In this article, we are going to discuss the 7 best CBD stocks to invest in right now.
An essential component of medical marijuana, CBD is the legal, non-psychoactive compound that is used to treat chronic pain, anxiety, and other ailments. Though initially met with skepticism, medical cannabis is rapidly gaining traction in the United States and as of the writing of this article, the use of marijuana for medical purposes is legal in 39 states, in addition to the District of Columbia. The latest state to join the growing list was Nebraska, which voted to legalize and regulate medical cannabis in November 2024.
READ ALSO: 12 Best Brewery Stocks to Buy According to Hedge Funds
Despite the growth, 2024 was overall a very turbulent year for the American cannabis sector. The decriminalization process is going slower than expected and legalization ballot measures in Florida, and South and North Dakota failed to pass. Wholesale prices are also at record lows and despite all the efforts, the legal industry still faces stiff competition from the unregulated black market. As a result, the American Cannabis Operator Index, which tracks the market value of firms in the industry, has fallen by over 50% since a year ago, and more than 90% since its peak in April 2019. A recent survey by Whitney Economics revealed that only 27.3% of cannabis operators nationwide are profitable. According to the US Chamber of Commerce, 65.3% of all small businesses in the US are profitable, so the cannabis sector is trailing far behind the national average.
A recent encouraging development came when President-elect Donald Trump publicly expressed support for recreational cannabis legalization efforts in his home state of Florida. He also backed up the industry’s access to the banking system and the ongoing federal cannabis rescheduling process. Whether this support will actually translate into wide-reaching cannabis reform remains to be seen. However, it puts to rest any previous concerns that Donald Trump could actually cancel the rescheduling process altogether if he gets re-elected since the process is under the purview of the US Department of Justice.
The US Cannabis Council, expressing its optimism for the sector under Trump’s presidency, stated:
“The cannabis community has every reason to be optimistic with President Trump returning to the White House. He has endorsed the SAFE Banking Act and reclassification of cannabis. We look forward to working with his administration to advance meaningful federal reform.”
That said, the withdrawal of Matt Gaetz, a vocal proponent of federal legalization, as Trump’s nominee for attorney-general after allegations of sexual misconduct was highly discouraging for the country’s cannabis advocates. Moreover, a great deal of reforms will still have to get through both the House and the Senate, which will require some level of bipartisan cooperation.
As for the federal cannabis rescheduling process, the Drug Enforcement Administration held preliminary hearings on the matter in December and these are expected to conclude in March. Perhaps the most significant relief from the change will come in the form of tax reform. Currently, companies selling cannabis cannot deduct normal business expenses from their tax bill, costing them more than $2.2 billion in extra taxes than what would be paid if they were treated as mainstream businesses. If federal rescheduling happens, it is expected to improve the overall cash flow of the industry by $3.1 billion in 2026, helping improve the profitability of cannabis companies and giving their investors some much-needed optimism, even if Trump’s other promises go up in smoke.
With that said, here are the Best CBD Marijuana Stocks to Buy Now.
A cannabis industry professional using software as a service-based tools to streamline operations.
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of 900 hedge funds and picked the top 7 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 CBD Stocks According to 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).
7. Aurora Cannabis Inc. (NASDAQ:ACB)
Number of Hedge Fund Holders: 6
As one of the world’s leading cannabinoid companies, Aurora Cannabis Inc. (NASDAQ:ACB) has a long history of developing and producing cannabis-based medicines. The company has developed more than 200 different medical products from cannabis and is the leading provider of medical marijuana to Canadian patients – a market worth over $250 million in fiscal year 2023-24.
Based in Edmonton, Aurora Cannabis Inc. (NASDAQ:ACB) has evolved into an international medical-cannabis powerhouse and enjoys a presence across Canada, Europe, Australia, and South America. The company remains committed to further expanding its global footprint and recently announced a distribution partnership between MedReleaf Australia, its wholly owned subsidiary, and The Entourage Effect. The latter provides comprehensive distribution and support services to pharmacies in the Land Down Under and will serve as a wholesaler for MedReleaf Australia’s leading portfolio of products. Aurora ranks number two in Australia, which is emerging as the largest medical market in the world outside of North America, sized at around $250 million annually according to the Pennington Institute. The company is now aiming to expand its sales also into New Zealand, a smaller but important emerging market in its own right.
Aurora Cannabis Inc. (NASDAQ:ACB) maintains a world-class research and genetics facility in Canada and remains focused on developing and expanding its portfolio of products. The company recently announced several new medical product advancements, in addition to the innovations in its recreational lineup.
Aurora Cannabis Inc. (NASDAQ:ACB) had a strong fiscal Q2 2025, with a total net revenue of $81.1 million, up 29% YoY. Its flagship Global Medical Cannabis segment grew 41% YoY and generated 76% of the total revenue and 98% of the adjusted gross profit. This clearly demonstrates Aurora’s commitment to capitalizing on high-margin international opportunities, especially after the maturation we have witnessed in the maturing Canadian market. The company also maintained zero debt in its cannabis business and ended the quarter with approximately $152 million in cash and cash equivalents
6. Village Farms International, Inc. (NASDAQ:VFF)
Number of Hedge Fund Holders: 6
Ranking at number 6 in our list of the Best Marijuana Stocks to Invest in 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. The company’s wholly-owned Canadian subsidiary, Pure Sunfarms, is one of the single largest cannabis operations in the world and ranks among the best-selling brands in Canada.
