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Medical and recreational cannabis use has been legalized in a growing number of U.S. states and on a national level in Canada, fueling a burgeoning legal cannabis industry in recent years. Cannabis stocks are now a prime focus for investors seeking potentially explosive sales and stock growth. But there are certain considerations associated with marijuana stocks that investors should keep in mind.
To begin with, cannabis stocks face higher-than-normal risk and volatility due to a long list of factors. Many publicly traded cannabis companies are young, unproven enterprises that face a complicated, fast-changing market that includes different laws across many local, state and regional jurisdictions. Also, cannabis use is still illegal at the U.S. federal level. The challenges are particularly great for marijuana penny stocks, and investors should be especially cautious and perform more than their usual due diligence when investing in these companies. Some up-and-coming names in the marijuana penny stock category include Cansortium Inc. (TIUM.U.CX) and Vireo Health International Inc. (VREOF).
Marijuana stocks, represented by the ETFMG Alternative Harvest ETF (MJ), have dramatically underperformed the broader market. MJ has provided a total return of -22.4% over the past 12 months, well behind the Russell 1000’s total return of 27.1%. Note that MJ targets a broad assortment of cannabis industry stocks, including penny stocks. These market performance numbers and all statistics in the tables below are as of Dec. 13, 2021.
Here are the top three marijuana penny stocks with the best value, the fastest growth, and the most momentum.
These are the marijuana penny stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in 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 price-to-sales ratio shows how much you’re paying for the stock for each dollar of sales generated.
| Best Value Marijuana Penny Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($M) | 12-Month Trailing P/S Ratio | |
| Greenlane Holdings Inc. (GNLN) | 1.12 | 90.1 | 0.2 |
| TILT Holdings Inc. (TILT.NO) | CA$0.32 | CA$105.1 | 0.6 |
| Acreage Holdings Inc. (ACRG.A.U.CX) | 1.70 | 179.5 | 1.1 |
Source: YCharts
- Greenlane Holdings Inc.: Greenlane Holdings is a holding company which, through subsidiaries, distributes vaporization products and accessories to smoke shops and other distribution vehicles. On Nov. 30, Greenlane announced the completion of its previously announced acquisition of DaVinci, a leading developer and manufacturer of premium portable vaporizers. DaVinci is expected to generate $12 million in sales for 2021. The total consideration of the acquisition was up to $20 million.
- TILT Holdings Inc.: TILT Holdings is a cannabis industry technology and infrastructure company. The company provides same-day delivery for retailers, wholesalers, and consumers in the U.S., Canada, Puerto Rico, and Jamaica.
- Acreage Holdings Inc.: Acreage Holdings is a multi-state operator of cannabis licenses and assets. The company cultivates cannabis plants, manufactures branded products, distributes cannabis flower and related products, and operates contractual relationships with cultivation facilities. Acreage reported Q3 2021 results for the period ended Sept. 30 on Nov. 10, 2021. Net operating losses narrowed year-over-year (YOY) as consolidated revenue climbed by 51.7%. The company attributed the results to its refocused efforts to reach profitability, strengthen its balance sheet, and accelerate growth in core markets.
These are the marijuana penny stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.
Source: YCharts
- The Green Organic Dutchman Holdings Ltd.: The Green Organic Dutchman Holdings is a Canadian holding company that, through subsidiaries, produces organic and farm-grown cannabis for medical use. Its customer base is global. The company reported on Nov. 18 that it had completed its previously announced acquisition of Galaxie Brands Corp., a Canada-based manufacturer of cannabis pre-rolls, vapes, solventless products, and similar offerings. The acquisition was valued at approximately CA$21 million ($16.3 million).
- Jushi Holdings Inc.: Jushi Holdings is a Canada-based holding company focused on branded cannabis and hemp-based assets. The company is engaged in retail, distribution, cultivation, and processing operations. For Q3 2021, ended Sept. 30, Jushi reported net income of $38.2 million as compared with net loss for the prior-year quarter. Net revenue more than doubled YOY. The company attributed the performance to the growth of its retail network through a strategic acquisition in Massachusetts and the opening of two new stores in Pennsylvania, among other factors.
- Red White & Bloom Brands Inc.: Red White & Bloom Brands is a manufacturer of cannabis products. The Canada-based company serves customers in both the U.S. and Canada.
These are the marijuana penny stocks that had the highest total return over the last 12 months.
| Marijuana Penny Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($M) | 12-Month Trailing Total Return (%) | |
| Cansortium Inc. (TIUM.U.CX) | 0.67 | 166.4 | 54.0 |
| RIV Capital Inc. (RIV.CX) | CA$1.43 | CA$203.7 | 45.9 |
| OrganiGram Holdings Inc. (OGI.TO) | CA$2.41 | CA$722.6 | 40.9 |
| Russell 1000 | N/A | N/A | 27.1 |
| ETFMG Alternative Harvest ETF (MJ) | N/A | N/A | -22.4 |
Source: YCharts
- Cansortium Inc.: Cansortium produces and sells medical cannabis products to customers in the U.S. and Canada. Its biggest U.S. market is Florida, and it is expanding into Texas, Michigan and Pennsylvania, where it has secured licenses and started operations.
- RIV Capital Inc.: RIV Capital, formerly known as Canopy Rivers Inc., is a Canada-based investment and acquisition company. The company invests in a portfolio of cannabis companies that operate in the wellness, cannabis production, software, retail and distribution, pharmaceuticals and biotech, and consumer products spaces.
- OrganiGram Holdings Inc.: OrganiGram Holdings is a Canada-based licensed producer of cannabis related extract-based products for both medical and recreational use. The company distributes its products to consumers and through wholesale shipping channels. In November, the company announced the launch of Monjour, a new wellness brand featuring cannabidiol (CBD)-forward products for consumers looking to incorporate CBD into daily wellness routines. The brand offers vegan and sugar-free products.
