Curaleaf Holdings (OTCQX:CURLF)
One of the most compelling stocks under $20, Curaleaf owns the distinction as the largest U.S.-based multistate operator (MSO), with a green footprint that extends out to 23 states. Naturally, the company also sports a massive market capitalization of a 12.47 billion CAD or approximately $10.4 billion. In 2020, Curaleaf generated revenue of nearly $627 million, up almost 184% against 2019 results.
Green Thumb Industries (OTCQX:GTBIF)
At the low point of last year, the shock of the COVID-19 pandemic saw shares of Green Thumb Industries become one of the best stocks under $5. Suffice to say, at a time of writing price of $29, that was a once-in-a-blue-moon opportunity. Still, GTBIF stock offers long-term viability as the underlying company is one of the largest MSOs, with operations in 12 states.
Trulieve Cannabis (OTCQX:TCNNF)
Another remarkable turnaround from the pandemic lows, Trulieve Cannabis was one of the best stocks under $10 in March 2020. While that particular opportunity has passed, TCNNF stock remains a compelling U.S.-based cannabis firm. As the largest operator in Florida, Trulieve is also profitable, a rarity in the cannabis space. In 2020, the company generated net income of $63 million.
Ayr Wellness (OTCQX:AYRWF)
Specializing in quality cannabis products, Ayr Wellness is one of the more intriguing MSOs, with a wide presence in Florida and dispensaries in the key cannabis markets of Massachusetts, Nevada and Pennsylvania. Ayr also went from a submillion-dollar revenue company in 2018 to one that rang up $155 million in top-line sales in 2020.
Cresco Labs (OTCQX:CRLBF)
Headquartered in Chicago, Illinois, Cresco Labs is one of the larger MSOs, with a strong presence in the Illinois and Pennsylvania markets. Despite the pandemic, 2020 represented a banner year for the company, generating $476.3 million in revenue, up nearly 271% from 2019 results. Momentum continues to be strong, with its most recent quarter enjoying a 313% year-over-year rise.
Long considered a controversial substance, cannabis has enjoyed a dramatic transition over the past two decades. During this time, according to the Pew Research Center, American public sentiment toward marijuana legalization shifted from a majority dissenting opinion to a majority favorable one. In recent years, the passing of the Agriculture Improvement Act of 2018 (colloquially known as the 2018 farm bill) sparked the rise of U.S.-based cannabis stocks.
Not only has public interest in natural therapeutics soared, cannabis also offers economic catalysts, such as job creation. Fundamentally, then, the following best of these stocks deliver much-needed vitality.
Quick Look at the Best US Cannabis Stocks:
- Green Thumb Industries
- Trulieve Cannabis
- Ayr Wellness
- Cresco Labs
Undoubtedly, Americans will look back to the 2016 presidential election with conflicted opinions. But amid the results came a formerly divisive issue that began finding more favorable consensus. Nine states voted on cannabis-related measures, with eight passing. Because of that, a majority of states legalized medical marijuana.
Later, the midterm elections of 2018 added momentum to the broader legalization initiative, with three out of four state measures passing. Better yet, generally conservative states started warming to the maligned green plant, primarily for economic reasons.
As multiple reports indicate, the cannabis sector represents a massive jobs creator. Further, by transitioning from an illicit black market to a legitimate (and therefore taxable) market, cannabis offered a source of revenue that many states desperately need.
Naturally, this dynamic formed a positive environment for U.S. cannabis stocks, which benefit from public demand and legal acceptance, if not outright encouragement.
Best Online Brokers for US Cannabis Stocks
While an exciting arena, these stocks face a myriad of challenges. Though state-level legalization initiatives provide a positive backdrop, the federal government still considers marijuana a Schedule I drug, the strictest narcotics classification. Therefore, many financial institutions remain hesitant to work with cannabis businesses. At times, investors and institutions do not distinguish between cannabidiol, cannabinoid products, assorted cannabis products and many more. Some simply won’t venture into this industry. Others see this as the newest of all deals, meaning that pot stocks could help lift the stock market, while Wall Street allows a range of businesses to grow.
Under this context, it’s no surprise that these stocks tend to trade in the over-the-counter (OTC) market. While advantageous for the issuing companies due to less-stringent disclosure requirements, investors must contend with certain difficulties such as lower liquidity levels.
If you’re interested in this specific subsegment, you should use a broker that provides favorable terms for trading OTC stocks. Below is a list of brokers for your consideration.
- Best For:Active and Global TradersSecurely through Interactive Brokers’ website
- Best For:Traders of All Levelssecurely through Moomoo's website
- Best For:Mobile Userssecurely through Plus500's website
- Best For:Momentum traderssecurely through Centerpoint Securities's website
- Best For:Intermediate Traders and Investorssecurely through Webull's app
Features to Look for in U.S. Cannabis Stocks
- Revenue growth: Since cannabis as an investment is a relatively fresh concept, many of the companies in this sector are not yet profitable. Over time, strong demand for natural therapeutics should deliver positive earnings per share. But in the meantime, you should see — discounting possible impact from the pandemic — growth in top-line sales.
- Stable trading: After enjoying a tremendous rally due to the anticipation for a green-friendly administration, U.S. cannabis stocks gave up much of these gains as political realities started to take hold. Nevertheless, this dynamic is understandable. As an investor, you want to make sure that the ebb and flow of your target stocks have a rhyme and reason. The market capitalization won’t fluctuate much (even as it grows,) and price targets
- Avoiding the pennies: While penny stocks tied to the cannabis industry are plentiful, they haven’t made the best investments thus far. True, they enjoy speculative upside potential but their fundamentals tend to be shoddy. Also, because cannabis firms may have less access to capital, the riskier companies often dilute their equity, which in turn hurts shareholders. A low share price only means the stocks are cheap, but a struggling stock of something like a biotech company may have a low price because it has not been able to maintain its value. Therefore, you must learn to discern between the two.
Homegrown Profitability Potential
When it comes to cannabis investments, Canada-based companies get a ton of attention. That’s because the Great White North became the first G7 nation to legalize recreational cannabis, catapulting an army of legal marijuana stocks.
Nevertheless, U.S. cannabis stocks tend to have a superior performance profile. In large part, it comes down to the math. From coast to coast, American cannabis MSOs have plenty of viable markets to compete in. The industry is also enjoying political tailwinds that could eventually turn into federal legalization.
Even if federal legalization doesn’t materialize, the cannabis industry produced massive job growth — a concept that policymakers can’t ignore, especially right now. Therefore, through careful money management, U.S. cannabis stocks may provide your portfolio with an added boost.
Related content: Cannabis And Psychedelics
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.