12 Best Marijuana Stocks To Invest In

Published on February 22, 2024 at 1:20 pm by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 best marijuana stocks to invest in. If you want to skip our discussion on the cannabis market, head over to 5 Best Marijuana Stocks To Invest In.

In 2024, the global cannabis market is poised for substantial growth due to emerging legal markets, innovative products, and technological advancements. The US cannabis market is expected to significantly expand, with projected retail sales reaching $53.5 billion by 2027, driven by the growth in adult-use cannabis. States like New York are contributing to this growth by finalizing details for approved cannabis programs. The trend towards personalized cannabis products is expected to rise as consumers become more educated, leading companies to tailor products to individual needs. While pre-rolls are projected to remain popular, there is a growing expectation that consumers will increasingly favor craft cannabis products and artisanal flower, despite the enduring demand for low-cost and convenient options.

In 2024, the National Cannabis Industry Association predicts the legalization of recreational cannabis in several additional states, but federal legalization remains uncertain, evidenced by the challenges facing the SAFER Banking Act in Congress. The SAFE Banking Act continues to be a significant issue, with potential developments expected in 2024. Potential actions by President Biden may reshape the industry’s regulatory framework, impacting financial reporting and taxation. States such as Maryland, and potentially Pennsylvania and Ohio, could influence regional market dynamics and tax structures. In November 2023, CNBC quoted Jaret Seiberg, a policy analyst at TD Cowen, who commented:

“Legalization of cannabis is inevitable. It’s just a question of how bumpy the next several years are going to be.”

Marijuana-related ETFs experienced a significant surge in September 2023, as investors re-entered the sector following months of declining interest. This upswing was notably substantial, attributed to the U.S. Department of Health and Human Services’ recommendation to ease restrictions on marijuana after a review of its classification under the Controlled Substances Act. The industry, previously constrained by slow federal reform, faced slow growth and losses in recent quarters. Despite marijuana legalization in 39 states, challenges persist due to the Schedule I classification and federal prohibition, limiting access to financing and broader market opportunities. Following the HHS recommendation, Canaccord Genuity analyst Matt Bottomley commented:

“This is effectively a continuation of what’s the most material element in how these stocks trade, which are federal catalysts. Velocity is so much higher on these federal headlines.”

On December 26, Boris Jordan, Executive Chairman of CuraLeaf, participated in CNBC’s ‘Fast Money’ to discuss the outlook for the cannabis sector in 2024. Jordan stated that ‘anything will be better than 2023, it was a terrible year’. He listed drivers that impacted the cannabis industry in 2023, including slower growth, higher cost of capital, and regulatory impediments. He said that the regulatory framework is better for 2024, with New York getting on board with adult-use cannabis programs. Florida is also expected to approve adult-use cannabis next year, according to Jordan. In 2024, Jordan observed that the industry’s direction depends on the US Federal Government, whether it moves cannabis from the Schedule 1 to Schedule 3 list, which would free up substantial cash in the sector. He added that currently, the marijuana businesses pay around 70% tax rate, which would then drop to a normal tax rate if the substance is categorized as Schedule 3. This would create a positive business dynamic in the industry and result in growth.

Some of the best marijuana stocks to invest in include The Scotts Miracle-Gro Company (NYSE:SMG), Tilray Brands, Inc. (NASDAQ:TLRY), and Innovative Industrial Properties, Inc. (NYSE:IIPR).

Our Methodology

We chose the top marijuana stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 933 elite hedge funds tracked as of the end of the fourth quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).

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Best Marijuana Stocks To Invest In

12. Organigram Holdings Inc. (NASDAQ:OGI)

Number of Hedge Fund Holders: 3

Organigram Holdings Inc. (NASDAQ:OGI) is focused on the production and sale of cannabis and cannabis-derived products in Canada. Their product offerings include medical cannabis products such as whole flower, milled flower, pre-rolls, vapes, gummies, and concentrates for medical retailers, as well as adult-use recreational cannabis. Organigram Holdings Inc. (NASDAQ:OGI) reported its revenue for the first fiscal quarter of 2024, which came in at C$36.5 million. As of December 31, 2023, the company had a total cash position of C$54.6 million, consisting of C$41.8 million in unrestricted cash and C$12.8 million in restricted cash.

