The marijuana industry consists of companies that are engaged in developing, producing, and selling medical and recreational marijuana. Unlike its southern neighbor, Canada made medical marijuana legal nationwide in 2001. In October 2018, the consumption and sale of recreational marijuana were regulated and authorized under certain conditions through the Cannabis Act. Put it simply, the weed arena there has evolved immensely and is not bound by as many restrictions as in the United States.
While uncertainty still prevails in the U.S., investors could get a piece of the pot action by investing in some of the highest-growing marijuana stocks on the market today.
Best Marijuana Stocks to Invest in 2020
Using estimated sales growth as the main parameter, below are the top five marijuana stocks projected to grow fast this year.
1. Auxly Cannabis Group Inc.
Auxly Cannabis Group was established in 1987 with a market cap of US$175.5 million and generally supports cannabis cultivation companies. With a projected sales growth of a whopping 1,109 percent, this company takes the first spot as the highest-growing marijuana stock on the market.
Since the launch of marijuana derivatives was postponed by Health Canada until mid-December, Auxly held back the production of its dried cannabis with the purpose of using it in pot product derivatives, like edibles. This means that most of Auxly’s increase in revenue has been moved, as well.
Nevertheless, Auxly awaits to see many of its partners to secure their first deliveries in 2020 and should expect a pivotal shared investment to start paying dividends soon. Although profitability will not likely pick up immediately, Auxly’s loss per share is estimated to shrink this year.
2. Flowr Corp.
This specialty grower with a market cap of US$42.3 million was founded in 2017. It provides cannabis cultivation services and offers dried flower and oil products. It has a notable estimated increase in revenue of up to 731 percent. Its sales are expected to grow from almost US$10 million last year to approximately US$80 million in 2020. This growth can be credited to Flowr’s increased production as well as also suspending its dried flower production to concentrate on highly profitable marijuana derivatives.
What will be especially interesting to follow is its premium quality cannabis, which should not be priced as average weed. Growing and selling this upper echelon-quality marijuana will surely result in rapid sales and high margins.
3. Green Organic Dutchman Holdings Ltd.
Established in 2016, this holding company with a market cap of US$100.1 million produces farm-grown and organic cannabis for medical use through its subsidiaries. Its sales are projected to grow by up to 545 percent.
Although the number seems impressive, the company only began developing the cultivation of cannabis farms recently and was kind of late to the game in bringing its products to the market. It’s also the first main grower in Canada to declare production cuts last October. Only the facility in Ancaster and a few small grow spaces at its flagship property in Valleyfield will be used for production this year.
With its peak production capacity of 219,000 kilograms (482,812 pounds) last year, Green Organic is only anticipating between 20,000 to 22,000 kilograms (44,092 to 48,502 pounds) in 2020. This will surely limit the company’s sales potential. However, the changes should propel the company to generate better cash flow.
4. Harvest Health & Recreation Inc.
This medical marijuana company specializing in cultivation, dispensaries, and production facilities was founded in 2007. It had a market cap of US$195.2 million and is now one of the highest-growing U.S. marijuana stocks in 2020 according to sales estimates. Wall Street projected its sales to grow from US$118 million to as much as US$661 million this year.
If all of its acquisitions succeed, Harvest Health is poised to be a major player. As it opens up more stores this year and gains from the ongoing legalization efforts in the U.S. (particularly in Arizona), Harvest Health should see substantial sales growth in the coming years.
5. Cresco Labs Inc.
Established in 1990, Cresco Labs has a market cap of US$812.5 million as it operates to cultivate and process medical marijuana products. The company develops and distributes medical-grade cannabis to treat a wide variety of health conditions. It has an estimated sales growth of 312 percent. Cresco is projected to benefit from its year-over-year sales revenue from US$132 million to approximately US$545 million. Cresco will also gain from rolling out new stores, such as in Illinois, which legalized adult use of recreational marijuana last Jan. 1.
In addition, it is expected to see a boost in sales as soon as its all-stock takeover of Origin House comes to a close. It’s worth mentioning that Origin House is one of a mere handful of businesses to hold a license to distribute marijuana in California, which is the world’s largest cannabis market in terms of sales. If the acquisition deal closes, Cresco would surely benefit from Origin House’s constant stream of revenue, as well as its access to hundreds of dispensaries in the Gold Coast. All of these should help Cresco’s sales skyrocket.
The Future of Marijuana Stocks in America
More and more people are becoming interested in cannabis stocks because of the investment potential that emerges from the legalization of marijuana in Canada and many states in the U.S. But what exactly is the future of the cannabis industry today?
Marijuana has continuously garnered remarkable attention from not just investors but also manufacturers and the research community despite it being illegal in some U.S. states. A total of 33 states have made the use of cannabis legal for medical purposes, 11 of which allow adults over the age of 21 to use the drug for recreational purposes. This number is likely to rise since more people are accepting the idea of legalizing marijuana across the U.S. In fact, more than half of Americans believe marijuana use should be legalized.
While it is still a controlled substance, there have been shifts in political policy as more research examines its potential medicinal purposes. The Food and Drug Administration even continues to evaluate changes to the drug’s marketing and export guidelines.