Village Farms International, Inc. (NASDAQ:VFF) exports medical cannabis from Canada to Australia, Germany, the United Kingdom, and Israel. The company’s exports increased 111% YoY in Q3 2024, with continued improvement in sales to its German, Australian, and UK partners. The company also owns 85% of Leli Holland, a recreational marijuana grower based in the Netherlands, and recently commenced cultivation in the country. Sales are set to begin during the first quarter of 2025, allowing Aurora to generate additional annual revenues of approximately $12.4 million by effectively catering to a market with no excise tax and much more favorable product pricing.
Village Farms International, Inc. (NASDAQ:VFF) has long prioritized sustainability and its cutting-edge greenhouses use less water, land, and chemicals. This commitment was exemplified through the establishment of the VF Clean Energy subsidiary a decade ago, 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 last year, with royalty payments now being received to provide a healthy stream of profits.
Village Farms International, Inc. (NASDAQ:VFF) has increased its revenue by 17% per year for the last five years. 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, Q3 still 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 in 2023.
5. Canopy Growth Corporation (NASDAQ:CGC)
Number of Hedge Fund Holders: 9
An early mover in the Canadian market, Canopy Growth Corporation (NASDAQ:CGC) engages in the production, distribution, and sale of cannabis and cannabinoid-based products for both adult use and medical purposes. The company consists of several different segments, including Canadian B2B, Canadian medical, rest-of-world cannabis, and Storz & Bickel (a category defining vaporizer technology made in Germany). Canopy Growth’s diversification provides it with a number of potential growth opportunities in the broader cannabis market. Moreover, the company has also recently positioned itself to be a top Canadian entrant in the US market with the acquisition of Wana Wellness, The CIMA Group, Mountain High Products, and most recently, Acreage.
David Klein, CEO of Canopy Growth Corporation (NASDAQ:CGC) stated:
“Completing the acquisition of Acreage marks the final step in establishing Canopy USA as a unified platform which we believe offers significant upside as the Canopy USA portfolio of brands can now capitalize on the rapidly expanding U.S. cannabis market, independent of the need for federal legalization. With a vertically integrated presence across key U.S. states in the Midwest and Northeast, as well as licensing agreements which support asset-light operations in state-legal markets nationally, Canopy USA is well positioned to demonstrate efficient growth ahead.”
Canopy Growth Corporation (NASDAQ:CGC)’s fiscal Q2 2025 report showed that the business is struggling, as it posted a revenue of $45.27 million, down by around 10.2% YoY and missing the analysts’ estimates by $2.63 million. This comes after revenue in Q1 had also fallen by 16% compared to the same period last year. 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.
Canopy Growth Corporation (NASDAQ:CGC) ended the quarter with $231 million in cash and short-term investments and a total principal debt balance of $574 million. In October, the company further reduced its term loan balance by $100 million by making an early prepayment, a step that will also reduce its annualized interest expenses by approximately $14 million.
To sum it up, Canopy Growth Corporation (NASDAQ:CGC)’s future depends on its ability to grow revenue, reduce debt, and capitalize on the US market – something that the company seems well positioned to do.
4. SNDL Inc. (NASDAQ:SNDL)
Number of Hedge Fund Holders: 10
Next on our list of the Best Marijuana Stocks is SNDL Inc. (NASDAQ:SNDL), the largest private-sector liquor and cannabis retailer in Canada. The company also operates as a licensed cannabis producer, focusing on premium indoor cultivation, cutting-edge product development, and cost-effective manufacturing.
Like many of its peers in the cannabis business, SNDL Inc. (NASDAQ:SNDL) has been focused on sales growth instead of profits, increasing its revenue from $60.9 million in 2020 to just over $909 million in 2023. However, the Calgary-based company still hasn’t turned a profit in its last four financial years. This strategy seems to be changing now as SNDL announced a restructuring plan last year to help reduce its annual expenses by CA$20 million ($13.9 million) and finally improve its profitability. While the initiative will cost over $8 million, it is expected to leave the company in a much better position once it is all wrapped up by the end of this year.
In a positive development, SNDL’s free cash flow was finally positive in Q3 2024, supported by ongoing operational gains in gross margin and efficient working capital management. The company is on track to deliver positive free cash flow for the 2024 calendar year, meeting or even exceeding its guidance. It must be noted that SNDL is delivering this positive cash flow during a time when the Canadian cannabis sector is anything but vibrant.
