Top Marijuana Stocks for March 2022

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 investing in equipment to speed up revenue growth.

Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have dramatically underperformed the broader market. MJ has provided a total return of -60.4% over the past 12 months, well below the Russell 1000’s total return of 8.1%. These market performance numbers and all statistics in the tables below are as of Feb. 24, 2022.

Below we look at the top five marijuana stocks with the best value, the fastest growth, and the most momentum.

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.

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• GrowGeneration Corp.: GrowGeneration is a distributor of agricultural products and one of the largest hydroponics suppliers in the country, operating retail hydroponic and organic specialty gardening retail outlets. Though GrowGeneration is not a pure-play cannabis company, many of its products are used in cannabis cultivation. It sells thousands of products, including plant nutrients, farming soils, advanced lighting technology, and hydroponic and aquaponic equipment. It owns and operates 63 retail and distribution centers. GrowGeneration announced in late January that it has acquired Horticultural Rep Group, a Utah-based specialty marketing and sales organization of horticultural products. Financial terms of the transaction were not disclosed. The company also announced in early January that it has acquired for $9.4 million the assets of Mobile Media Inc. and MMI Agriculture, a mobile shelving manufacturing and warehouse facility.
• Village Farms International Inc.: Village Farms International is a Canada-based vertically integrated greenhouse produce company. The company produces cannabis in addition to growing, producing, and distributing fresh produce to national grocers in North America. The company’s brands include: Village Farms Fresh, a vertically integrated greenhouse grower; Pure Sunfarms, a cannabis producer; ROSE LifeScience, a cannabis producer and distributor; Balanced Health Botanicals, a CBD brand with an e-commerce platform; Village Fields Hemp, a hemp grower; and VF Clean Energy, a subsidiary that converts landfill gas to clean energy.
• Hydrofarm Holdings Group Inc.: Hydrofarm Holdings Group is a holding company that, through its subsidiaries, makes and distributes hydroponic products to customers throughout the U.S., Canada, and Europe. The company offers hundreds of brands. It has a total of nine distribution centers, offering a product line of more than 5,000 items.
• Cresco Labs Inc.: Cresco Labs grows, manufactures, distributes, and packages cannabis products. The company operates in 10 states, including production facilities and dispensaries. Its brands include Cresco, Reserve, Remedi, High Supply, Wonder Wellness Co., Mindy’s, Good News, Sunnyside, and FloraCal Farms. Cresco Labs’ stock also trades over the counter (OTC) in the U.S. under the ticker CRLBF. The company recently announced that it has terminated its agreement to purchase Blair Wellness LLC, a Maryland-based medical cannabis dispensary. Cresco Labs said that the agreement was terminated because of the failure to meet certain closing conditions. There were no termination fees associated with the transaction, which had originally been expected to close in Q4 2021.
• Ayr Wellness Inc.: Ayr Wellness is a cannabis company involved in the cultivation, manufacturing, and dispensing of cannabis and cannabis-derived products. The company’s product portfolio includes flowers, seltzers and tinctures, edibles and vape products under brands including Kynd, Origyn, Stix Preroll Co., Levia, Road Tripper, Entourage, Haze, Wicked, Secret Orchard, and Cannapunch. Ayr Wellness also trades OTC in the U.S. under the ticker AYRWF. The company recently announced that it has completed its acquisition of Cultivauna LLC, owner of Levia branded cannabis infused seltzers and water-soluble tinctures, for $20 million in upfront consideration. Under the terms of the transaction, which was first announced on Sept. 7, 2021, an earnout payment of up to an additional $40 million will be paid in shares depending on whether certain revenue targets in 2022 and 2023 are achieved.

These are the marijuana 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 organically or through other means, and 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.

