy a big advantage in the medical cannabis industry.

2. Valens

Valens is a Canadian company that provides extraction services for companies that make cannabis products, including medical cannabis products such as capsules, soft gels, topical ointments, and tinctures.

Valens contracts with top medical cannabis growers and claims to have the largest extraction capacity among its rivals. The extraction company has multiyear agreements with many Canadian growers, including Canopy Growth, HEXO (NASDAQ:HEXO) , OrganiGram (NASDAQ:OGI) , and Tilray (NASDAQ:TLRY) .

Extraction opportunities related to medical cannabis are growing substantially in the U.S., Europe, Australia, and Latin America. The company’s solid revenue growth is likely to be further boosted by its acquisition of Florida-based cannabidiol (CBD) products company Green Roads by providing valuable exposure to the U.S. cannabis market.

3. Jazz Pharmaceuticals

Jazz Pharmaceuticals became the largest cannabis-focused drug developer following its acquisition of GW Pharmaceuticals in May 2021. Sativex, developed by GW, is a medical cannabis drug that contains both the high-inducing tetrahydrocannabinol (THC) and the non-psychoactive CBD. It treats spasticity associated with multiple sclerosis. Epidiolex, also developed by GW, is a CBD drug and the company’s most successful product. Sativex is approved in multiple countries, excluding the U.S., and Epidiolex is approved in both the U.S. and Europe.

Epidiolex, which generated sales of more than $510 million in 2020, is significantly boosting Jazz’s revenue. Its sales growth should continue with the European Commission’s approval in April 2021 of the drug (sold as Epidyolex in Europe) to treat seizures associated with tuberous sclerosis complex.

Jazz is not a pure-play medical cannabis company, and it also makes the sleep disorder drugs Xyrem, Xywav, and Sunosi, which account for more than two-thirds of its sales. Jazz also sells the cancer drugs Rylaze, Vyxeos, and Zepzelca.

4. Trulieve Cannabis

Trulieve Cannabis is a vertically integrated U.S.-based cannabis company that grows medical cannabis and distributes medical cannabis products to its own retail dispensaries. The company’s primary operations are in Florida, where it runs more than 80 medical cannabis dispensaries and commands a market share of close to 50%. Trulieve also has operations in California, Connecticut, Massachusetts, Pennsylvania, and West Virginia.

Trulieve is acquiring Harvest Health & Recreation (OTC:HRVSF) . After the deal closes, Trulieve will rank as the most profitable U.S. multistate cannabis operator. It will also be the largest U.S. cannabis company based on its combined retail and cultivation footprint.

Unlike most of its peers, Trulieve regularly delivers quarterly profits. The company’s earnings growth remains strong, which gives Trulieve considerable financial flexibility to invest in expanding its business.

5. Innovative Industrial Properties

As a real estate investment trust, or REIT, Innovative Industrial Properties is the leading real estate provider for the U.S. medical cannabis industry. The company buys properties from medical cannabis operators and then leases the properties back to the operators, providing needed cash to growing cannabis businesses and stable income for Innovative.

Innovative Industrial Properties currently owns properties that are leased to tenants in 18 states. The company is increasing its customer base not only in the states where it already operates but also in additional states that legalize medical or recreational cannabis.

As a REIT, Innovative Industrial Properties distributes at least 90% of its taxable income to investors in the form of dividends. Innovative Industrial Properties’ consistent profitability is due in part to its diversification across many tenants.

How to choose the best medical marijuana stocks

Investors should consider the same key attributes for medical marijuana stocks that they would for any stock:

  • Financial performance: Many medical marijuana companies aren’t yet profitable, but the best companies have clear and defined plans for achieving profitability in the future. The safest companies also have plenty of cash, which creates financial flexibility and preserves the value of the stock.
  • Growth opportunities: The patchy regulatory framework of the marijuana sector means that medical cannabis companies’ growth prospects vary widely. The best companies are minimally limited by geographic constraints.
  • Competitive position: Leading medical marijuana companies have high production capacity, plenty of distribution channels, and beneficial partnerships with established companies.

If you don’t want to choose specific stocks, another way to gain exposure to medical marijuana stocks is to buy shares in a cannabis-focused exchange-traded fund (ETF). This confers instant diversification across the cannabis sector, although currently no pure-play medical cannabis ETFs are available.