SNDL Inc. (NASDAQ:SNDL) has plenty of cash in hand compared to its competitors and ended Q3 2024 with a cash balance of $263 million, up from $183 million in Q2, with no 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) also has a good track record of utilizing its significant cash reserves smartly. A great example is its $320 million acquisition of Alcanna, the largest private liquor retailer in Canada, in 2022. The purchase seems to be paying off and SNDL’s Liquor Retail segment brought in $144.6 million in revenue in Q3 2024 with a gross margin of 25.6%, up 100 basis points YoY. The company still remains focused on strategic expansion and recently announced the acquisition of all outstanding shares of Nova Cannabis Inc., marking a major milestone. Moreover, it has also won a bid to acquire Indiva Limited, a leading producer of cannabis edibles in Canada.
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.
3. Cronos Group Inc. (NASDAQ:CRON)
Number of Hedge Fund Holders: 13
Cronos Group Inc. (NASDAQ:CRON) is 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 significant stake in Cronos which it acquired in 2019 for $1.8 billion.
In a positive development, Cronos Group Inc. (NASDAQ:CRON) announced recently that its brand Spinach has become the best-selling cannabis brand in Canada, according to HiFyre Retail Analytics for August 2024. The company continues to build on this success and in Q3 2024, released new Spinach hits all-in-one vapes in Pink Lemonade and Rocket Icicle, as well as new flavors, mango and grape for a 1.2 gram base. Launched in November 2018, Spinach ranks first in both edibles and flower categories.
Cronos Group Inc. (NASDAQ:CRON) hasn’t been able to turn a net profit over the last 4 years, but its revenue has improved consistently. Keeping it up, the company’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. This comes after Cronos had already reported a notable 46% YoY increase in net revenue in Q2, highlighting its strong growth trajectory.
Cronos Group Inc. (NASDAQ:CRON) also remains focused on global expansion and already boasts a strong presence in countries like Israel, Germany, the UK, and Australia. To meet its growing flower demand in the international market, the company recently announced that it is investing heavily to support the expansion of its GrowCo state-of-the-art production facility.
Cronos Group Inc. (NASDAQ:CRON) maintains a strong balance sheet and ended Q3 2024 with an industry leading $862 million in cash and cash equivalents (significantly exceeding its current market capitalization), with zero 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 with operations in Canada, the United States, Europe, Australia, and Latin America. The company has businesses in medical adult-use cannabis, beverages, spirits, wellness products, and a vast array of consumer-connected lifestyle brands.
The core business of Tilray Brands, Inc. (NASDAQ:TLRY) is cannabis and it is the number one cannabis operator in Canada, the leading medical cannabis business across Europe, and the top branded hemp business in North America. The company has further strengthened its presence in Europe recently by winning a tender from Luxembourg’s Ministry of Health and Social Security to supply medical cannabis flower to the country.
Last year, Tilray Brands, Inc. (NASDAQ:TLRY) 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 and ended 2024 with the release of a new line of Delta-9 THC-infused mocktails through its Herb & Bloom brand.
Due to the slower-than-expected marijuana legalization policies in the US and the EU, and the saturation of the cannabis market in Canada, Tilray Brands, Inc. (NASDAQ:TLRY) is following an aggressive diversification strategy and even forayed into alcohol last year with the acquisition of several craft breweries. The move seems to be paying off and Tilray’s alcohol business now accounts for 28% of its revenue, whereas 31% came from cannabis. The company also recently moved into the rapidly growing non-alcoholic beer segment with the launch of several NA craft brews through its Montauk Brewing Co. and Runner’s High brands.
Tilray Brands, Inc. (NASDAQ:TLRY) ended its Q1 2025 with $287.9 million in long-term debt and $280.1 million in cash, equivalents, and short-term investments. The company’s financial strength enables it to pursue new opportunities and capitalize on emerging trends in the market.
At the end of Q3 2024, shares of Tilray Brands, Inc. (NASDAQ:TLRY) were held by 16 hedge funds in the IM database 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
With 28 hedge fund investors tracked by IM at the end of Q3 2024, The Scotts Miracle-Gro Company (NYSE:SMG) tops our list of the Best Marijuana Stocks to Buy Now. The Ohio-based company is the world’s largest marketer of branded consumer products for lawn and garden care and has applied its expertise in horticulture to develop innovative technologies and solutions specifically tailored for cannabis cultivation. SMG is also the owner of The Hawthorne Gardening Company, a leading provider of nutrients, lighting, and other materials for the indoor and hydroponic growing industry.
The Scotts Miracle-Gro Company (NYSE:SMG) 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. Consequently, the company has made some hard decisions and cut over $400 million in operating expenses to right-size its business. SMG has also been working to strengthen its struggling Hawthorne segment to help it overcome industry challenges and these efforts are starting to pay off. The company recently announced 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.
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 company also managed to over-deliver on its target of generating over $1 billion of free cash flow over two years with more than $580 million generated in 2024 on top of nearly $440 million the year before. 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.
Moving beyond monetary profits, The Scotts Miracle-Gro Company (NYSE:SMG) also remains committed to sustainability and collaborates with the National Fish and Wildlife Foundation to conserve monarch butterflies and other insect pollinators in 24 states in the US. The company also recently partnered with the Central Ohio Beekeepers Association and established a new bee yard at their Marysville, Ohio campus.
Overall, The Scotts Miracle-Gro Company (NYSE:SMG) ranks first on our list of the best CBD 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
