An in-depth look at the leading CBD stocks in the U.S stock market this year. Here’s what you need to know. These are the marijuana stocks with the best value, fastest growth, and best performance for September 2022.
Investing in CBD Stocks
Sometimes the best time to invest in a relatively new market is after the initial euphoria evaporates. That could very well be the case with investing in CBD stocks.
CBD is short for cannabidiol, which is a chemical found in the cannabis plant. CBD doesn’t produce a high but has been found to have therapeutic benefits.
The U.S. legalized hemp-derived CBD at the federal level with the 2018 Farm Bill. The mere anticipation of the passage of this legislation stoked investors’ interest in the stocks of companies involved in the CBD industry.
Although federal legalization served as a key milestone, the U.S. Food and Drug Administration (FDA) still hasn’t finalized regulations for CBD food supplements. As a result, the CBD opportunity in the U.S. hasn’t delivered on investors’ lofty ambitions — at least not yet. However, the pressure is mounting for CBD regulations to be eased. Even the U.S. Congress has gotten involved with bill proposals to change the federal regulation of CBD products.
The CBD market could expand in the not-too-distant future with the finalization of regulations. Now could be a great time for investors to check out CBD stocks. Here are five CBD stocks to consider in 2022.
|Canopy Growth (NASDAQ:CGC)||$3 billion||Canadian cannabis producer with U.S. CBD operations.|
|Charlotte’s Web Holdings (OTC:CWBHF)||$172 million||Leading CBD products company.|
|Cresco Labs (OTC:CRLBF)||$2.1 billion||U.S. cannabis operator that markets CBD products.|
|Jazz Pharmaceuticals (NASDAQ:JAZZ)||$8.5 billion||Pharmaceutical company with the first FDA-approved CBD drug.|
|The Valens Company (NASDAQ:VLNCF)||$166 million||Canadian company that provides extraction services used to produce CBD and cannabis derivative products.|
For a while, Canopy Growth ranked as the biggest marijuana stock in the world based on market cap. It remains one of the largest companies in the cannabis industry with top-tier positions in the Canadian medical and recreational marijuana markets and the German medical cannabis market.
Canopy Growth can’t enter the U.S. cannabis market and maintain its listing on a major U.S. stock exchange as long as marijuana is illegal at the federal level. However, the company is already a player in the U.S. hemp-derived CBD market.
In 2019, Canopy Growth teamed up with businesswoman and TV celebrity Martha Stewart to develop CBD products for the U.S. market. The company now has a line of CBD brands with Stewart. It also has other CBD products that include Whisl, the No. 1 CBD-only vape in the U.S. market.
Canopy Growth isn’t profitable yet. However, it does have a large cash stockpile, thanks in large part to investments by beverage giant Constellation Brands (NYSE:STZ), the company’s biggest shareholder.
The CBD opportunity is only a secondary reason to consider this stock. The primary potential catalyst for Canopy Growth is the prospect that U.S. federal cannabis laws will be changed and allow the company to enter the lucrative U.S. cannabis market.
Charlotte’s Web Holdings
If you’re looking for a pure-play CBD stock, Charlotte’s Web could be right up your alley. The company pioneered the hemp CBD industry in 2011, and it still ranks No. 1 based on market share.
Charlotte’s Web markets a wide range of CBD products. From bath and beauty to ingestibles and topicals, the company covers all the bases when it comes to CBD. It even sells CBD products for pets.
The company’s CBD products are available at more than 14,000 retail outlets. About 8,000 healthcare practitioners also distribute Charlotte’s Web’s products, and the company has a strong online presence. More than half of its total revenue stems from direct-to-consumer e-commerce sales.
Charlotte’s Web isn’t resting on its laurels. It plans to launch CBD beverages in the second half of 2022. Market researcher Brightfield Group projects that the CBD beverage market will reach $1.3 billion in 2026, up from $245 million in 2021.
However, Charlotte’s Web’s stock performance over the past couple of years has been disappointing. But the company now has a new CEO with former Bacardi executive Jacques Tortoroli taking the helm in December 2021. The potential for the finalization of regulations regarding CBD dietary supplements could be just what the stock needs to mount a major comeback.
Cresco Labs is a U.S.-based cannabis operator that markets recreational and medical cannabis products in 10 states, all of which rank among the 20 most-populated in the U.S. (and with seven in the top 10).
