Newly released documents indicate that the U.S. Food and Drug Administration (FDA) has “determined that cannabis has a legitimate medical use and that it should be moved from Schedule I to Schedule III on the controlled substances list.” With Presidential elections round the corner, there are hopes for federal level legalization of cannabis. Clearly, it’s a good time to buy some of the best cannabis stocks for an impending bull market.

Besides these industry factors, cannabis companies have worked towards cost cutting and plugging the cash burn. In the next 12 to 24 months, several cannabis companies will be generating positive free cash flows. Improving fundamentals is another catalyst for a bull market.

Additionally, the global medicinal cannabis market is gaining growth traction. The recent revelation from the U.S. FDA report is indicative of the point that evidence-backed medicinal cannabis is likely to have a large addressable market.

Therefore, let’s talk about three cannabis stocks that are poised for a big rally.

Tilray Brands (TLRY)

Tilray Brands (NASDAQ:TLRY) stock has cooled off after a sharp rally towards the end of last year. This is a good accumulation opportunity. Assuming a scenario where cannabis is legalized at the federal level, TLRY stock is likely to be a multibagger at the blink of an eye.

For Q2 2024, Tilray reported record revenue off $194 million. That is higher by 34% on a year over year (YOY) basis. In Canada, the company has a leading market share in recreational cannabis business. Further, TLRY’s medicinal cannabis segment has gained growth traction in international markets.

With a diversified portfolio, Tilray Brands is also the fifth largest craft beer brewer in the U.S. With acquisitions in the beverages business, the company has a strategic infrastructure for cannabis growth on possible federal level legalization.

Further, Tilray Brands expects to deliver positive adjusted free cash flow in the current financial year. As financial flexibility increases, the company will be positioned to make aggressive investments.

Cronos Group (CRON)

Cronos Group (NASDAQ:CRON) is a massively undervalued cannabis stock that seems poised for a big rally. Notably, in the last six months CRON has moved higher by 13.6%. With positive business developments, expect the positive momentum to sustain.

An obvious reason to like Cronos Group is its strong cash buffer of $840 million. The cash and equivalents are more than the company’s current market valuation. Further, in a federal level legalization scenario, CRON is positioned to make some big investments for growth.

Also, Cronos Group is gradually making inroads in the global medicinal cannabis market. In September 2023, the company commenced its medical cannabis shipments to its German distribution partner, Cansativa GmbH. Last month, the company entered the Australian cannabis market with its first shipment of cannabis flower to Vitura Health Limited. Global expansion will yield results in the coming years.

Further, Cronos Group expects net change in cash to be positive in 2024. As the cash buffer swells further, CRON stock is likely to trend higher.

Curaleaf Holdings (CURLF)

Curaleaf Holdings (OTCMKTS:CURLF) stock has zoomed by 57% in the last six months. The rally from deeply oversold levels is likely to sustain on another potential bull run for cannabis stocks.

For Q3 2023, Curaleaf Holdings reported flat revenue YOY to $333 million. However, I would look at two important points. First, adjusted EBITDA margin for the quarter was healthy at 23%. Further, CURLF reported operating and free cash flow of $47 million and $33 million respectively. With positive FCF, the company is poised to accelerate investments.

Finally, Curaleaf Holdings remains “bullish for a strong end to 2023 and an exciting 2024.” It’s likely that revenue growth will accelerate in the coming quarters and that explains the rally in CURLF stock. An important catalyst for growth is expansion in Europe besides strong presence in the U.S. Also, Curaleaf has been investing in research and development and the launch of new products will support growth.

On the date of publication, Faisal Humayun did not hold (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.