According to Insider Monkey’s fourth quarter database, 3 hedge funds were bullish on Organigram Holdings Inc. (NASDAQ:OGI), compared to 4 funds in the prior quarter. D E Shaw is the largest stakeholder of the company, with 146,500 shares worth $190,116.

Like The Scotts Miracle-Gro Company (NYSE:SMG), Tilray Brands, Inc. (NASDAQ:TLRY), and Innovative Industrial Properties, Inc. (NYSE:IIPR), Organigram Holdings Inc. (NASDAQ:OGI) is one of the best marijuana stocks to invest in.

11. Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)

Number of Hedge Fund Holders: 5

Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) ranks 11th on our list of the best marijuana stocks. The company is involved in the manufacturing and distribution of controlled environment agriculture equipment and supplies in the United States and Canada. Their product range includes agricultural lighting devices, indoor climate control equipment, nutrients, and plant additives for growing cannabis, flowers, fruits, vegetables, grains, and herbs in controlled environments. Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)’s Q3 2023 Q3 GAAP EPS came in at -$0.44 and its revenue was $54.2 million. Net sales for full-year 2023 were expected to range between $230 million and $240 million.

According to Insider Monkey’s fourth quarter database, 5 hedge funds were bullish on Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM), compared to 6 funds in the earlier quarter. Michael Zimmerman’s Prentice Capital Management is the largest stakeholder of the company, with 464,108 shares worth $425,819.

Here is what Baron Discovery Fund has to say about Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) in its Q4 2021 investor letter:

“Our top 10 holdings represented 25.6% of the Fund’s net assets at the end of the fourth quarter. This is in line with historical weightings. Cash at the end of the quarter was 3.4%, which is in line with our low to mid-single digit targeted levels. We exited our position in Hydrofarm Holdings Group, Inc. as we felt the macro headwinds the company was facing in its end-markets were both challenging and worsening.”

10. Village Farms International, Inc. (NASDAQ:VFF)

Number of Hedge Fund Holders: 6

Village Farms International, Inc. (NASDAQ:VFF) specializes in the production, marketing, and sale of greenhouse-grown tomatoes, bell peppers, and cucumbers in North America. The company operates through four segments – Produce, Cannabis-Canada, Cannabis-U.S., and Energy. Village Farms International, Inc. (NASDAQ:VFF) also produces and supplies cannabis products to licensed providers and provincial governments worldwide. It is one of the best marijuana stocks to watch.

On January 31, Village Farms International, Inc. (NASDAQ:VFF) announced that it is building its first indoor cannabis production facility in the Netherlands through its subsidiary, Leli Holland. The company, holding a license for legal recreational cannabis production in the Netherlands, aims to start production in Q4 2024. Leli Holland plans to sell different cannabis products, and the construction will be funded using Village Farms’ existing cash reserves.

According to Insider Monkey’s fourth quarter database, 6 hedge funds were bullish on Village Farms International, Inc. (NASDAQ:VFF), compared to 4 funds in the last quarter. Israel Englander’s Millennium Management is a prominent stakeholder of the company, with 124,673 shares worth $95 million.

9. Aurora Cannabis Inc. (NASDAQ:ACB)

Number of Hedge Fund Holders: 6

Aurora Cannabis Inc. (NASDAQ:ACB) is involved in the production, distribution, and sale of cannabis and cannabis-derived products globally. The company operates through three segments – Canadian Cannabis, European Cannabis, and Plant Propagation. On February 9, Canaccord Genuity upgraded its rating on Aurora Cannabis Inc. (NASDAQ:ACB) to Buy, citing a favorable valuation. Despite the expected performance in Q3 and a 25% decrease in Aurora Cannabis Inc. (NASDAQ:ACB) shares since Q2 2023, the analysts noted moderate progress towards sustainable profitability as a factor in the upgrade. Aurora Cannabis Inc. (NASDAQ:ACB) is one of the best marijuana stocks to monitor.

