For something that’s still considered an illegal substance by the United States government, cannabis sure does make a lot of money the legal way. Legalization of marijuana at the state level has created a booming industry that includes everything from farms and pharmaceuticals to retail and consumer goods.
The global market for legal, licensed cannabis fell just shy of $20 billion last year, according to Roy Bingham, co-founder and chairman of BDSA, a cannabis market research firm. In an interview with Forbes, he pegged the U.S. market at around $16 billion in 2020 and expects it to top $24 billion this year, making it far and away the biggest cannabis market in the world.
That’s the case even though federal law still classifies marijuana as a Schedule I substance under the Controlled Substances Act, meaning it is considered to have a high potential for dependency with no accepted medical use, making distribution of marijuana a federal offense.
Even so, a growing number of states have sidestepped federal law by legalizing cannabis for recreational and medical purposes. This has created a thriving market that numerous companies want a piece of. Keep reading to learn about the seven top cannabis stocks for 2021.
Best Marijuana Stocks for 2021
This year’s top cannabis stocks target both the medical and recreational markets. Below are seven stocks with strong growth potential.
As the cannabis industry’s biggest U.S. multistate operator, Massachusetts-based Curaleaf has the scale to ride out occasional market ups and downs. Its stock price has been comparatively steady this year, trading in a fairly narrow range of $13 to $18 a share. The company operates in more than 20 states and boasts nearly 100 dispensaries, more than 20 cultivation sites and more than 30 processing sites. It posted 2020 revenue of $626.6 million, nearly triple the prior year’s total, according to InvestorPlace.
Green Thumb Industries (GTBIF)
This Chicago-based company owns and operates 55 cannabis retail stores in the U.S. It offers cannabis flower as well as processed and packaged products under brands that include Rythm, Dogwalkers, The Feel Collection, Incredibles, Dr. Solomon’s and Beboe. Illinois’ legal recreational marijuana market opened in early 2020, allowing Green Thumb to benefit from heavy demand in its home state. Its stock price has roughly tripled over the past year.
Trulieve Cannabis (TRUL)
Trulieve is a cannabis grower and retailer that mainly targets the Florida medical marijuana market. It accounts for nearly half of total cannabis sales in the Sunshine State and has delivered steady profits in the last few years, The Motley Fool reported. Earlier this year, the company announced plans to buy Harvest Health & Recreation to expand its presence into other states.
Ayr Wellness (AYRWF)
Based in New York, Ayr Wellness cultivates, extracts, manufactures, distributes and retails cannabis products and branded cannabis packaged goods. Its lineup includes concentrates, edibles and vaporizer products. The company also operates medical retail dispensaries and provides administrative, consulting and support services to licensed cannabis companies. Ayr Wellness has yet to turn an annual profit. However, its stock price has mostly moved higher in 2021, a reflection of the faith many investors have in the company.
Innovative Industrial Properties (IIPR)
As cannabis stocks go, Innovative Industrial Properties occupies pretty high ground on Wall Street. It trades on the New York Stock Exchange and boasts a stock price close to $200. The company also has a fairly unique business model by focusing on the acquisition, ownership and management of specialized properties that are leased to state-licensed operators for regulated medical-use cannabis facilities.
Innovative Industrial is taxed as a real estate investment trust, so it returns at least 90% of its taxable income to shareholders, according to The Motley Fool. The company’s business got disrupted by the COVID-19 pandemic, with three tenants getting temporary rent deferrals. But it remains solidly profitable.
Headquartered in Denver, GrowGeneration owns and operates retail hydroponic and organic gardening stores in the U.S. Because it sells hydroponic cultivation equipment and plant nutrients to cannabis companies, it stands to get a major boost from marijuana legalization efforts across the country. Investors are bullish on the stock. A year ago, GrowGeneration’s share price traded around $7. As of July 19, it trades near $38.
Jazz Pharmaceuticals (JAZZ)
Jazz Pharmaceuticals entered the cannabis market in May 2021 when it acquired biotech GW Pharmaceuticals. That deal brought aboard Epidiolex, which is the first cannabis-based medicine to be approved by the U.S. Food and Drug Administration, The Motley Fool reported. Epidiolex treats two rare forms of childhood epilepsy and has enjoyed better-than-expected sales. Epidiolex also got FDA approval last year to treat tuberous sclerosis complex, a rare organ disease.
The Legal Status of Cannabis in the United States
In 2012, Colorado became the first state to legalize marijuana for recreational use. Since then, 18 other states, along with Washington, D.C., and Guam, have legalized weed even as it remained illegal at the federal level.
Many other states are considering similar legalization measures as marijuana becomes more accepted by mainstream society — not to mention a potentially lucrative source of income. Meanwhile, Congress is weighing several bills related to cannabis, including those that aim to decriminalize it at the federal level.
Here’s a quick look at the legal status of cannabis across the country:
States and Jurisdictions Where Recreational Marijuana Is Legal
- Washington, D.C.
- New Jersey
- South Dakota
- New York
- New Mexico
In addition, a total of 36 states plus the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands have approved the medical use of marijuana.
Data is accurate as of July 4, 2021, unless otherwise noted, and subject to change.