The company isn’t just a cannabis producer and retailer. Cresco also is the No. 1 U.S. wholesaler of branded cannabis products containing CBD, including its Wonder gummies.
Cresco has achieved tremendous success in recent years. The company’s revenue has grown significantly, both organically and through acquisitions. It’s consistently profitable. Cresco’s solid balance sheet should also enable it to continue expanding into new markets.
Probably the biggest knock against Cresco is that the company can’t list its shares on a major U.S. stock exchange as long as marijuana remains illegal at the federal level. However, this limitation also is a key factor behind the stock’s attractive valuation compared to Canadian pot stocks.
You might be surprised to find a pharmaceutical stock listed among the top CBD stocks to consider. But Jazz Pharmaceuticals has a direct and important connection with CBD. In 2018, the company’s Epidiolex became the first CBD product made from the cannabis plant to win FDA approval.
Jazz actually didn’t own Epidiolex at that time. It acquired GW Pharmaceuticals, which developed the CBD drug to treat epileptic seizures, for $6.7 billion in 2021 .
Epidiolex is still a long way from generating annual sales of $1 billion or more, as some analysts projected after it was first approved in the U.S. However, sales continue to pick up as the drug launches in additional European countries.
Jazz also has other growth drivers in its lineup. Sleep disorder drug Xywav is gaining momentum. Sales are soaring for another sleep disorder drug, Sunosi, as well as blood cancer drug Rylaze and lung cancer drug Zepzelca.
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The Valens Company
One of the important steps in investing in marijuana stocks is to understand the different types of companies. Ancillary businesses that support the industry can sometimes have even more attractive prospects than pure plays. The Valens Company is a good example.
Valens is the largest third-party extraction company serving the Canadian cannabis industry. It uses different methods to extract cannabinoids (including CBD) from cannabis. Valens also markets its own cannabis products, which is part of its strategy to transition into a leading cannabis consumer packaged goods company.
The company’s Green Roads already ranks among the top 10 CBD brands in the U.S. Green Roads products are available in about 7,000 retail locations. Valens hopes to also achieve success in Canada if over-the-counter CBD sales are permitted in the country.
Like most Canadian cannabis-related stocks, Valens hasn’t made investors happy over the past year. However, its shares trade at a more attractive valuation than most U.S. and Canadian cannabis stocks.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Brands, Cresco Labs Inc., and The Valens Company Inc. The Motley Fool recommends Charlotte’s Web and Charlotte’s Web Holdings. The Motley Fool has a disclosure policy.
Top Marijuana Stocks for September 2022
CL.CX, SNDL, and VRNO.CX are top for value, growth, and performance
Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal, and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp., Cronos Group Inc., and Tilray Inc. Many big marijuana companies have continued to post sizable net losses as they focus on investments needed to speed up revenue growth. 37 U.S. states now permit the use of marijuana in some form.
Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have vastly underperformed the broader market. MJ has provided a total return of -63.6% over the past 12 months, well below the Russell 1000 Index’s total return of -8.2%. These market performance numbers and all statistics in the tables below are as of Aug. 24, 2022.
Here are the top five marijuana stocks with the best value, the fastest growth, and the best performance.
Best Value Marijuana Stocks
These are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in the early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves (or returns to) profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.
|Best Value Marijuana Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/S Ratio|
|Cresco Labs Inc. (CL.CX)||CA$4.92||CA$1.5||1.3|
|Jushi Holdings Inc. (JUSH.CX)||CA$2.29||CA$0.4||1.6|
|Aurora Cannabis Inc. (ACB)||1.57||0.5||1.8|
|TerrAscend Corp. (TER.CX)||CA$2.32||CA$0.6||1.9|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$17.47||CA$3.2||2.1|
- Cresco Labs Inc.: Cresco Labs is a cannabis products company involved in growing, manufacturing, and distribution. The company operates in 10 states, including more than 70 total production facilities and dispensaries. Its brands include Cresco, Remedi, High Supply, Wonder Wellness Co., Mindy’s, Good News, Sunnyside, and FloraCal Farms. Cresco Labs’ stock also trades OTC in the U.S. under the ticker CRLBF. On July 15, Cresco reported that Columbia Care Inc., a cultivator and maker of cannabis products, had obtained the final order from the Supreme Court of British Columbia approving its business combination with Cresco Labs. Per the agreement, Cresco will acquire all outstanding shares of Columbia Care. The combination is expected to close in Q4 2022. At the time of the announcement, it was estimated that Cresco Labs is paying $2 billion for Columbia Care.
