Investors in marijuana stocks have been put through the wringer for years. Will 2022 finally be their time to shine? These are the marijuana stocks with the best value, fastest growth, and best performance for September 2022.
10 Best Marijuana Stocks to Buy Now
Investors in marijuana stocks have been put through the wringer for years. Will 2022 finally be their time to shine?
Cannabis investors have been waiting for a surge in marijuana stocks since the end of 2017. So far, they have gotten nothing but false starts.
But investors that hold the industry’s best stocks and the best exchange-traded funds (ETFs) – and perhaps a bit more patience – should be best-positioned for marijuana’s renaissance.
The Prime Alternative Harvest Index, which tracks the performance of some of the cannabis industry’s most prominent companies, is working on its fifth consecutive calendar year with double-digit negative returns. Perhaps worse: A $10,000 investment in the index at its inception on Dec. 18, 2017, would today be worth around $3,200.
Amazingly, while marijuana stocks haven’t delivered the long-term returns investors have yearned for over the past five years, the cannabis industry in the U.S. is extremely healthy – and that’s despite a continued delay in federal legalization. You can thank a growing number of forward-thinking states such as New Jersey, which legalized recreational-use marijuana on April 21.
In 2022, estimates put U.S. legal cannabis sales at $33 billion – up 32% from 2021 – and $52 billion by 2026. The economic impact is expected to be even more significant.
“While federal legalization flounders in Washington, D.C., the American cannabis industry’s economic impact could near $100 billion by end of 2022 and nearly $158 billion by 2026,” Fortune reported Jenel Stelton-Holtmeier, editor of MJBiz Factbook, tells Fortune. “This means that for every $1 consumers and patients spend at adult-use stores and dispensaries, an additional $1.80 will be injected into the economy, much of it on a local level.”
The long-term prognosis for the cannabis industry is excellent. Ultimately, the following 10 picks look like the best marijuana stocks (and funds) to benefit from this ongoing growth and maturation.
Data is as of April 28.
- Market value: $5.6 billion
Believe it or not, one of your favorite garden supply brands is also a way to invest in cannabis.
Scotts Miracle-Gro (SMG, $101.35) made a big splash in the medical marijuana market in late March when affiliates of the company acquired Etain Health, one of New York state’s original medical marijuana producers.
With the state legalizing recreational sales expected later in 2022 or early in 2023, the $247 million cash-and-stock acquisition gives the Ohi0-based maker of lawn care and gardening products more direct participation in the cannabis industry. In addition, the company’s mergers-and-acquisitions specialist, Mark Sims, will become CEO of Etain, pushing aside its founders.
Before Scotts invested in Etain, Raymond James analyst Joseph Altobello lowered his price target on SMG to $150 from $185. Altobello cut the target price by $35 because Scotts cut its 2022 growth estimates for its Hawthorne hydroponics business. It now expects Hawthorne’s sales to fall by 25% this year.
However, Altobello still rates Scotts a Strong Buy – and believes shares still have 48% upside over the next 12 months.
“Our Strong Buy rating on the shares of Scotts Miracle-Gro reflects our view that the gains made by its U.S. Consumer segment during the COVID-19 pandemic should prove largely sustainable, while its Hawthorne hydroponics business is well-positioned for long-term growth despite near-term headwinds,” Altobello said in March. “Further, valuation remains very attractive, as it seems investors are essentially getting Hawthorne for free.”
That valuation has admittedly become even more attractive, given that SMG shares have been caught up in the market’s recent downturn and shed another 20% of its price.
British American Tobacco
- Market value: $95.3 billion
British American Tobacco (BTI, $41.84) is best known for cigarette brands such as Lucky Strike, Camel, Pall Mall, Rothmans, and Dunhill. However, the U.K.-based company also has developed non-combustible products such as Vuse vaping products, Velo nicotine pouches and Glo tobacco heating products. The company expects these “New Category” products to reach 5 billion British pounds (or $6.4 billion) by 2025.
BTI is also a global player. It currently generates 45% of its revenue from the U.S., 23% from Europe and North Africa, 16% from Asia/Pacific and the Middle East, and 15% from the Americas and Sub-Saharan Africa.
However, the company’s 19.5% ownership stake in Canada cannabis producer OrganiGram Holdings (OGI) is what has BTI on this list of marijuana stocks. In March, BTI invested $5.1 million in OrganiGram, upping its position from its original C$220 million ($172.4 million) in 2021.
