The cannabis industry has been attracting considerable interest lately, thanks to several regulatory developments in various regions around the globe. Countries like Germany and Canada have legalized cannabis use and sale, and most recently, the United States government announced plans to reclassify the plant from a Schedule I to a Schedule III drug.
If this happens, the cannabis industry will likely receive a huge boost in specific areas like financing and taxation. Several states have legalized recreational marijuana use in the U.S., such as Washington D.C and Ohio and several more, like Florida, are gearing up to vote on legalization for the plant. From all indications, this year could be quite a profitable one for the industry and its spectators.
These regulatory developments could lead to a cannabis rally for the books. It is undoubtedly a welcome development, considering the difficult economic conditions that the cannabis industry has had to endure for some time now. If you’re looking to participate in the coming cannabis stock rally, these three cannabis stocks to buy are the smartest picks in the market.
Green Thumb Industries (GTBIF)
Green Thumb Industries (OTCMKTS:GTBIF) is a Canadian cannabis company that cultivates, manufactures and distributes various cannabis products, from concentrates and vapes to pre-rolled joints, edibles and topicals.
The company is poised to benefit massively from the impending cannabis rescheduling in the U.S. At the moment, the company is confined to selling its products in states where cannabis use is legal, such as Ohio, Minnesota and Virginia, but that could all change if the rescheduling occurs.
Financially, the company has been experiencing a massively profitable year so far. According to its recent quarterly report, it generated total revenue of $276 million, an 11% increase compared to the same period last year. Furthermore, its GAAP net income for the first quarter was $31 million, and its diluted share increased by 240% year over year.
Much of this recent growth is powered by the company’s expansion into newer markets across the U.S. This year, it has opened multiple new dispensaries in several states, particularly Florida. Green Thumb Industries has 16 dispensaries in Florida alone and over 90 dispensaries across 14 states.
Curaleaf Holdings (CURLF)
Curaleaf Holdings (TSE:CURLF) is an American-based cannabis operator with over 140 dispensaries and 18 cultivation sites scattered across the country. The company’s $2.71 billion market cap and $3.38 billion enterprise value make it one of the biggest players in the cannabis industry.
Curaleaf Holdings has a solid domestic presence and is fast emerging as a major player in the international scene. It is pursuing global expansion into the international market, particularly in Europe. In a recent investor pitch deck, Curaleaf Holdings estimates the value of the European market to be $248 billion. It has already established a presence in major European countries, such as Germany, the UK, France, Poland, Sweden, Italy, Spain, Switzerland and Portugal.
Curaleaf Holdings’ international presence will surely bode well for it, following the recent wave of positive cannabis legislature adjustments across Europe and America. For example, Germany has recently passed a bill that decriminalizes cannabis and allows home growing and ownership in social clubs and spaces.
Financially, Curaleaf Holdings is enjoying a very profitable year thus far. According to its recent quarterly report, it recorded total revenue of $339 million, a 2% year-over-year increase, and an adjusted gross margin of 48%.
AFC Gamma (AFCG)
AFC Gamma (NASDAQ:AFCG) is a real-estate financing company that caters to cannabis companies, providing funding for them through debt securities like senior secured loans. Although its $256 million market cap is on the low end for cannabis lending companies, it has massive potential. It is poised to massively profit from the wave of cannabis legalization in the U.S.
In a recent press release, AFC Gamma announced that it would remain solely focused on lending in the cannabis industry. The company’s loans typically range from $5 million to $100 million. Some cannabis companies under AFC Gamma’s portfolio include Sunburn, a Florida-based company and Gron Edibles, a leading edible producer. Furthermore, its financial performance this year has been impressive. According to its recent quarterly report, the company recorded a net interest income of $14.76 million.
On the date of publication, Joel Lim did not have (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.