- Jushi Holdings Inc.: Jushi Holdings is a holding company focused on branded cannabis and hemp-based assets. The company is engaged in retail, distribution, cultivation, and processing operations. Its brands include: The Bank, focused on plant genetics and cultivation; The Lab, specializing in vape products and concentrates; Nira+, a producer of medicinal THC products; Sèche, which offers various branded ground and flower cannabis products; and Tasteology, a provider of THC-infused products. Jushi also trades OTC in the U.S. under the ticker JUSHF. Jushi announced in late August that its fourth medical cannabis dispensary in Virginia would open on Aug. 31. This is the company’s 35th retail outlet nationwide.
- Aurora Cannabis Inc.: Aurora Cannabis is a Canada-based company specializing in the production, distribution, and sale of medical cannabis products. Its brands include Aurora, Aurora Drift, Daily Special, MedReleaf, Whistler, and more. The company’s growth strategy targets medical cannabis markets across the globe as well as the U.S. hemp-derived CBD market and the Canadian recreational market. On Aug. 25, Aurora announced that it had acquired a controlling interest in Bevo AgTech Inc., a vegetable and ornamental plant company, through a subsidiary. Bevo operates 63 acres of greenhouses in Canada. Total consideration at the time of closing was roughly $45 million, with an additional payment of up to $12 million payable for up to three years following the acquisition depending on Bevo’s achieving various financial milestones.
- TerrAscend Corp.: TerrAscend is a Canada-based vertically integrated cannabis company with operations in Canada and the U.S. The company’s brands and business lines include Gage Cannabis, The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, and Valhalla Confections. TerrAscend also trades OTC in U.S. markets under the ticker TRSSF. On Aug. 24, TerrAscend announced the closing of its acquisition of Michigan-based dispensary operator KISA Enterprises MI, LLC and related real estate assets. TerrAscend paid total consideration of $28.5 million for KISA. The acquisition includes six dispensary licenses.
- Trulieve Cannabis Corp.: Trulieve is a vertically integrated cannabis company with operations in eight states. The company’s brands include Cultivar Collection, Muse, Sweet Talk, and Momenta. Trulieve shares trade OTC under the ticker TCNNF. On Aug. 10, Trulieve reported earnings for Q2 2022. The company posted a net loss of $22.5 million compared with net income for the prior-year quarter as well as a 49% increase in revenue year over year (YOY). Net income was negatively impacted by charges associated with the acquisition of Harvest as well as other factors.
Fastest Growing Marijuana Stocks
These are the marijuana stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue organically or through other means and find growing companies that have not yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share (EPS). However, sales growth can also be potentially misleading about the strength of a business because growing sales for money-losing businesses can be harmful if the companies have no plan to reach profitability.
|Fastest Growing Marijuana Stocks|
|Price ($)||Market Cap ($B)||Revenue Growth (%)|
|SNDL Inc. (SNDL)||2.78||0.7||2,250|
|OrganiGram Holdings Inc. (OGI)||1.09||0.3||82.8|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$17.47||CA$3.2||54.6|
|Jushi Holdings Inc. (JUSH.CX)||CA$2.29||CA$0.4||48.6|
|Cronos Group Inc. (CRON)||3.10||1.2||47.6|
- SNDL Inc.: SNDL is a Canada-based cannabis producer. The company operates cultivation and processing facilities, retail stores, and also sells alcoholic beverages. Its cannabis brands include Sundial, Top Leaf, Palmetto, and Grasslands. At its annual and special shareholder meeting in late July, the company officially changed its name from Sundial Growers Inc. to SNDL Inc. It also implemented a share consolidation under which 10 pre-consolidation common shares were consolidated into one post-consolidation common share, effective July 25. The company announced on Aug. 22 that it would acquire cannabis product manufacturer The Valens Company Inc. (VLNS) for total consideration of about $138 million. The deal is expected to close in Jan. 2023.
- OrganiGram Holdings Inc.: Organigram Holdings is a Canada-based producer of medical and recreational cannabis. Its subsidiaries include Organigram Inc., Laurentian Organic Inc., and The Edibles and Infusions Corp., and its brands include Edison Cannabis Co., SHRED, and monjour, among others.
- Trulieve Cannabis Corp.: See above for company description.
