Last week ended on an excellent note for the cannabis sector. On Thursday, Oct. 6, President Joe Biden announced a nationwide pardon for the thousands of individuals convicted of simple marijuana possession. Additionally, he urged governors to issue similar pardons at the state level. This decision has the potential to impact thousands of lives, but it doesn’t stop there. Biden also instructed Secretary of Health and Human Services Xavier Becerra and Attorney General Merrick Garland to conduct a review of the classification of marijuana under federal drug laws. Pot stocks surged after the news broke as companies anticipate the loosening of cannabis regulations.
Biden’s actions represent a significant step forward. While the momentum has not extended into this week, pot stocks have the potential to demonstrate significant growth if Biden’s push toward federal legalization continues.
Let’s take a look at the top pot stocks that investors should be watching.
| CRON | Cronos Group | $2.98 |
| CURLF | Curaleaf Holdings | $6.14 |
| TLRY | Tilray | $3.19 |
Cronos Group (CRON)
All pot stocks have been turbulent since the latest rally driven by the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. But while many of its peers were on a steady downward trajectory, Cronos (NASDAQ:CRON) has worked hard to stay elevated.
Over the past six months, CRON stock has fallen less than 20% while some competitors have fallen more than 50%. While its overall history has been quite volatile, experts have long been touting its potential. InvestorPlace contributor Faisal Humayun sees it as an undervalued company that investors shouldn’t ignore.
Although Humayun sees the medical marijuana field as an important growth catalyst for CRON, he also likes its diversified product portfolio. Cronos has been growing its international operations well. In May 2022, it reported that net revenue from Israel had seen a 263% year-over-year increase, exceeding $9 million in Q1 2022. As Humayun reported, “Cronos also has a presence in the U.S. with hemp-derived consumer products and cosmetics.”
This will give it a competitive edge if the U.S. progresses on its path toward federal legalization.
Curaleaf Holdings (CURLF)
This U.S.-based company doesn’t receive as much coverage as its competitors. However, there are plenty of reasons why Curaleaf (OTCMKTS:CURLF) belongs on a list of stocks to buy for a pro-cannabis economy.
The company is based in Massachusetts, making it a rare breed in a sector dominated by Canadian companies. But its location will give Curaleaf the edge it needs to beat its competitors to the top. If marijuana is legalized at the federal level, companies based in the U.S. will have the home field advantage. According to the company’s website, Curaleaf has an established presence in 21 states, owning and operating more than 140 dispensaries and 29 cultivation venues. This includes many densely populated states, including New York, New Jersey and Florida.
Curaleaf has also outperformed many of its peers throughout 2022. Down less than 15% for the past six months, it has done better than CRON so far and looks poised to keep rising. In the past year, it has demonstrated strong top-line growth with “20% of second quarter 2022 revenue generated by new products launched in the last 12 months.”
All this points toward a company that is well-positioned to meet a surge in demand.
Tilray (TLRY)
At just over $3 per share, Tilray (NASDAQ:TLRY) may be trading at penny stock levels. But experts like Humayun see it as a long-term growth stock that will surge upon federal cannabis legalization. “Considering an optimistic scenario of legalization, TLRY stock is the best cannabis stock to buy,” Humayun wrote.
Humayun isn’t the only one who remains highly bullish on it, either. Institutional investors such as Morgan Stanley (NYSE:MS) and Vanguard are among the stock’s top holders.
Tilray also has a strong international presence. Its subsidiaries span Europe, Canada and Australia as well as Latin America. The company is a leader in the field of medical cannabis and its reach is continuously expanding. And despite facing legal and regulatory hurdles from the U.S., Tilray has worked hard to find loopholes. In August 2021, it announced a “complicated deal for convertible debt in cannabis retailer MedMen Enterprises.” This will allow the large player to have its foot firmly in the door.
If the U.S. continues moving toward federal legalization, Tilray’s expansion initiatives will leave it well-positioned to conquer the market.
On the date of publication, Samuel O’Brient 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.
