It’s not hard to find cannabis penny stocks. But it’s a little more challenging to find cannabis stocks that can make you a millionaire or even have the chance to turn a profit. The industry continues to face an inconsistent and uncertain regulatory environment.
For example, as recently as September 2023, the conventional wisdom suggested that the United States Drug Enforcement Association (DEA) was ready to reclassify marijuana from a Schedule I controlled substance to a Schedule III controlled substance.
The industry and investors are still waiting.
Nevertheless, hope springs eternal for some investors. And hope is the currency of penny stocks. If you have the patience and appropriate risk tolerance, here are three cannabis penny stocks that have the potential to turn a modest investment into a million dollars.
Cresco Labs (CRLBF)
As they say in sports, sometimes the best deal is the one you don’t make. That’s the broad theme that Cresco Labs (OTCMKTS:CRLBF) hopes to pitch to investors. In late 2023, the company backed away from acquiring Columbia Care. In doing so, the company prioritizes its current targeted growth strategy in its core markets instead of gaining scale.
Cresco is “on a mission to normalize, professionalize and revolutionize cannabis.” One example of this strategy is the company’s limited-edition THC-infused buffalo wing sauce. The sauce is a collaboration between the Fifty/50 sports bar in Chicago’s Wicker Park and Cresco and went on sale in select markets on February 2, 2024.
The company sells both retail and medical cannabis products in 10 states that make up the company’s core market. Furthermore, Cresco cites that it offers the industry’s #1 portfolio of cannabis brands according to its customers.
Cresco is not yet profitable; its revenue in the last two quarters is down year-over-year. However, analysts are bullish on CRLBF stock, setting a $3.32 price target with 9 out of 13 analysts offering a Strong Buy rating.
WM Technology (MAPS)
Including WM Technology (NASDAQ:MAPS) on this list of cannabis penny stocks is a reminder that the cannabis business is a business. That means in addition to the products that make their way to consumers, there are a lot of less pleasant tasks.
WM Technology provides cannabis companies with software solutions that help them deal with a complex regulatory environment. That will only become more important if, and more likely when, the legislation around cannabis becomes more favorable.
The company’s financials don’t show anything spectacular in either direction. Revenue in the first three quarters of the year is down from the prior year, but earnings paint a more mixed picture, showing the company may be gaining efficiency.
That’s one reason MAPS stock is down 31% in the last 12 months. And trading at just 99 cents a share as of this writing, it’s a stock likely to show a lot of volatility. It also isn’t heavily covered by analysts. However, the consensus price target of three analysts is $2.37, which would be a 144% gain.
GrowGeneration (GRWG)
GrowGeneration (NASDAQ:GRWG) makes this list of cannabis penny stocks that have the potential to be a millionaire maker, because it’s already done it once. Opportunistic investors that bought GRWG stock in early 2020 saw the stock rocket 800% higher. That could turn a $10,000 investment into a million dollars and more.
The problem is the stock is back to that 2020 level as the leading hydroponic and other pot cultivation equipment retailer is facing the same problems that other retailers are facing.
On the financial front, GrowGeneration is telling investors the same story as the other cannabis penny stocks on this list. Revenue is falling year-over-year, and the company, which was profitable in 2021, has dipped back into negative earnings territory. On the positive side, the losses are narrowing; the company has a cash balance on its books with no debt.
Like many cannabis companies, GrowGeneration would benefit from a cut in interest rates. Analysts remain bullish on GRWG stock with four Strong Buy ratings and a $4.37 consensus price target.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris Markoch 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.