- Jushi Holdings Inc.: See above for company description. Note that Jushi Holdings reported Q2 2022 earnings results for Q2 2022 on Aug. 29, 2022. Jushi’s ranking in the table above is based on its Q1 2022 earnings report.
- Cronos Group Inc.: Cronos Group is a Canada-based cannabis company. Its brand portfolio includes Spinach, Happy Dance, and PEACE+. Cronos reported Q2 2022 earnings results on Aug. 9. Its net loss narrowed significantly YOY as consolidated net revenue rose. Revenue was driven in particular by Israel net revenue, which more than tripled YOY.
Marijuana Stocks With the Best Performance
These are the marijuana stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.
|Marijuana Stocks With the Best Performance|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Verano Holdings Corp. (VRNO.CX)||CA$8.40||CA$2.7||-44.2|
|4Front Ventures Corp. (FFNT.CX)||CA$0.69||CA$0.4||-47.5|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$17.47||CA$3.2||-49.3|
|Cronos Group Inc. (CRON)||3.10||1.2||-53.0|
|Green Thumb Industries Inc. (GTII.CX)||CA$16.23||CA$3.8||-57.1|
|ETFMG Alternative Harvest ETF (MJ)||N/A||N/A||-63.6|
- Verano Holdings Corp.: Verano Holdings is a vertically integrated, multi-state cannabis operator. The company produces a wide range of medical and adult-use cannabis products. It owns and operates 13 cultivation and manufacturing facilities and owns over 100 dispensaries in a number of states throughout the U.S. The company’s stock also trades OTC in the U.S. under the ticker VRNOF. On Aug. 19, Verano announced the opening of its 111th dispensary nationwide and its fourth location in Clarksburg, W.Va.
- 4Front Ventures Corp.: 4Front Ventures is a cannabis operator and retailer. It owns, operates, or manages cultivation and manufacturing properties in five states and employs over 600. Its stores attracted more than 1 million unique customers in 2021. 4Front also trades OTC under the symbol FFNTF. On Aug. 15, 4Front reported Q2 2022 earnings results. Its net loss widened slightly YOY as total revenues climbed. The company its operations in Massachusetts and California posted strong performance during the quarter.
- Trulieve Cannabis Corp.: See above for company description.
- Cronos Group Inc.: See above for company description.
- Green Thumb Industries Inc.: Green Thumb Industries is a cannabis retailer and consumer packaged products company. It markets products under brand names including Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles, and RYTHM. It has 77 open retail locations across 15 U.S. markets. Green Thumb stock also trades OTC under the ticker GTBIF.
Trends to Watch in Marijuana Stocks
Marijuana stocks have given investors a wild ride over the past few years, staging eye-watering rallies and substantial declines. Those who invest in this emerging sector should monitor these key trends as they will likely guide price direction in months and years ahead.
Financing: Most U.S. financial institutions avoid offering to fund cannabis companies as marijuana is still federally illegal, meaning lenders that provide loans could face possible prosecution. However, the Secure and Fair Enforcement Banking Act (SAFE)—which passed through the House in 2021—aims to address this by preventing the federal government from penalizing banks that offer financial services to the cannabis industry. Although the legislation has failed to gain support in the Senate, investors should monitor any amendments to the bill that could increase the chances of it gaining congressional approval.
Increasing Merger and Acquisition Activity: As of last year’s fourth quarter, $8.5 billion worth of merger and acquisition (M&A) transactions had closed in the sector, significantly higher than the $3 billion worth of deals in 2020 and $3.6 billion in 2019. Increasing dealmaking in the cannabis space indicates that institutional investors have growing confidence in the industry’s future.
Potential U.S. Legalization: While several cannabis legalization bills grace the halls of Congress, bipartisan support remains difficult to achieve, creating a large amount of uncertainty for industry participants. However, several leading Canadian operators, such as Cronos and Tilray, are banking on the U.S. cannabis market, with both companies entering into acquisition deals subject to its decriminalization south of the border.
Advantages of Marijuana Stocks
Despite the underwhelming performance of marijuana stocks over the past year amid an uncertain regulatory environment, the sector offers risk-taking investors significant growth potential. According to industry analysis firm MJBizDaily, U.S. cannabis sales will surpass $33 billion in 2022 before reaching $52 billion by the end of 2026. Moreover, the global cannabis market is expected to reach nearly $200 billion by 2028, up from $28 billion in 2021.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.