In this article, we are going to discuss the 10 best marijuana stocks to buy according to hedge funds.
The United States of America is the country that consumes the most weed in the world. As we mentioned in our article – 30 Cities with the Highest Weed Consumption in the US – the American legal cannabis industry fared well in 2023 as legal sales across the 38 states that allow some form of regulated marijuana reached $28.8 billion, a 10.3% increase from the previous year. After an eventful 2024, the industry is expected to flourish even further. According to a report from the wholesale marketplace LeafLink, retail sales of cannabis reached a record $2.8 billion in October 2024, up 6.2% from last year. The data revealed that America’s total retail cannabis sales for this year are expected to be in the proximity of $32.6 billion.
The US legal weed industry also added 22,952 new jobs last year – a sign that the national business climate has somewhat stabilized following the turmoil of the previous two years. According to the 2024 Vangst Jobs Report, there were over 440,445 jobs supported by legal cannabis nationwide as of early 2024, an increase of 5.4% from 2023.
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Perhaps this year’s most positive news for the country’s legal cannabis sector came in April, when the Drug Enforcement Agency announced that it would act on the Biden administration’s call to reclassify marijuana from a ‘Schedule I’ drug, which includes heroin and LSD, to a less tightly regulated ‘Schedule III’ drug, which includes ketamine and some anabolic steroids. The decision marked a major policy shift by the federal government and while it would neither make the substance legal nor decriminalize it on a federal level, it would loosen quite a few restrictions around it and add fresh arguments for supporters of ballot measures seeking to legalize cannabis in states where it is still illegal. The process is lengthy and complex and will stretch well into the next year, but as the DEA finalizes its review, stakeholders from across the industry are closely monitoring developments.
Another encouraging development came in the form of a tweet from President-elect Donald Trump, in which he expressed support for a recreational cannabis legalization ballot initiative in his home state of Florida. He also backed up the marijuana industry’s access to the banking system and the ongoing federal cannabis rescheduling process. Whether this support will actually translate into action when Trump takes office for his second term remains to be seen.
However, 2024 ended with a slightly sour taste in the mouth of America’s cannabis stakeholders, as Florida’s cannabis legalization ballot measure failed to pass, despite historic levels of funding and a rigorous advertising campaign. This was a major blow to the industry as the Sunshine State was expected to become a $6 billion cannabis market by 2026, had Amendment 3 succeeded in meeting the required 60% threshold.
The setback inevitably impacted cannabis stocks, which witnessed a downturn following the news of the rejection. Amplify Alternative Harvest ETF, the first US ETF to target the global cannabis sector has fallen by over 31.6% since November 4, closing at $2.27 on December 24, 2024.
As of the writing of this article, 24 states have legalized recreational weed in America, in addition to the District of Columbia. However, possessing or selling marijuana remains a crime under federal law, punishable by prison time and fines.
With that said, here are the Best Marijuana Stocks to Invest In.
Photo by CRYSTALWEED cannabis on Unsplash
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of 900 hedge funds and picked the top 11 companies operating in the cannabis sector with the highest number of hedge fund investors. When two or more companies had the same number of hedge funds investing in them, we ranked them by the revenue of their last financial year instead. Following are the Best Marijuana Stocks According to Most Hedge Funds.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Advanced Flower Capital Inc. (NASDAQ:AFCG)
Number of Hedge Fund Holders: 6
Advanced Flower Capital Inc. (NASDAQ:AFCG) provides financial services to the cannabis industry, including real estate loans and loan underwriting. The Florida-based company offers direct and bridge loans ranging from $10 million to $100 million, which are crucial for an industry growing quickly but facing severe banking and financing issues.
Advanced Flower Capital Inc. (NASDAQ:AFCG) reported distributable earnings of $0.35 per share in Q3 of 2024, beating the Wall Street Analysts’ estimate of $0.34 per share. Over the last four quarters, the company has surpassed consensus EPS estimates twice. Moreover, the company recently declared a quarterly dividend of $0.33 per share for the quarter ending December 31, 2024. Notably, the company’s current dividend policy is to pay between 85% and 100% of distributable earnings over the year.
