Investing in cannabis stocks can be a lucrative venture for investors, but it is important to understand the risks involved. This article provides an overview of the top five cannabis companies and their operations, as well as the potential risks and rewards of investing in the cannabis industry. The cannabis industry has seen a lot of ups and downs in recent years, with stocks fluctuating due to news about legalization and other market developments. However, there are still some major players in the industry that investors should be aware of.
Here is a look at the top five cannabis companies and their operations.
Green Thumb Industries (GTI)
is one of the largest cannabis companies in the United States. It owns 77 retail cannabis stores in 15 states, and has enough additional licenses to nearly double its retail store count. Currently, GTI stocks can only be bought and sold on U. S.OTC markets, but if federal restrictions on cannabis were lifted, stocks could be listed on major U. exchanges, which could provide a great catalyst for GTI.
Cresco Labs
is another major player in the U. cannabis industry. It operates retail cannabis stores in 10 states, including six of the most populous states in the U.S., and is the leading wholesaler of branded cannabis products in the country. Like GTI, Cresco Labs shares can currently only be traded on U. OTC markets.
Innovative Industrial Properties (IIP)
helps solve cash shortages for growing marijuana companies by buying U. S.-owned properties and leasing them to medical cannabis operators.IIP has grown significantly in recent years and now owns properties in 19 states, generating strong revenue and profit growth despite the recent default of one of its main tenants. Since IIP is organized as a real estate investment trust (REIT), it returns at least 90% of its taxable income to shareholders.
GrowGeneration
is a leading hydroponic gardening company that sells products to both home gardeners and commercial growers. It operates 28 stores across 11 states, with plans to open more stores in 2021. GrowGeneration stocks can be traded on Nasdaq.Scotts Miracle-Gro
is another major player in the hydroponic gardening space, with its Hawthorne Gardening subsidiary being one of the leading suppliers of hydroponic gardening products for the cannabis industry. Hawthorne should have a significant long-term growth trajectory despite some short-term challenges.Risks and Rewards of Investing in Cannabis Stocks
Investing in marijuana stocks comes with both risks and rewards.The COVID-19 pandemic affected almost every sector of the world economy, including the cannabis industry, with some companies experiencing logistical challenges that affected sales and research progress while others saw sales skyrocket due to more time spent at home and increased anxiety. Cannabis companies cannot easily obtain capital from banks or financial institutions since marijuana is still illegal at the federal level, so investors need to be aware of this risk when considering investing in marijuana stocks. Additionally, all of the above-mentioned marijuana stocks have fallen significantly over the past 12 months, which underlines the risks faced by investors. However, factors that cause poor performance (especially an imbalance between supply and demand) should be resolved over time, and aggressive investors with high risk tolerances are likely to find a lot of things they like about marijuana stocks as this huge industry offers opportunities for long-term investors.
