There’s a reason people are looking for cannabis stocks to buy now.

It is increasingly likely that marijuana will be rescheduled from a Schedule I controlled substance to a Schedule III controlled substance. 

Many of the more interesting cannabis stocks to buy now have not provided the returns that investors expected over the last few years. The realities of profitability have met initial enthusiasm. Losses continue to plague the industry.

Those losses have been substantial. I would continue to avoid those firms. Rescheduling won’t be enough to affect change.

The best cannabis stocks to buy now are the few profitable firms, picks and shovels companies, and established pharmaceutical companies with cannabis revenues. 

Green Thumb Industries (GTBIF) 

Green Thumb Industries (OTCMKTS:GTBIF) has found profitability, which makes it one of the safer cannabis stocks to buy now. 

The company reported $13 million in net income on $252 million in sales. The $252 million in sales represented a 2% sequential increase over first-quarter revenues. That’s where the firm is at: It’s not growing quickly but it is well-run.

That’s exactly what investors should search for in this sector. The growth narrative hasn’t worked. Cannabis firms have grown top-line but none of them have been able to reach profit.

Green Thumb Industries appears to be the rare, well-run exception to the rule in the weed space. The rescheduling will simply bring more attention to the firm for its profitability and that should catalyze its growth. 

Cronos Group (CRON) 

I continue to recommend Cronos Group (NASDAQ:CRON) as one of the cannabis stocks to buy now. It’s among the few large weed operations and stocks that is doing what it should.

The company is focused on streamlining its business with a pivot toward profits in mind. Losses, especially, growing losses, are out for investing in weed firms.

Evidence of a grasp on reeling in those losses and pivots toward better business are in. That’s precisely what Cronos Group is showing and precisely why it’s one of the best big cannabis stocks. 

Revenues continued to contract in Q2. While it’s difficult to spin that positively the good news is that Cronos Group continues to find operational profitability. Further, the firm’s losses are narrowing rapidly, nearly halving in H1 and declining by two-thirds in Q2. 

Cronos Group’s appeal is straightforward. Don’t look for the negative ‘gotcha’ in its financial statements. The overarching results tell the story of the firm and it’s a good story to get behind with your capital as rescheduling approaches. 

Canopy Growth (CGC)

Canopy Growth (NASDAQ:CGC) is among the more reasonable cannabis stocks to buy now to its presence and brand.

The company is the largest producer in Canada and benefits from its established network in ways that smaller firms cannot. 

Rescheduling is a U.S. concern, to be sure. Canopy’s Canadian footprint hardly matters in relation to U.S. controlled substance listing. However, the company acquired Jetty Extracts which gives it a greater U.S. presence. 

Canopy Group’s losses remain concerning. That differentiates it from the previous two firms above. However, the company beat revenue expectations by $13.7 million making it much more palatable.

Canopy Group has strong name-brand recognition that other firms do not. That still matters and gives CGC stock certain benefits. The recent buzz around rescheduling has caused share prices to jump dramatically on multiple days.

Thus, it’s still too early to count it out and investing can clearly result in quick, impressive gains. 

Scotts Miracle-Gro (SMG) 

The expected rescheduling of marijuana could be exactly the catalyst Scotts Miracle-Gro (NYSE:SMG) stock is seeking.

Most of us are very familiar with Miracle-Gro simply because of its ubiquity in relation to all things gardening and agriculture. However, the real catalyst for the company is as much from its Hawthorne Gardening business division. 

Hawthorne Gardening sells enterprise-grade hydroponic equipment and tools. Thus, it’s reasonable to expect a boom as regulations are relaxed.

That would be a welcome change at the company, given that Hawthorne has declined of late. Segment sales declined by 40% in the most recent reporting period as overall sales declined by 6%. 

The stock’s price should rise. It’s a picks-and-shovels investment that benefits from the expected regulatory easing soon. Buying SMG stock can balance defensive capital preservation with capital appreciation. It also offers a high-yield dividend in a growth-first sector absent of dividends at all. 

Jazz Pharmaceuticals (JAZZ) 

Jazz Pharmaceuticals (NASDAQ:JAZZ) is foremost, a pharmaceutical firm and stock. The company doesn’t grow or sell cannabis for recreational use.

In fact, it doesn’t sell cannabis at all. Instead, Jazz Pharmaceuticals develops a range of therapeutics based on the science of cannabinoids. The company purchased GW Pharmaceuticals for that purpose back in 2021. 

Jazz Pharmaceuticals’ pipeline includes cannabinoid-based therapeutics at 4 of the 5 stages of clinical development.

The company is among several leading pharma firms in a position to benefit from the continued development of the cannabis therapeutics sector. Its Epidiolex sales grew by 15% in Q2, reaching $202.2 million.

Not only is Epidiolex on its way to blockbuster status, but so too has the firm’s expertise in the sector become clear.

It’s reasonable to assume that Jazz Pharmaceuticals is among the best-positioned firms to commercialize cannabidiol for pharmaceutical purposes. The company upped its full-year guidance on the results. 

Bausch Health (BHC) 

Bausch Health (NYSE:BHC) is another pharma firm whose stock benefits from cannabis.

The firm sells Cesamet, a man-made form of cannabis used to treat nausea and vomiting in chemotherapy patients. Beyond that, Bausch Health sells a wide range of generic pharmaceuticals, medical devices, and over-the-counter products including eye drops. 

The narrative that favors investing in Bausch Health is similar to that for Jazz Pharmaceuticals: It’s a diversified application of cannabis that has the potential to benefit as the sector opens.

Rescheduling of cannabis as a controlled substance should catalyze rising prices. 

Further, Bausch Health is simply doing well at the moment with or without a boost on the regulatory cannabis front.

Revenues jumped 10% in Q2, reaching $2.167 billion, and the company reported net income whereas it reported a net loss a year earlier. The downside is that shares are fully priced at the moment but they could run higher anyway. 

GrowGeneration (GRWG)

GrowGeneration (NASDAQ:GRWG) is preparing for expected growth across the cannabis sector.

Right now the stock is cheap, offers attractive upside, and is characterized by improving operations. It’s another picks-and-shovels investment that is able to rise when rescheduling occurs. 

The cannabis sector is collectively pausing its spending spree in favor of improving operations. The focus on sales growth at the expense of everything else has taken a back seat to a quest for profits of late. GrowGeneration’s sales have fallen as well. 

The company is making drastic steps toward profitability itself. A year ago in the second quarter, the firm lost $136.7 million. That loss narrowed to $5.7 million this year. The company is cleaning house.

I expect that cannabis firms will reinvest in growth in anticipation of a favorable outcome in rescheduling. That promises to improve GrowGeneration’s top-line results at some point. The firm has put in the work to improve its operations and is much better run as a result. It’s now in a position to benefit on multiple fronts. 

On the date of publication, Alex Sirois 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.