Advanced Flower Capital Inc. (NASDAQ:AFCG) now operates as a pure-play cannabis mortgage REIT and has already exceeded its $100 million origination target for the year, reaching $116 million in total new originations by the end of Q3. Additionally, the company has made substantial progress exiting, restructuring, or securing significant paydowns on several key loans since last year, leading to approximately $150 million in capital repaid and allowing it to redeploy that capital into new vintage deals with attractive risk-adjusted returns.
Advanced Flower Capital Inc. (NASDAQ:AFCG) ended the third quarter with total assets of $366.6 million, including cash and cash equivalents of $122.2 million, which included $60 million drawn on its line of credit that was subsequently repaid in full on October 1, 2024. Its line of credit provides it with up to $60 million in available funds that can be drawn as needed.
At the end of Q3 2024, 6 hedge funds tracked by IM held shares of Advanced Flower Capital Inc. (NASDAQ:AFCG) with a total stake value of $7.34 million, up 266% from the previous quarter.
9. Chicago Atlantic Real Estate Finance, Inc. (NASDAQ:REFI)
Number of Hedge Fund Holders: 6
Next on our list of the Best Marijuana Stocks is Chicago Atlantic Real Estate Finance, Inc. (NASDAQ:REFI), a market-leading commercial mortgage REIT utilizing significant real estate, credit, and cannabis expertise to originate senior secured loans primarily to state-licensed cannabis operators in limited-license states in the United States.
Chicago Atlantic Real Estate Finance, Inc. (NASDAQ:REFI) had a strong Q3 2024, reporting revenue of $14.16 million, a 4.6% YoY increase, and beating the analysts’ estimates by over $265,000. Net income also grew by 19% YoY to reach $11.2 million. The company ended the quarter with $362.3 million in total loan principal across 29 companies with an average yield of 18.3%.
Chicago Atlantic Real Estate Finance, Inc. (NASDAQ:REFI) recently declared a regular Q4 dividend of $0.47 per share, plus a special cash dividend of $0.18 per common share. The special dividend is required for the company to comply with the country’s federal income tax rules for REITs. The firm has chosen to be taxed as a commercial mortgage real estate investment trust (REIT), so it isn’t required to pay corporate taxes. This allows it to distribute 90% of its taxable income to stockholders, making it a great option for investors looking for a regular income.
Also in October, Chicago Atlantic Real Estate Finance, Inc. (NASDAQ:REFI) secured a $50 million unsecured term loan with a fixed interest rate of 9% and received an investment-grade BBB+ rating from Egan-Jones, giving it liquidity of over $75 million to fund new investments.
Shares of Chicago Atlantic Real Estate Finance, Inc. (NASDAQ:REFI) were held by 6 hedge funds in the IM database at the end of Q3 2024, with Two Sigma Advisors holding the largest stake of 188,400 shares, valued at over $2.92 million.
8. GrowGeneration Corp. (NASDAQ:GRWG)
Number of Hedge Fund Holders: 6
GrowGeneration Corp. (NASDAQ:GRWG) sells hydroponic gardening products for use in new and emerging industries or segments, including the growing of cannabis. Incorporated in Colorado in 2014, GrowGen claims to be the largest chain of specialty retail hydroponic and organic garden centers in the United States.