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• GrowGeneration Corp.: See above for company description.
• Verano Holdings Corp.: Verano Holdings is a vertically integrated, multistate cannabis operator. The company produces a wide range of medical and adult-use cannabis products, which it sells through its portfolio of brands, including: Verano, Avexia, Encore, and MÜV. It owns and operates 15 cultivation facilities and 109 retail locations in a number of states throughout the U.S. (the number of cultivation facilities and retail locations includes those operated and owned by two pending acquisitions). The company’s stock also trades OTC in the U.S. under the ticker VRNOF. Verano announced in early February that it has agreed to acquire Goodness Growth Holdings Inc., a holding company whose subsidiaries include Vireo Health, a multistate cannabis company, and Resurgent Biosciences Inc., a science and intellectual property incubator. The deal gives Verano Holdings access to the New York, New Mexico, and Minnesota markets. The all-share transaction is valued at approximately $413 million. Verano Holdings did not say when the transaction is expected to be completed. The company also announced in early January the appointment of Brett Summerer as chief financial officer (CFO). Summerer has over 21 years of financial management experience, including at General Motors Co., Kraft Heinz Co., and Corning Inc. He replaces Brian Ward.
• 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 maker of hemp-based CBD products that are physician formulated; 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.
• Ayr Wellness Inc.: See above for company description.
• Cronos Group Inc.: Cronos Group is a Canada-based cannabis company with production and distribution operations throughout the world. The company focuses on cannabis research, technology, and product development. Its brand portfolio includes: a global wellness platform, PEACE NATURALS; two adult-use brands, COVE and Spinach; and three hemp-derived CBD Brands, Lord Jones, Happy Dance, and PEACE+.

Momentum investing is a factor-based investing strategy in which you invest in a stock whose price has risen faster than the market has as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stock’s outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the stocks that had the highest total return over the past 12 months.

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• Arena Pharmaceuticals Inc.: Arena Pharmaceuticals is a clinical-stage biopharmaceutical company that is developing a diverse portfolio of therapeutic candidates focused on the areas of gastroenterology, dermatology, and cardiology. It does not currently have any medicines or products that have been approved for use by regulators. The company is working on developing a drug for treating pain related to gastrointestinal disorders called Olorinab, which uses cannabinoids. The company announced in mid-December that it has agreed to be acquired by Pfizer Inc. for approximately $6.7 billion. Pending approval by regulators, the deal is expected to close in the first half of this year.
• Innovative Industrial Properties Inc.: Innovative Industrial Properties (IIP) is a real estate investment trust (REIT) that engages in the acquisition, disposition, development, and management of industrial facilities leased to tenants in the regulated medical cannabis industry. The company’s portfolio consists of specialized industrial and greenhouse buildings leased to state-licensed, medical-use cannabis cultivators across the U.S. IIP recently announced that it has closed its acquisition of an approximately 114,000-square-foot property in New Jersey and entered into a long-term lease with a subsidiary of Ascend Wellness Holdings Inc., a multistate, vertically integrated operator. In addition to the $35.4 million purchase price for the property, IIP will pay Ascend Wellness up to $4.6 million for the completion of improvements to the property, bringing the company’s total expected investment to $40.0 million.
• Green Thumb Industries Inc.: Green Thumb Industries is a consumer-packaged cannabis products company and retailer. It manufactures and distributes a variety of branded cannabis products through its portfolio of brands, including Beboe, Dogwalkers, Dr. Solomon’s, Good Green, and Rythm. The company also owns and operates retail cannabis stores called Rise. Green Thumb has 16 manufacturing facilities and scores of retail locations, with operations across 14 U.S. markets. The company’s stock also trades OTC in the U.S. under the ticker GTBIF. Green Thumb Industries announced in late December that it has acquired LeafLine Industries, a Minnesota-based licensed cannabis cultivator. The acquisition provides Green Thumb with access to patients within the Minnesota medical cannabis market. Financial terms of the transaction were not disclosed.
• Jushi Holdings Inc.: See above for company description.
• Verano Holdings Corp.: See above for company description.

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