3 best cannabis stocks to buy for August
There is no doubt that marijuana presents a long-term growth opportunity for investors, especially as the United States moves towards legalizing the substance at the federal level.
Many of the first major players in the cannabis business, including Canopy growth, Hexo, and Tilray, all quickly flew back to earth as the reality of dealing with the labyrinthine framework of Canada’s regulatory system turned out to be more difficult than originally anticipated. But there is hope that the American system will not grope the ball the same way.
Investors can always go into the market now and earn big returns. New Frontier Data industry analysts estimate that legal marijuana sales in the United States will grow at a compound rate of 16% per year through 2025 to $ 43 billion – not including the potential for new states or new federal laws. Some 64% of these sales will be for adult recreational use and the remaining 36% will be for medical patients.
These cannabis users will be purchasing their marijuana from licensed dispensaries, and it is for this reason that I think investors should look to the multi-state operator segment of the market for their best returns today.
“Rapid growth and scale” seems to be the motto Columbia Care (OTC: CCHWF) adopted in his attempt to be an MSO leader in cannabis. Thirty-six states have legalized the recreational or medical use of marijuana, and Colombia has 99 dispensaries in 17 of them. It also operates 31 growing and manufacturing facilities and offers wholesale distribution in 13 markets.
It uses acquisitions to rapidly expand its dispensary footprint, including vertically integrated medical marijuana operator Green Leaf Medical; Ohio-focused CannAscend, which operated four dispensaries; and California-based grower, wholesaler and retailer, Project Cannabis. This is critical, as Columbia’s growth potential is accelerating as more states approve the use of cannabis for medical and personal use. Therefore, having a large network available allows it to quickly become operational in any market.
Columbia Care says its revenues triple or quadruple when usage metrics increase, and because twice as many states currently allow medical use as those that allow recreational use, this MSO is able to capitalize as the first is transformed into the latter.
Even if financial performance is weighed down by short-term acquisitions, now may be a good time to buy the stock. Columbia Care shares are down 32% year-to-date, but that could recover quickly in the near future.
While Jushi Holdings (OTC: JUSHF) It is also expanding its dispensary presence nationwide, taking a much more narrow and focused approach. Currently, only three states – Pennsylvania, Illinois, and Virginia – account for 80% of its revenue this year, and Pennsylvania is the predominant location, home to 13 of its 20 retail outlets.
That said, Jushi has a retail presence in two other states (California and Massachusetts), has a growing list of branded retail stores with more than a dozen more planned by the end of the year. year, operates five cultivation sites and has a similar number of mining and processing facilities, giving it a total presence in seven states to date.
Jushi’s unique opportunity comes from the states he targets, which limit his competition either by capping the number of dispensary licenses they will authorize, or by granting them based on jurisdiction. This means that Jushi won’t necessarily be replaced by a contender with deep pockets and late in the game.
With fewer than two dozen dispensaries and revenue forecast to hit just $ 255 million this year, Jushi Holdings is smaller than many of its rivals, but analysts predict exponential sales growth, reaching nearly $ 1 billion. dollars by 2024. This will help catapult it to the forefront of the industry and undoubtedly bring its share price up.
Trulieve Cannabis (OTC: TCNNF) is an even more focused player than Jushi as he’s almost exclusively a Florida-based medical marijuana stock – at least for now.
Trulieve is the state’s largest licensed medical marijuana supplier, with the most dispensaries and the highest sales volume, and is only now trying to replicate that success in other jurisdictions. He recently obtained a license to operate in his seventh state (Georgia). Yet 90% of its dispensaries are in Florida.
This company is also trying a new approach to expansion, having successfully launched a pilot program to sell its premium cannabis clones at one of its dispensaries in Massachusetts. This will allow home growers to use Trulieve’s high quality plant genetics to grow their own marijuana plants at home.
The first phase of the plan is limited to Trulieve’s Chocolope NewBerry Sativa strain, but if well received, the cannabis company could introduce other strains and add other locations where customers can buy them.
This gives Trulieve the opportunity to grow their business by building on their reputation, much like craft beer brands allow home brewers to buy kits of their favorite craft beer to make at home.
As it also acquires Harvest Health and leisure, giving it access to MSO’s five-state dispensary portfolio, Trulieve could be another top-tier marijuana company much sooner than expected.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.