The stock of GrowGeneration Corp. (NASDAQ:GRWG) has tumbled to a 52-week low, closing at $1.61 on December 24, reflecting a persistent downtrend in the hydroponic and organic gardening supplies sector. The company had a mixed Q3 2024 as its revenue fell by over 10.1% YoY to reach $50 million, but still beat analysts’ estimates by $1.28 million. The drop was driven by the closure of 19 retail locations as part of the company’s ongoing restructuring, including 12 solely in the last quarter. Net loss also increased by almost 56% YoY to reach $11.4 million. However, there was encouraging news regarding same-store sales, which grew by 12.5%, supported by strong commercial sales and robust customer retention. This marked the first quarter of positive same-store sales in the last three years. Operating expenses were also down by 5.4%, falling to $22.9 million, as the company continued to streamline its operations through store consolidations and cost-cutting measures.
GrowGeneration Corp. (NASDAQ:GRWG) ended Q3 with a solid cash position, maintaining $55.2 million in cash equivalents and marketable securities, with zero debt. It also repurchased an additional $1.8 million of shares during the quarter, as it ‘continues to believe its equity has a compelling value’.
In line with GrowGeneration Corp. (NASDAQ:GRWG)’s stated objective for proprietary brand sales to account for 35% of total gardening sales by the end of 2025, the company announced the launch of three new premium product lines last month, in product categories that include grow lighting, essential accessories, and medium for indoor growing and greenhouse hydroponics.
7. Aurora Cannabis Inc. (NASDAQ:ACB)
Number of Hedge Fund Holders: 6
Aurora Cannabis Inc. (NASDAQ:ACB) engages in the production, distribution, and sale of cannabis and cannabis-derived products across Canada, Europe, Australia, and South America. Since 2006, the company has developed more than 200 different medical products and is the leading provider of medical cannabis to Canadian patients – a market worth over $250 million in fiscal year 2023-24. The Edmonton-based producer has transformed itself from a Canadian recreational player into an international medical-cannabis powerhouse.
Aurora Cannabis Inc. (NASDAQ:ACB) had a strong Q2 2025, with a total net revenue of $81.1 million, up from $63.1 million in the same period last year. Medical marijuana, which is its core segment, grew 41% YoY to reach $61.3 million. The company’s strategy of going global also seems to be paying off, as its international revenue increased 93% to $35 million, exceeding Canadian medical revenue for the first time and contributing 57% to total global medical cannabis revenue. Aurora is now number two in Australia, which is emerging as the largest medical cannabis market in the world outside of North America, sized at around $250 million annually according to the Pennington Institute. Germany also posted significant growth since the country adopted one of the most liberal legal approaches to cannabis in Europe.
As a result, Aurora Cannabis Inc. (NASDAQ:ACB) reported a net profit of $1.7 million in the last quarter, a notable YoY increase of 325%. This means that the company managed to report quarterly earnings of $0.04 per share, beating analysts’ estimates of a loss of $0.22 per share and topping consensus revenue estimates three times over the last four quarters. Aurora also ended the quarter with approximately $152 million in cash and cash equivalents and no debt in its cannabis business.
Aurora Cannabis Inc. (NASDAQ:ACB)’s focus on innovation and research, expanding international footprint, and debt-free balance sheet provides it a concrete edge over its competitors in the rapidly ballooning medical marijuana industry.
6. Village Farms International, Inc. (NASDAQ:VFF)
Number of Hedge Fund Holders: 6
Ranking at number six in our list of the Best Marijuana Stocks to Buy Now is Village Farms International, Inc. (NASDAQ:VFF), one of North America’s leading growers, marketers, and distributors of top-quality, greenhouse-grown fruits and vegetables. Its operations also include Pure Sunfarms, one of the largest cannabis growers in Canada.
In the last five years, Village Farms International, Inc. (NASDAQ:VFF) has seen its revenue increase by 17% per year. This trend continued in Q3 2024, when the company’s total sales increased by 20% YoY to $83.4 million, beating the analysts’ estimates by around $2.8 million. However, the firm’s consolidated cash flow from operations was reported at $4.3 million, compared to $12.1 million a year ago. Q3 also ended with a loss of over $212,000, though it was much better than the loss of over $900,000 incurred during the same period last year.
