• ETFMG Alternative Harvest ETF (MJ). Providing a YTD return of 34% as of early September 2021, this ETF that tracks the Alternative Harvest Index is no slouch. With an at-present highly accessible cost-per-share 0f around $16, investors wanting to try the cannabis industry on for size can do so at a low price of entry. Shares come with a steep expense ratio for a passively managed ETF, though: 0.75%.
• Constellation Brands, Inc. Class A (STZ). Spirits are Constellation’s main game, but like Altria, this company is diversifying into cannabis via investment in Canopy Growth (CGC), a Canadian cannabis producer. Holding a 38.6% share of the company, Constellation saw a substantial return on investment in 2020. While not a pure cannabis play, this analyst-favorite stock is having a heyday with a one-year return of almost 15% and a dividend yield of 1.5%.
• Altria Group Inc. (MO). You’ll know this stock best as the maker of Marlboro and one of the behemoths in the tobacco sector (along with its dabblings in the adult beverage industry). Because of that, for ESG investors, Altria’s likely not an option. For those who don’t mind the vice, the company’s making a play for cannabis, holding a substantial stake in Cronos Group, detailed above. While the stock took a substantial hit from its investment in JUUL, share prices have been near their one-year highs. Analysts have noticed and the stock comes complete with several Buy and Strong Buy ratings and a dividend yield that only stocks in this sector can bear: 7.2%.
The Best Large-Cap Stocks with Cannabis Exposure
• GrowGeneration Corp (GRWG). Back in the day, hearing “hydroponics” made you instantly think of someone growing weed in their basement. Today, hydroponics is one of the top cultivation methods for the legal cannabis industry, and GrowGeneration stands as the leading supplier of hydroponic equipment in the U.S. Offering over 50 retail centers throughout the U.S., this young company (founded in 2014) is growing by leaps and bounds. No dividends as of yet, but a P/E ratio above 104 says that growth-oriented investors might find what they’re looking for.
• AdvisorShares Pure US Cannabis ETF (YOLO). Actively managed ETFs are hard to come by, but here’s one for the cannabis sector. If you’re looking to dip a toe into cannabis, this ETF can help you get all the benefits of an actively managed mutual fund with the real-time liquidity of an ETF. A relatively new fund, it invests in mid-cap industry firms in the U.S., Canada, the U.K. and even Israel. As an active ETF, the expense ratio is high, clocking in at 0.75%.
• Global X Cannabis ETF (POTX). With the lowest expense ratio amongst the ETFs noted in this article (0.51%), this ETF also posts respectable returns in excess of 11% year-over-year in September 2021. This passively managed fund outperforms many of the actively managed funds above, making the combination of a lower expense ratio, better performance and a rare dividend yield of roughly • Scotts Miracle-Gro Co. (SMG). Where does a company best known for plant fertilizers come into the cannabis mix? If you can make backyard plants grow, odds are you can make cannabis grow. For investors looking for the proven track record of a large cap stock with a leg in the growing cannabis industry, Scotts could be a fit. It’s acquired multiple cannabis-adjacent and pure cannabis companies and even built a brand new 50,000 square foot facility for R&D to explore how their fertilizer products impact cannabis growth. With a P/E ratio around 15.7 and a 1.7% dividend yield, Scotts stands as a respectable choice for investors exploring cannabis in their portfolios..14 per share, as of writing, an attractive prospect for those looking to tap into cannabis sector growth.
The Best REIT with Cannabis Exposure
As always, you should ensure any potential investment choice aligns with your personal goals and risk tolerance. And please note, stocks and funds are listed below in alphabetical order only, by category.
• Curaleaf Holdings Inc (CURA). This Massachusetts-headquartered firm trades on the Canadian Securities Exchange. Curaleaf runs dispensaries and production facilities across 23 states, and with a CAD$10.3 billion market cap it’s one of the biggest industry players in North America. Shares are well off their February 2021 highs of CAD$23, even as the firm’s year-over-year revenue continues to gain by leaps and bounds—up more than 165% year over year in the most recent quarter.
Image source: Getty Images.
Yet another MSO with big-time growth potential is small-cap Harvest Health & Recreation (OTC:HRVSF) . After paring back some of its expansion plans in 2020 to reduce its operating expenses, Harvest Health should benefit from its home state of Arizona voting to legalize recreational marijuana this past November. No MSO has a larger presence in the Grand Canyon State. Wall Street will be looking for Harvest Health to boost its full-year sales to $368 million in 2021, and perhaps even eke out a small profit.
The fastest-growing Canadian pot stock in 2021 is forecast to be Cronos Group (NASDAQ:CRON) , with its sales nearly doubling, per Wall Street. Admittedly, Cronos’ sales have been minimal to begin with, so it’s starting off from a relatively low base. The opening of new dispensaries in key Canadian provinces (ahem, Ontario), as well as increased uptake of higher-margin derivative products (e.g., cannabis vapes, edibles, and concentrates), should be the primary growth drivers for Cronos this year.
5. Planet 13 Holdings: 94%
Image source: Getty Images.
It should be a banner year for vertically integrated cannabis operator TerrAscend (OTC:TRSSF) , as well. Like Jushi, TerrAscend’s operating model favors limited license markets, like Pennsylvania and New Jersey — the latter of which recently voted to legalize recreational marijuana. TerrAscend also has a presence in the San Francisco Bay area of California, with wholesale and retail opportunities in a high-income region of the most lucrative cannabis market in the world. Wall Street will be looking for TerrAscend’s sales to rocket from $197 million in 2020 to $369 million this year.
2. Columbia Care: 142.9%
Marijuana-focused real estate investment trust Innovative industrial Properties (NYSE:IIPR) is looking to keep its foot on the gas pedal in 2021. As of mid-December, it owned 66 properties in 17 states, with an average weighted-lease length of 16.6 years. Considering that weed is still illegal at the federal level, Innovative Industrial Properties’ sale-leaseback program has become especially popular among MSOs seeking cash. Look for IIP to continue to add new marijuana cultivation and processing sites to its portfolio this year, on its way to potentially topping $200 million in annual revenue.
Planet 13 Holdings (OTC:PLNH.F) , which is arguably the most unique MSO, slots in as the fifth-fastest-growing cannabis stock for 2021. The company’s only operational dispensary is just west of the Las Vegas Strip and spans 112,000 square feet. The Planet 13 SuperStore has seen increased foot traffic and substantially bigger tickets since opening its doors to the public in November 2018. This year, it’ll be opening a second location covering 40,000 square feet in Santa Ana, California. Like Curaleaf, and a number of other U.S. MSOs, Planet 13 also expects to turn the corner to profitability in 2021.