5 Marijuana Stocks to Consider Buying

As Federal law continues to argue a ban on the cultivation and use of marijuana, leaning heavily on releasing the ban, 21 states have already legalized recreational marijuana. When New York joined the legalization club, the New York Times claimed it "paves the way for a potential $4.2 billion industry."
Still, marijuana laws vary by state. But the number of states legalizing it is increasing. Only four states outlaw marijuana use completely: South Carolina, Kansas, Wyoming, and Idaho. The other states allow some type of legalized use or have decriminalized it. Most legalized usage is for medicinal purposes and requires a doctor's prescription while Colorado, for example, paved the way for fully legalized recreational sales and usage.
Interest in legalizing recreational marijuana in the United States is on the rise. Whether your state has legalized marijuana or not, marijuana is becoming big business. Marijuana Business Daily estimates the industry may reach $130 billion by 2024.
Are you considering investing? Here's what you need to know about buying marijuana stock.

What is marijuana?

Before you invest in a product or company, you should know what what the industry is about.
Marijuana, or cannabis, has two main chemicals: Delta-9 tetrahydrocannabinol (THC) and cannabidiol (CBD).
THC produces mind-altering effects and is often smoked to "get high." CBD is not mind-altering and has been found to have therapeutic effects. It is being sold in lotions and oils. Some states that allow for medicinal usage only allow it in CBD oil form.
If you're looking for more information regarding cannabis stocks of interest, check out Motley Fool's Stock Advisor service.

Marijuana stocks to consider buying

If you are thinking now is the time to invest, take a look at five marijuana stocks worth considering, listed by their name and ticker symbol.

1. Tilray Inc. (TLRY)

Aphria, based in Leamington, Canada, cultivates, processes, produces, markets, distributes, and sells medical cannabis. The company went public on April 4, 2014, becoming the first company to sell stock in pot.
By 2019, its stock rose 2,139%. In 2021, the company merged with Tilray Inc. to become the world's largest weed company by revenue. The company generated a revenue of $144.1 Million in the second quarter of 2023. Prices for shares are below $5 at press time.

2. Aurora Cannabis (ACB)

Based in Edmonton, Canada, Aurora Cannabis produces and distributes medical cannabis products worldwide. It went public in 2018 and has been struggling.
For second quarter fiscal 2023, the net revenue reported was $61.7 million, a small increase from the prior year, despite the company's plan to shift toward premium cannabis in a bid to achieve profitability by the second quarter of 2021. Prices for shares are below $5 at press time.

3. Canopy Growth (CGC)

Based in Smith Falls, Canada, Canopy Growth is the largest legal cannabis company in the world by sales and market cap. However, because cannabis wasn't legal in the U.S., it is not operating in the country in order to keep its stock exchange listing.
For its fiscal year, 2022, the company also hit some speed bumps taking in a huge loss in the year. It reported a loss of $5.23 per share. 
The Motley Fool chose Canopy as a company to benefit the most from federally legalized cannabis in the U.S. Prices for shares are below $5 at press time.

4. Cronos Group (CRON)

Toronto-based Cronos reported revenue relatively dropped from 2021 to 2022. In fourth-quarter 2022, it saw a 73% drop in revenue across the United States as compared to the prior year.
But Cronos acquired Lord Jones for $300 million in 2019. The company offers a luxury hemp-derived CBD product line that was responsible for nearly all of Cronos’ revenue growth in 2020 and continues to be its strong suit today.
Analysts think Cronos could be the fastest-growing marijuana stock over the next three years. Prices for shares are below $5 at press time.

5. Jazz Pharmaceuticals (Jazz)

GW Pharmaceuticals biopharmaceutical company, based in Cambridge, U.K., specializes in cannabinoid-based drugs such as its federally approved epilepsy drug Epidiolex, which went on the market in 2018.
This seizure medication is the only cannabis-based drug that U.S. Food and Drug Administration and European Commission both approved. Today, much of its revenue is driven by Epidiolex which is the reason behind Jazz Pharmaceuticals' acquisition of the company in the spring of 2021 and promptly watched its net product sales of Epidiolex close 2022 with $736.4 million.
Because the company is targeting specific conditions, it is considered a solid long-term stock and is the best-performing on this list. Prices for shares are just below $150 at press time.

A word of caution

As a new industry, advisors have raised flags on early investing:
  • The companies are international, meaning access to financial data could be more limited than in the U.S.
  • Several fraud investments have appeared to capitalize on the interest in marijuana stocks. The Securities and Exchange Commission has warned about investment fraud and market manipulation.

The bottom line

The revenues of companies selling marijuana products are showing there is growth but rather than seeing spikes in marijuana stock after legalization announcements, the opposite has been the case. When four states voted to legalize it in November 2020, stocks dropped, with the largest company's shares falling 10%.
Investing in marijuana will require you to pay attention to the market and the news and be cautious, but the potential is there.
To help you keep an eye on marijuana stock, consider enrolling in Motley Fool's Stock Advisor.

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