Village Farms International, Inc. (NASDAQ:VFF) also remains committed to sustainability. Over a decade ago, it launched its subsidiary VF Clean Energy, which converted landfill gas into clean energy and provided electricity for BC Hydro. Over time, the company transitioned to a renewable natural gas (RNG) model and its Delta RNG facility became operational in April, with royalty payments now being received to provide a healthy stream of incremental profits.
Village Farms International, Inc. (NASDAQ:VFF) is also benefitting immensely from expanding into the international cannabis market. Exports from Canada increased 111% YoY in Q3 2024, with continued improvement in sales to its German, Australian, and UK partners. Moreover, the company’s EU-GMP certification has been recently renewed and it has also commenced cultivation in the Netherlands – its first international recreational market. Sales are set to begin during the first quarter of the coming year through its Leli Holland subsidiary, catering to a fully legal market estimated to be between $3.1 to $3.7 billion annually.
6 hedge funds in the IM database held shares of Village Farms International, Inc. (NASDAQ:VFF) at the end of Q3 2024, with Renaissance Technologies holding the largest stake valued at over $1 million.
5. Canopy Growth Corporation (NASDAQ:CGC)
Number of Hedge Fund Holders: 9
Canopy Growth Corporation (NASDAQ:CGC), together with its subsidiaries, engages in the production, distribution, and sale of cannabis and cannabinoid-based products for both adult use and medical purposes.
Canopy Growth Corporation (NASDAQ:CGC) had a tough fiscal Q2 2025, as it posted a revenue of $45.27 million, down by around 10.2% YoY and missing the analysts’ estimates by $2.63 million. However, the company still witnessed growth across its medical cannabis businesses, with net revenue increasing YoY by 16% in Canada and 12% in international markets. Moreover, Canopy’s Germany-based Storz & Bickel business, known for premium high-margin devices like the Volcano and Venti, delivered an overall net revenue growth of 32% YoY.
The quarter was especially remarkable for Canopy Growth Corporation (NASDAQ:CGC)’s European business, where sales grew by 72% YoY. The company’s asset-light model for Europe is also coming online now, supported by agreements with multiple EU-based cultivators, and is expected to provide the scalability it needs to meet rising demand over the coming quarters without the need for heavy capital investments.
Canopy Growth Corporation (NASDAQ:CGC)’s free cash outflow during the quarter was $56 million, representing a 16% improvement YoY, primarily driven by a reduction in cash interest expenses. It further improved its balance sheet with early prepayment, reducing senior secured term loan by $100 million.
Canopy Growth Corporation (NASDAQ:CGC) is also positioning itself to be a top Canadian entrant in the US market. Earlier this month, it announced the acquisition of Acreage, a multi-state operator of cannabis cultivation and retailing facilities in the country. This comes after Canopy had already announced the acquisitions of Wana Wellness, The CIMA Group, and Mountain High Products in October.
Shares of Canopy Growth Corporation (NASDAQ:CGC) were held by 9 hedge funds tracked by IM at the end of Q3 2024, compared to 8 in the previous quarter.
4. SNDL Inc. (NASDAQ:SNDL)
Number of Hedge Fund Holders: 10
SNDL Inc. (NASDAQ:SNDL) is the largest private-sector liquor and cannabis retailer in Canada. The company also operates as a licensed cannabis producer and stands as one of the country’s premier vertically integrated cannabis enterprises.
SNDL Inc. (NASDAQ:SNDL) has been focused on revenue growth instead of profits, increasing its revenue from $60.9 million in 2020 to just over $909 million last year. However, the Calgary-based company still hasn’t turned a profit in its last four financial years. It seems like the strategy is changing now as the liquor and cannabis retailer announced a restructuring plan in July to help slash its annual expenses by $20 million and finally improve its profitability. Moreover, the company recently moved to privatize Nova through the acquisition of the remaining outstanding minority equity interest and also closed the acquisition of Indiva, enabling it to emerge as the leader in the Canadian infused edibles category.
