It’s been a wild journey for cannabis stocks in the last eight years. There have been phases of euphoria that have quickly fizzled out. Initially, it was the burden of cash burn that kept cannabis stocks depressed. This was followed by regulatory headwinds that have dented hopes of stellar growth for the sector. In my view, 2024 is another critical year for potential multibagger cannabis stocks, and there are several reasons to be optimistic.

First, some of the best cannabis companies have curbed cash burn, and with growing sales, margins will likely continue to improve. Further, there seems to be positive news on the regulatory front. Germany recently legalized cannabis, and other European countries could follow suit.

Additionally, there are calls for reclassification of cannabis as a Schedule III drug in the United States. With the presidential election around the corner, I also expect discussions related to the federal-level legalization of cannabis. These potential positives are likely to translate into a big rally for cannabis stocks.

Curaleaf Holdings (CURLF)

Curaleaf Holdings (OTCMKTS:CURLF) stock has witnessed a sharp rally of 110% in the last 12 months. In my view, this is just the beginning of a sustained upside backed by industry tailwinds and positive business developments.

Earlier this week, Curaleaf completed the acquisition of Northern Green Canada. The latter is focused on expanding in the international market through its EU-GMP certification. That will provide Curaleaf with a bigger presence in Europe coupled with inroads into markets like Australia and New Zealand.

An important point to note is that Curaleaf reported muted revenue growth last year. However, with aggressive expansion in the European medicinal cannabis market, the company expects 2024 to be a “catalyst year.”

It’s, therefore, likely that revenue growth will accelerate in the coming quarters. Even with EBITDA margin remaining stable, Curaleaf is positioned for healthy operating and free cash flows. I must add here that Curaleaf has a strong presence in the United States. Potential federal-level legalization or the reclassification of cannabis as a Schedule III drug are impending catalysts.

Cronos Group (CRON)

Cronos Group (NASDAQ:CRON) is another massively undervalued cannabis stock to buy for multibagger returns. To put things into perspective, a cash buffer of $862 million in the balance sheet is almost equal to the company’s market valuation.

Of course, that’s not the only reason to be bullish. Business developments have been positive, and a strong cash buffer implies headroom for aggressive organic and acquisition-driven growth.

An important point to note is that Cronos has been making inroads into new markets. Last year, the company entered the medicinal cannabis market in Germany and Australia. That came at the right time with Germany legalizing cannabis. Inroads into new markets are likely to ensure that revenue growth accelerates.

At the same time, Cronos has guided for positive net change in cash for 2024. The financial flexibility is, therefore, likely to remain high and will support aggressive growth plans of geographic and product portfolio expansion.

Tilray Brands (TLRY)

Tilray Brands (NASDAQ:TLRY) is another potential multibagger cannabis stock to buy. It’s worth noting that TLRY stock has remained sideways in the last six months. I expect a breakout on the upside after a consolidation backed by positive financial metrics.

Earlier this month, Tilray reported results for Q3 2024. The company achieved net revenue of $188 million, which was higher by 30% on a year-on-year basis.

It’s worth noting that international cannabis net revenue increased by 44% and the company claims to have a leading market share in Germany. With the recent legalization in the country, Tilray is positioned to accelerate growth in the medicinal and recreational segments.

Last year, Tilray focused on diversification through acquisitions. The company continues to maintain its position as the fifth-largest craft beer brewer in the United States. That also provides Tilray with a strong strategic infrastructure for expansion once cannabis is legalized at the federal level.

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.