According to Insider Monkey’s fourth quarter database, 6 hedge funds were bullish on Aurora Cannabis Inc. (NASDAQ:ACB), compared to 7 funds in the prior quarter. Israel Englander’s Millennium Management is a prominent stakeholder of the company, with 31,654 shares valued at $154,466.

8. Cronos Group Inc. (NASDAQ:CRON)

Number of Hedge Fund Holders: 7

Cronos Group Inc. (NASDAQ:CRON) is a cannabinoid company based in Toronto, Canada. Cronos Group Inc. (NASDAQ:CRON) is engaged in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for both medical and adult-use markets. It is one of the best marijuana stocks to invest in. On November 8, 2023, Cronos Group Inc. (NASDAQ:CRON) reported a Q3 GAAP EPS of $0.00 and a revenue of $24.81 million, exceeding Wall Street estimates by $0.03 and $5.24 million, respectively. Revenue for the third quarter increased 21.6% on a year-over-year basis.

According to Insider Monkey’s fourth quarter database, 7 hedge funds were bullish on Cronos Group Inc. (NASDAQ:CRON), compared to 8 funds in the prior quarter. Traci Lerner’s Chescapmanager LLC is the leading stakeholder of the company, with 8.3 million shares worth $17.40 million.

7. GrowGeneration Corp. (NASDAQ:GRWG)

Number of Hedge Fund Holders: 8

GrowGeneration Corp. (NASDAQ:GRWG) owns and operates retail hydroponic and organic gardening stores across the United States. The company specializes in the marketing and distribution of products for hydroponic gardening, including nutrients, growing media, lighting, environmental control systems, vertical benching, and accessories. GrowGeneration Corp. (NASDAQ:GRWG) is one of the best marijuana stocks to buy.

On January 8, GrowGeneration Corp. (NASDAQ:GRWG) announced that it anticipates full-year 2023 revenue to reach the upper limit of the previously provided guidance range of $220 million to $225 million. The adjusted EBITDA guidance for FY23 remains unaltered, with a projected loss between $4 million to $6 million.

According to Insider Monkey’s fourth quarter database, 8 hedge funds were bullish on GrowGeneration Corp. (NASDAQ:GRWG), compared to 7 funds in the last quarter. D E Shaw is the leading stakeholder of the company, with 772,855 shares valued at approximately $2 million.

6. WM Technology, Inc. (NASDAQ:MAPS)

Number of Hedge Fund Holders: 11

WM Technology, Inc. (NASDAQ:MAPS) offers e-commerce and compliance software solutions to retailers and brands in the cannabis market, operating in the United States and internationally. Their Weedmaps marketplace enables cannabis users to search for and browse products, reserve items from local retailers, and provides educational information. On November 8, 2023, WM Technology, Inc. (NASDAQ:MAPS) reported a Q3 GAAP EPS of -$0.02, in-line with market consensus. Revenue for the quarter came in at $47.73 million, outperforming Wall Street estimates by $0.39 million.

According to Insider Monkey’s fourth quarter database, 11 hedge funds were long WM Technology, Inc. (NASDAQ:MAPS), compared to 9 funds in the last quarter. Falcon Edge Capital is the largest stakeholder of the company, with 2.12 million shares worth $1.5 million.

In addition to The Scotts Miracle-Gro Company (NYSE:SMG), Tilray Brands, Inc. (NASDAQ:TLRY), and Innovative Industrial Properties, Inc. (NYSE:IIPR), WM Technology, Inc. (NASDAQ:MAPS) is one of the best marijuana stocks to consider. It ranks 6th on our list.

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