SNDL Inc. (NASDAQ:SNDL) maintains a strong financial position and ended Q3 2024 with a cash balance of $263 million, up from $183 million in Q2, and continues to have zero outstanding debt. To return value to its shareholders, the company also announced a share repurchase program of around $70.3 million in November.
SNDL Inc. (NASDAQ:SNDL) is also well-positioned in the US cannabis market. The company, through its subsidiary SunStream USA, holds a two-thirds economic interest in Surterra Wellness, a notable medical cannabis operator in Florida with a 10% market share. Hence, the failure of Amendment 3 was a big blow to SNDL as it was aiming for substantial growth had recreational cannabis been legalized. However, its other US assets, including loans and properties in Michigan, Massachusetts, Nevada, and Texas, provide a safety net against potential downturns.
3. Cronos Group Inc. (NASDAQ:CRON)
Number of Hedge Fund Holders: 13
Ranking at number 3 in our list of the Best Marijuana Stocks is Cronos Group Inc. (NASDAQ:CRON), a Canada-based cannabinoid company engaged in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for both medical and adult-use markets. A noteworthy aspect of the company is its close association with Altria Group, a giant in the tobacco industry that maintains a 41% stake in Cronos that it acquired in 2019.
Cronos Group Inc. (NASDAQ:CRON)’s revenue increased by a significant 38.8% to reach $34.4 million in Q3 2024. What’s more is that most of this growth came from the company’s increasing market share in Canada, reflecting its sustainable nature. Also, Cronos has managed this growth while reducing operating expenses by $3 million year-over-year (adjusted for non-cash impairments), significantly improving EBITDA from -$15 million to -$6 million. This comes after the company had already reported a notable 46% YoY increase in net revenue in Q2, highlighting its strong growth trajectory.
It needs to be mentioned that Cronos Group Inc. (NASDAQ:CRON) still hasn’t been able to turn any annual net profit over the last 4 years, despite improving its revenue consistently. Hence, the company’s recently renegotiated supply agreement with GrowCo marks a strategic shift that positions it to lower production costs materially.
Cronos Group Inc. (NASDAQ:CRON) also announced recently that its brand Spinach has become the best-selling cannabis brand in Canada, according to HiFyre Retail Analytics for August 2024. Launched in November 2018, Spinach ranks first in both edibles and flower categories. Mike Gorenstein, Chairman, President, and CEO of Cronos Group Inc. (NASDAQ:CRON) stated:
“It’s no surprise to us that Spinach® has secured its position as the number one cannabis brand in Canada, with our focus on elevating the adult consumer experience playing a key role in our success. The Spinach® brand has redefined the cannabis market, creating products that enhance shared moments with friends, and we’re thrilled by the overwhelming support from adult consumers. We’re grateful for their loyalty and enthusiasm, as we continue to lead the industry. Our emphasis on quality, innovation, and groundbreaking product development remains steadfast, with even more innovative offerings on the horizon under the Spinach® brand.”
Cronos Group Inc. (NASDAQ:CRON) ended Q3 with an industry-leading balance sheet with $862 million in cash and cash equivalents – significantly exceeding its current market capitalization – and additional value in loan receivables and real estate assets, with no debt obligations.
2. Tilray Brands, Inc. (NASDAQ:TLRY)
Number of Hedge Fund Holders: 16
The New York-based Tilray Brands, Inc. (NASDAQ:TLRY) has a highly diversified global portfolio – operating in more than 20 countries with businesses in medical adult-use cannabis, beverages, spirits, wellness products, and a vast array of consumer-connected lifestyle brands.
