Cannabis Investments: Industry History & Performance
A $ 25 billion industry, the cannabis industry is among the fastest-growing in the United States. According to the National Conference of State Legislatures, marijuana is legal for recreational use in 18 states and allowed for medical use in 37 states, with more states considering legislation in 2022. While cannabis investments may benefit from this growth potential, some legal hurdles remain.
For example, marijuana use remains illegal at the federal level, with no assurance of legalization at the national level any time soon. However, state legalization continues to grow, as support for legal marijuana is at a record level of 68 percent in the US, according to a recent Gallup poll.
List of Cannabis Stocks
Cannabis industry growth has produced a wide range of cannabis investments to choose from, including a combined total of over 400 stocks and exchange-traded fundsor ETFs, that either focus directly on cannabis or have indirect but significant exposure to the cannabis industry.
For example, there are 28 marijuana stocks of publicly-traded companies that provide direct exposure to the cannabis industry. However there are also stocks of companies offering indirect exposure to cannabis, such as Altria Group (MO), a company best known for its tobacco products that recently bought a stake in a multi-national cannabis company.
Top 10 Marijuana Stocks by Market Cap
How To Evaluate Marijuana Stocks
- Performance: To make our list of the best marijuana stocks, we ranked by 1-year return through March 4, 2022. Investors are wise to review long-term returns as well, including 3-, 5- and 10-year returns. Since cannabis is a relatively new and emerging industry, many publicly-traded cannabis investments have short performance histories of less than three years.
- Market capitalization: Many marijuana stocks are small-cap stocks, which range in market capitalization from $ 300 million to $ 2 billion, and some are micro-cap stocks that range from $ 50 million to $ 300 million. Small market capitalization stocks generally have higher market risk, but may have greater growth potential, compared to mid- and large-cap stocks.
- Company description: This is a description of the business, including details about how and where a company operates, and the various segments of a market in which a company specializes.
- Quant Ratings and Factor Grades: Seeking Alpha’s Quant Ratings and Factor Grades can be used for evaluating stocks or ETFs. In this article, we share what are called, “Factor Grades,” which provide letter grades for five “factors” – Valuation, Growth, Momentum, Profitability, and Revisions. To do this, Seeking Alpha compares the relevant metrics for the factor to the same metrics for the other ETFs in its asset class. The factor grades range from a high of A + to a low of F.
5 Best Marijuana Stocks By Performance
To make our list of the 5 best marijuana stocks by performance, we rank by the highest 1-year returns through March 4, 2022. Many cannabis investments have seen significant negative returns over the past year and none of them have outpaced the S&P 500 Index .
|Company Name (Ticker)||1-Yr Return|
|Innovative Industrial Properties (IIPR)||0.18%|
|22nd Century Group, Inc. (XXII)||-3.21%|
|Cara Therapeutics, Inc. (CARA)||-40.82%|
|OrganiGram Holdings Inc (OGI)||-51.06%|
|Green Thumb Industries Inc (OTCQX: GTBIF)||-51.20%|
1. Innovative Industrial Properties (IIPR)
Innovative Industrial Properties is a self-advised Maryland real estate investment trust, or REIT, focused on the acquisition, ownership and management of properties used for medical-use cannabis facilities. IIPR buys property from these facilities and leases it back to them, helping to solve cash management challenges for marijuana growers.
IIPR tops our list of best cannabis investments due to its 0.18% 1-year return as of March 4, 2022. Innovative is also the largest marijuana stock on our list, as measured by its $ 4.8 billion market capitalization.
Seeking Alpha Factor Grade Ratings: IIPR
2. 22nd Century Group, Inc. (XXII)
22nd Century Group, Inc. is an agricultural biotechnology company that focuses on enhancing health and wellness through plant science for the life science and consumer products industries. It develops very low nicotine content tobacco products and hemp / cannabis plants for medical, therapeutic and agricultural uses.
XXII finds its way on our list of top marijuana stocks with a 1-year return of -3.21%, during a time when many cannabis investments saw steep declines of 50% or more. Part of what helped 22nd Century’s performance is the FDA’s approval to market its VLN (very low nicotine) cigarettes in the US
Seeking Alpha Factor Grade Ratings: XXII
3. Cara Therapeutics, Inc. (CARA)
Cara Therapeutics, Inc. is a clinical-stage biopharmaceutical company that focuses on developing products that target the body’s peripheral nervous system and immune cells. The products treat pain, kidney disease, and liver disease. Cara Therapeutics, Inc. was founded in 2004 and is headquartered in Stamford, Connecticut.
Cara’s 1-year return is -40.82%, which is significantly negative, especially compared to a broader market index, such as the S&P 500, which is up 14.73% over the past year. Cara’s # 3 place on our list of top marijuana stocks is in part due to recent FDA approval of its IV KORSOVA product.
Seeking Alpha Factor Grade Ratings: CARA
|D +||D-||D||B||D +|
4. OrganiGram Holdings Inc (OGI)
Organigram Holdings Inc. produces and sells cannabis and cannabis-derived products in Canada. OGI’s products include medical cannabis, cannabis flowers, cannabis oils, vaporizers, cannabis edibles, and adult use recreational cannabis under the Edison Cannabis Co., Trail Blazer, SHRED, SHRED’ems, Big Bag O ‘Buds, and Monjour brands.
OGI makes our list of top cannabis investments for its 1-year return of -51.06%, which is extremely negative compared to the 14.73% gain on the S&P 500 over the past year. OGI’s relative performance above most cannabis stocks is partly due to recent growth in earnings.
Seeking Alpha Factor Grade Ratings: OGI
5. Green Thumb Industries Inc (OTCQX: GTBIF)
Green Thumb Industries Inc. engages in manufacture, distribution, and sale of various cannabis products for medical and adult-use in the United States. It offers cannabis flower, pre-rolls, concentrates, vapes, tinctures, edibles, topicals, and other cannabis-related products under the Beboe, Dogwalkers, Doctor Solomon’s, Good Green, Incredibles, and RHYTHM brands.
1-year performance for GTBIF is -51.20%, which is extremely low compared to 14.73% for the S&P 500 but still higher than the remaining 25+ marijuana stocks that are publicly traded. As of December 31, 2021, Green Thumb owned and operated 73 retail stores in the United States. The company was founded in 2014 and is headquartered in Chicago, Illinois.
Seeking Alpha Factor Grade Ratings: GTBIF
Cannabis is one of the fastest growing industries in the US and Canada. However, the industry is still in its infancy, as it faces multiple political headwinds, and many marijuana stocks have seen extreme swings in market price over the past year. Investors should use caution when considering the purchase of cannabis investments.