“Innovation is an important cornerstone of Organigram’s core strategy, and the Product Development Collaboration with BAT underscores our commitment to the development of disruptive, consumer-focused cannabis products,” Organigram CEO Beena Goldenberg said in a statement.
In March, Argus Research David Coleman reiterated his Buy rating and $50 price target on BTI shares.
“We believe that BTI shares offer value and like the high dividend yield,” he says; that yield is 8.8% at current prices.
Coleman believes British American Tobacco will earn $4.90 a share in 2022 and $5.20 in 2023. BTI’s shares currently trade at 8.5x projected 2022 earnings, below its five-year historical average.
In the future, if the cannabis industry rises off the mat, BTI would likely up its stake in OrganiGram, possibly acquiring it outright. But, as Coleman says, BTI is a good marijuana stock to hold if you’re a value investor who likes healthy dividends.
Innovative Industrial Properties
- Market value: $4.2 billion
Innovative Industrial Properties (IIPR, $150.78) is a real estate investment trust (REIT) that invests in greenhouses and industrial facilities for the medical cannabis industry. It was founded in 2016, when it had just one property under its umbrella; that expanded to 66 by the end of 2020, and it currently boasts 105.
The REIT’s diversified portfolio spans 19 states. Nine of them – including Illinois, California, and Pennsylvania – account for almost 90% of its 7.9 million square feet of rentable space.
In April, IIPR acquired a property in Maryland with 84,000 square feet of industrial and greenhouse space for $25.0 million. This exemplifies the REIT’s business model: The seller, Maryland Cultivation and Processing, then entered into a long-term, triple-net lease. It intends to use the facility for cultivating cannabis.
Piper Sandler analyst Alexander Goldfarb gives the REIT an Overweight rating (equivalent of Buy) with a $230 target price, some 53% higher from current levels. In 2022, Goldfarb estimates its adjusted funds from operations (AFFO, an important measure of REIT profitability) will be $8.71 a share and $10.57 a share in 2023.
“Assuming the eventual federal legalization, IIPR retains the advantage of being the dominant cannabis landlord, who understands all facets: tenants, zoning, utilities, security, etc,” Goldfarb says.
(EDITOR’S NOTE: The commentary on this pick was updated on July 7 to reflect the recent Juul ruling.)
Marlboro parent Altria (MO, $41.81) has not had a good stretch over the past few years. The stock has delivered a five-year annualized total return (stock price and dividends) of negative 5.0%, which is considerably less than the positive 11.1% total return for the entire U.S. market. On the other hand, its annualized total return over the past 52 weeks is -4.1%, which is much better than the -13.2% for the entire U.S. market.
The June 23 news that the Food and Drug Administration banned all of Juul Labs’ vape products from U.S. shelves certainly didn’t help. However, a good portion of the stock’s correction was already priced into its shares leading up to the announcement.
Altria paid $12.8 billion for 35% of Juul Labs in 2018. It knew it was taking a risk when it made the investment. Since then, it has written down the value of its investment on several occasions. At the end of 2021, Altria valued its 35% interest at $1.7 billion. The company is expected to appeal the FDA’s decision.
While the Juul ban came as a surprise to analysts, the long-term pain to Altria’s business shouldn’t be that big a problem. The estimate is a pre-tax hit of 90 cents per share or more to write off the remainder of its investment.
The bigger concern for analysts is twofold: a slowdown in cigarette spending by inflation-ravaged consumers and Philip Morris International bringing its smokeless products to the U.S. market. As for Altria, it believes the FDA should focus on tobacco harm reduction.
“[The government’s] focus should be less on taking products away from adult smokers and more on providing them a robust marketplace of reduced harm FDA-authorized smoke-free products,” the company said in a statement.
The company’s 2022 earnings are expected to be nearly $9 billion, with 85% of its sales from tobacco. The 19 analysts covering MO stock have an average rating of Hold with a median target price of $56.
As for its spot among the market’s top marijuana stocks? Altria owns 45% of Cronos Group (CRON), a large Canadian marijuana firm. It also has warrants to acquire an additional 10% of the company, allowing it to control Cronos in the future. These warrants expire on March 8, 2023, so there is a possibility Altria will control Cronos by this time next year.