Tilray Brands, Inc. (NASDAQ:TLRY)’s core business is cannabis but that seems to be changing now. The company recently forayed into the alcohol sector with significant investments in craft breweries and is now the 5th largest craft beer business in the US with a 4.5% market share. In fact, Tilray Brands, Inc. (NASDAQ:TLRY)’s alcohol business now accounts for 28% of its revenue, whereas 31% came from cannabis. A year ago, 13% of its sales were from alcohol and 40% from cannabis. The other two segments, distribution services and wellness products, haven’t changed that much. This comes in response to the slower-than-expected marijuana legalization policies in the US and the EU, and the saturation of the cannabis market in Canada.
That said, Tilray Brands, Inc. (NASDAQ:TLRY) is still the number one cannabis business in Canada, the leading medical cannabis business across Europe, and the top branded hemp business in North America.
Despite its shifting strategy, Tilray Brands, Inc. (NASDAQ:TLRY) continues to invest and expand its presence in the cannabis industry. In September, Tilray also entered the lucrative US THC beverage market with a range of Delta-9 THC mocktails and seltzers through its newly formed Tilray Alternative Beverages business unit. The company is hoping to dominate the rapidly ballooning market for cannabis-infused drinks since it already has a business and distribution network in place thanks to its beverage-related assets.
Tilray Brands, Inc. (NASDAQ:TLRY) ended its Q1 with $287.9 million in long-term debt and $280.1 million in cash, equivalents, and short-term investments. Its TTM cash outflow was just $82.2 million, so it can still afford to sustain its strategy of diversification and expansion into new businesses and markets for a while.
At the end of Q3 2024, shares of Tilray Brands, Inc. (NASDAQ:TLRY) were held by 16 hedge funds tracked by IM with a total stake value of $20.62 million, up 36% from the previous quarter.
1. The Scotts Miracle-Gro Company (NYSE:SMG)
Number of Hedge Fund Holders: 28
Topping our list of the Best Marijuana Stocks According to Hedge Funds is The Scotts Miracle-Gro Company (NYSE:SMG) – the world’s largest marketer of branded consumer products for lawn and garden care. The Ohio-based company has applied its expertise in horticulture and gardening to develop innovative technologies and solutions specifically tailored for cannabis cultivation.
The Scotts Miracle-Gro Company (NYSE:SMG) reported a revenue of $414.7 million in its Q4 of 2024, up 10.73% YoY and beating the analysts’ estimates by over $15 million. The growth was mainly due to higher sales in the US consumer division, where sales went up by 54% to $309.7 million, driven by the normalization of shipment timing. However, its Hawthorne segment’s sales decreased by 46%, primarily driven by Hawthorne’s exit from the distribution of third-party brands and a decline in sales from its professional horticultural lighting business. SMG announced in its Q4 2024 earnings call transcript that it has managed to dismantle Hawthorne to make it a much smaller and more profitable business, while also reinvesting $100 million into its brands, sales force, supply chain, and innovation.
Despite the uptick in revenue, The Scotts Miracle-Gro Company (NYSE:SMG) ended the quarter with a loss of $244 million, though it was much better than the $468.4 million loss it suffered in the same period last year. The company has been facing several challenges over the last few years, including high debt and an unsustainable cost structure due to a decrease in demand after the pandemic. As a result, it has had to make some hard decisions to right-size its business and cut over $400 million in operating expenses. These decisions included mass layoffs and the closure of distribution facilities, leading to a loss of talent and hindering the company’s ability to innovate, which is crucial given the shifting market dynamics.
Notably, The Scotts Miracle-Gro Company (NYSE:SMG) managed to deliver on its target of generating over $1 billion of free cash flow over two years with more than $580 million generated this year on top of nearly $440 million last year. It utilized this free cash flow to return value to shareholders through its quarterly dividend and increased balance sheet strength by lowering debt by $390 million. Liquidity also remained strong with nearly $1.2 billion in borrowing capacity and $70 million of cash on hand.
Overall, The Scotts Miracle-Gro Company (NYSE:SMG) ranks first on our list of the best marijuana stocks. While we acknowledge the potential for SMG to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SMG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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