The continued lack of legalization of marijuana at the federal level is preventing greater growth across the industry. That could change by the end of this year. The federal government aims to finish its review of marijuana’s current legal status by the end of 2023, based on remarks from the U.S. Department of Health and Human Services leadership. Thus, a legitimate path toward the federal de-scheduling of cannabis in 2024 has emerged.
In turn, the cannabis industry has a potent catalyst ahead, which hasn’t been true since states began decriminalizing after Canada’s legalization in 2018. Stick with firms that are showing positive signs currently and consider larger firms later.
Curaleaf Holdings (CURLF)
Curaleaf Holdings (OTCMKTS:CURLF) is one of the better-known cannabis stocks. It has a relatively large footprint with 160 retail outlets nationwide, with a heavy concentration in Florida — 60 stores.
The reason Curaleaf could boom in 2024 is it has the resources to adapt quickly to de-scheduling, should it occur. Curaleaf suffers from the same issue of losses that plague cannabis firms everywhere. The company lost $74.49 million on $338.58 million in sales. However, it isn’t doing as badly as other well-known cannabis firms in that regard. Tilray (NASDAQ:TLRY) is just as well known as Curaleaf and lost $120 million on $184 million in sales. In other words, CURLF is relatively better operated, making it more investment-worthy and likely to boom in 2024.
Curaleaf currently operates in 19 states and will enter others should 2024 go as many industry pundits anticipate. That fragmentation is causing inefficiency, meaning federal legalization will benefit the company in many ways.
Green Thumb Industries (GTBIF)
Although Green Thumb Industries (OTCMKTS:GTBIF) isn’t growing currently, the company very much remains worthy of investment. Profitability has been a major stumbling block for cannabis firms since day one. Losses are incredibly common across the industry and often exceptionally large.
Green Thumb Industries is a breath of fresh air in that regard. It continues to turn profits, although its absolute profitability is in decline. Q2 sales fell from $254.3 million to $252.4 million. That’s relatively insignificant. Net gain fell from $24.44 million to $13.4 million. And that’s actually not bad, considering expenses increased by $21 million. The company was quite strong operationally, given the net decline of $11 million in profitability.
Frankly speaking, Green Thumb Industries remains far ahead of the competition for the simple fact that it’s profitable. The company already cracked the code other cannabis firms have had so much trouble with. GTBIF doesn’t get enough press regarding that truth. Regardless, 2024 could see it boom because if any firm understands how to scale up, it ought to be Green Thumb Industries.
Cronos Group (CRON)
Cronos Group (NASDAQ:CRON) is another cannabis stock showing signs of heading in the right direction. What I mean is, Cronos Group is addressing the losses issue plaguing the sector.
As losses decline, the company will have a much greater chance in 2024.
Firm-wide losses declined by nearly 50% in the first half of 2023, falling to $27.53 million. During the second quarter, losses declined by roughly 60%, falling from $20.22 million to $8.36 million year-over-year. That’s exactly what investors have been hoping for lately as operational efficiency comes to the fore.
The company achieved those improvements even as revenues declined by a modest amount. That speaks to the company’s ability to manage costs, prompted by industry-wide pressures — primarily external. Investors have watched cannabis firms destroy value for far too long. They’re fed up, and capital has fled the sector en masse. Cronos Group is reacting appropriately and is much closer to breaking even as a result. That definitely has the potential to translate to blazing growth come 2024.
On the date of publication, Alex Sirois did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