Raymond James analyst Rahul Sarugaser believes Cronos Group’s partnership with Ginkgo Bioworks (DNA) on eight cannabinoids should pay dividends in the future. As a result, he gives it an Outperform 2 rating.
Investors shouldn’t forget that Altria owns 10% of Anheuser-Busch InBev (BUD).
Top Marijuana Stocks for September 2022
CL.CX, SNDL, and VRNO.CX are top for value, growth, and performance
Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
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., Cronos Group Inc., and Tilray Inc. 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 -63.6% over the past 12 months, well below the Russell 1000 Index’s total return of -8.2%. These market performance numbers and all statistics in the tables below are as of Aug. 24, 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|
|Cresco Labs Inc. (CL.CX)||CA$4.92||CA$1.5||1.3|
|Jushi Holdings Inc. (JUSH.CX)||CA$2.29||CA$0.4||1.6|
|Aurora Cannabis Inc. (ACB)||1.57||0.5||1.8|
|TerrAscend Corp. (TER.CX)||CA$2.32||CA$0.6||1.9|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$17.47||CA$3.2||2.1|
- Cresco Labs Inc.: Cresco Labs is a 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. At the time of the announcement, it was estimated that Cresco Labs is paying $2 billion for Columbia Care.
- 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. Jushi announced in late August that its fourth medical cannabis dispensary in Virginia would open on Aug. 31. This is the company’s 35th retail outlet nationwide.
- Aurora Cannabis Inc.: Aurora Cannabis is a Canada-based company specializing in the production, distribution, and sale 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. On Aug. 25, Aurora announced that it had acquired a controlling interest in Bevo AgTech Inc., a vegetable and ornamental plant company, through a subsidiary. Bevo operates 63 acres of greenhouses in Canada. Total consideration at the time of closing was roughly $45 million, with an additional payment of up to $12 million payable for up to three years following the acquisition depending on Bevo’s achieving various financial milestones.
- TerrAscend Corp.: TerrAscend is a Canada-based vertically integrated cannabis company with operations in Canada and the U.S. The company’s brands and business lines include Gage Cannabis, The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, and Valhalla Confections. TerrAscend also trades OTC in U.S. markets under the ticker TRSSF. On Aug. 24, TerrAscend announced the closing of its acquisition of Michigan-based dispensary operator KISA Enterprises MI, LLC and related real estate assets. TerrAscend paid total consideration of $28.5 million for KISA. The acquisition includes six dispensary licenses.
- Trulieve Cannabis Corp.: Trulieve is a vertically integrated cannabis company with operations in eight states. The company’s brands include Cultivar Collection, Muse, Sweet Talk, and Momenta. Trulieve shares trade OTC under the ticker TCNNF. On Aug. 10, Trulieve reported earnings for Q2 2022. The company posted a net loss of $22.5 million compared with net income for the prior-year quarter as well as a 49% increase in revenue year over year (YOY). Net income was negatively impacted by charges associated with the acquisition of Harvest as well as other factors.
Fastest Growing Marijuana Stocks
These are the marijuana stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue organically or through other means and find growing companies that have not yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share (EPS). However, sales growth can also be potentially misleading about the strength of a business because growing sales for money-losing businesses can be harmful if the companies have no plan to reach profitability.
|Fastest Growing Marijuana Stocks|
|Price ($)||Market Cap ($B)||Revenue Growth (%)|
|SNDL Inc. (SNDL)||2.78||0.7||2,250|
|OrganiGram Holdings Inc. (OGI)||1.09||0.3||82.8|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$17.47||CA$3.2||54.6|
|Jushi Holdings Inc. (JUSH.CX)||CA$2.29||CA$0.4||48.6|
|Cronos Group Inc. (CRON)||3.10||1.2||47.6|
- SNDL Inc.: SNDL is a Canada-based cannabis producer. The company operates cultivation and processing facilities, retail stores, and also 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 implemented a share consolidation under which 10 pre-consolidation common shares were consolidated into one post-consolidation common share, effective July 25. The company announced on Aug. 22 that it would acquire cannabis product manufacturer The Valens Company Inc. (VLNS) for total consideration of about $138 million. The deal is expected to close in Jan. 2023.
- OrganiGram Holdings Inc.: Organigram Holdings is a Canada-based producer of medical and recreational cannabis. Its subsidiaries include Organigram Inc., Laurentian Organic Inc., and The Edibles and Infusions Corp., and its brands include Edison Cannabis Co., SHRED, and monjour, among others.
- Trulieve Cannabis Corp.: See above for company description.
- Jushi Holdings Inc.: See above for company description. Note that Jushi Holdings reported Q2 2022 earnings results for Q2 2022 on Aug. 29, 2022. Jushi’s ranking in the table above is based on its Q1 2022 earnings report.
- Cronos Group Inc.: Cronos Group is a Canada-based cannabis company. Its brand portfolio includes Spinach, Happy Dance, and PEACE+. Cronos reported Q2 2022 earnings results on Aug. 9. Its net loss narrowed significantly YOY as consolidated net revenue rose. Revenue was driven in particular by Israel net revenue, which more than tripled YOY.
Marijuana Stocks With the Best Performance
These are the marijuana stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.
|Marijuana Stocks With the Best Performance|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Verano Holdings Corp. (VRNO.CX)||CA$8.40||CA$2.7||-44.2|
|4Front Ventures Corp. (FFNT.CX)||CA$0.69||CA$0.4||-47.5|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$17.47||CA$3.2||-49.3|
|Cronos Group Inc. (CRON)||3.10||1.2||-53.0|
|Green Thumb Industries Inc. (GTII.CX)||CA$16.23||CA$3.8||-57.1|
|ETFMG Alternative Harvest ETF (MJ)||N/A||N/A||-63.6|
- 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. 19, Verano announced the opening of its 111th dispensary nationwide and its fourth location in Clarksburg, W.Va.
- 4Front Ventures Corp.: 4Front Ventures is a cannabis operator and retailer. It owns, operates, or manages cultivation and manufacturing properties in five states and employs over 600. Its stores attracted more than 1 million unique customers in 2021. 4Front also trades OTC under the symbol FFNTF. On Aug. 15, 4Front reported Q2 2022 earnings results. Its net loss widened slightly YOY as total revenues climbed. The company its operations in Massachusetts and California posted strong performance during the quarter.
- Trulieve Cannabis Corp.: See above for company description.
- Cronos Group Inc.: See above for company description.
- Green Thumb Industries Inc.: Green Thumb Industries is a cannabis retailer and consumer packaged products company. It markets products under brand names including Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles, and RYTHM. It has 77 open retail locations across 15 U.S. markets. Green Thumb stock also trades OTC under the ticker GTBIF.
Trends to Watch in Marijuana Stocks
Marijuana stocks have given investors a wild ride over the past few years, staging eye-watering rallies and substantial declines. Those who invest in this emerging sector should monitor these key trends as they will likely guide price direction in months and years ahead.
Financing: Most U.S. financial institutions avoid offering to fund cannabis companies as marijuana is still federally illegal, meaning lenders that provide loans could face possible prosecution. However, the Secure and Fair Enforcement Banking Act (SAFE)—which passed through the House in 2021—aims to address this by preventing the federal government from penalizing banks that offer financial services to the cannabis industry. Although the legislation has failed to gain support in the Senate, investors should monitor any amendments to the bill that could increase the chances of it gaining congressional approval.
Increasing Merger and Acquisition Activity: As of last year’s fourth quarter, $8.5 billion worth of merger and acquisition (M&A) transactions had closed in the sector, significantly higher than the $3 billion worth of deals in 2020 and $3.6 billion in 2019. Increasing dealmaking in the cannabis space indicates that institutional investors have growing confidence in the industry’s future.
Potential U.S. Legalization: While several cannabis legalization bills grace the halls of Congress, bipartisan support remains difficult to achieve, creating a large amount of uncertainty for industry participants. However, several leading Canadian operators, such as Cronos and Tilray, are banking on the U.S. cannabis market, with both companies entering into acquisition deals subject to its decriminalization south of the border.
Advantages of Marijuana Stocks
Despite the underwhelming performance of marijuana stocks over the past year amid an uncertain regulatory environment, the sector offers risk-taking investors significant growth potential. According to industry analysis firm MJBizDaily, U.S. cannabis sales will surpass $33 billion in 2022 before reaching $52 billion by the end of 2026. Moreover, the global cannabis market is expected to reach nearly $200 billion by 2028, up from $28 billion in 2021.
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.