In only a few short years, cannabis has emerged as one of the next big market disruptors. Today, as billions of dollars pour into the sector, investors are keen to take part in the anticipated marijuana boom. But before you add marijuana stocks to your portfolio, consider how the legality issues that surround this product may impact profits.
Cannabis refers to plants Cannabis sativa, Cannabis indica and Cannabis ruderalis. This plant can be processed for a variety of purposes, from topical oils and food products to building materials — but it’s popularly grown and consumed for its psychoactive properties.
Cannabis legalization is a divisive subject and the laws that govern its consumption vary by state. Some states, like Washington, Vermont and California, have legalized both recreational and medical marijuana consumption. Others, like Utah, Arizona and New York, only permit marijuana consumption for medical purposes. And in many other states, cannabis consumption is not permitted in any capacity.
Cannabis stocks are shares of any company that grows, harvests, sells, manufactures or distributes cannabis, including hemp.
Marijuana vs. hemp
Unlike marijuana, hemp is not a narcotic. While hemp and marijuana both come from the cannabis plant, hemp has a lower component of the psychoactive THC — typically less than 0.3% — which means it has no psychoactive effects.
Typically, hemp is used in food products, building materials and textiles. Marijuana, on the other hand, is primarily used for medicinal and recreational purposes.
How do I buy cannabis stocks?
Choose a stock trading platform. If you’re a beginner, our table below can help you choose.
Open your account. You’ll need to provide your ID, bank account information and Social Security number.
Fund your account. Before you can start trading, you’ll need to fund your account with a bank transfer.
Search for stocks. Use a stock screener to sort and filter stocks.
Submit your order. Once you’ve found a security you’d like to buy, indicate how many you’d like to purchase and submit your order.
Monitor your investments. Log in to your brokerage account to track the performance of your portfolio.
We evaluate stock trading platforms against a range of metrics that include fees, ease of use, available securities and advanced tools to meet specific investor needs. We encourage you to compare stock platforms to find one that's best for your particular budget and goals.
Our pick for building a portfolio. We chose SoFi for this category because it offers both commission-free stocks and a free robo-advisor. That means you can open an active investing account to pick and choose companies you want to invest in, and open a robo-advisor account to help you build a portfolio and manage how much risk you take on.
Our pick for beginners. We chose Robinhood for this category because it offers commission-free trading and is easy to use. You can search for stocks by company name, and the mobile app is clean and intuitive to use.
Our pick for active traders. We picked Interactive Brokers for this category because it offers advanced tools and low fees for active investors and pros. The simpler IBKR Lite platform is aimed at less-active investors, but all users older than 21 must meet a $20,000 liquid net worth requirement for a cash account.
Cannabis stocks can be purchased directly from US exchanges. If you’re interested in international cannabis stocks, you’ll need a brokerage account that offers access to global or over-the-counter stocks.
Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.
4Front Ventures Corp. owns and manages licensed cannabis facilities in state-licensed markets in the United States. The company operates in two segments, THC Cannabis and CBD Wellness. It produces and sells cannabis and CBD. As of December 31, 2020, it operated 5 dispensaries in Massachusetts, Illinois, Michigan primarily under the MISSION brand name. In addition, the company sells equipment, supplies, and intellectual property to cannabis producers; imports and sale equipment and supplies; leases real estate properties to cannabis producers; offers consulting services; and operates cannabis dispensaries. 4Front Ventures Corp. was founded in 2011 and is headquartered in Phoenix, Arizona.
Market capitalization: $914661184
Dividend yield: 0%
AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals in the worldwide. The company offers HUMIRA, a therapy administered as an injection for autoimmune and intestinal Behçet's diseases; SKYRIZI to treat moderate to severe plaque psoriasis in adults; RINVOQ, a JAK inhibitor for the treatment of moderate to severe active rheumatoid arthritis in adult patients; IMBRUVICA to treat adult patients with chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma, waldenström's macroglobulinemia, marginal zone lymphoma, and chronic graft versus host disease; VENCLEXTA, a BCL-2 inhibitor used to treat adults with CLL or SLL; and MAVYRET to treat patients with chronic HCV genotype 1-6 infection. It also provides CREON, a pancreatic enzyme therapy for exocrine pancreatic insufficiency; Synthroid used in the treatment of hypothyroidism; AndroGel for males diagnosed with symptomatic low testosterone; Linzess/Constella to treat irritable bowel syndrome with constipation and chronic idiopathic constipation; Lupron for the palliative treatment of advanced prostate cancer, endometriosis and central precocious puberty, and patients with anemia caused by uterine fibroids; and Botox therapeutic. In addition, the company offers ORILISSA, a nonpeptide small molecule gonadotropin-releasing hormone antagonist for women with moderate to severe endometriosis pain; Duopa and Duodopa, a levodopa-carbidopa intestinal gel to treat Parkinson's disease; Lumigan/Ganfort, a bimatoprost ophthalmic solution for the reduction of elevated intraocular pressure (IOP) in patients with open angle glaucoma (OAG) or ocular hypertension; Ubrelvy to treat migraine with or without aura in adults; Alphagan/ Combigan, an alpha-adrenergic receptor agonist for the reduction of IOP in patients with OAG; and Restasis, a calcineurin inhibitor immunosuppressant to increase tear production. The company was incorporated in 2012 and is based in North Chicago, Illinois.
Altria Group, Inc., through its subsidiaries, manufactures and sells cigarettes, oral tobacco products, and wine in the United States. It offers cigarettes primarily under the Marlboro brand; cigars principally under the Black & Mild brand; and moist smokeless tobacco products under the Copenhagen, Skoal, Red Seal, and Husky brands, as well as provides on! oral nicotine pouches. The company also produces and sells varietal and blended table wines, and sparkling wines under the Chateau Ste. Michelle and 14 Hands names; and imports and markets Antinori, Torres, and Villa Maria Estate wines, as well as Champagne Nicolas Feuillatte in the United States. In addition, it provides finance leasing services primarily in transportation, power generation, real estate, and manufacturing equipment industries. The company sells its tobacco products primarily to wholesalers, including distributors; and large retail organizations, such as chain stores. Altria Group, Inc. was founded in 1822 and is headquartered in Richmond, Virginia.
Amyris, Inc., a synthetic biotechnology company, operates in the clean health and beauty markets through its consumer brands and as a supplier of sustainable and natural ingredients in Europe, the United States, Asia, Brazil, and internationally. It manufactures and sells products for the health and wellness, clean beauty, and flavor and fragrance markets. The company operates under the Amyris, Biofene, Biossance, Pipette, Purecane, and No Compromise trademarks. Amyris, Inc. has a collaboration agreement with the Infectious Disease Research Institute to advance a novel ribonucleic acid vaccine platform, including accelerating the development of a COVID-19 vaccine. The company was formerly known as Amyris Biotechnologies, Inc. and changed its name to Amyris, Inc. in June 2010. Amyris, Inc. was incorporated in 2003 and is headquartered in Emeryville, California.
Aphria Inc. cultivates, processes, produces, markets, distributes, and sells medical cannabis in Canada and internationally. The company offers pharmaceutical-grade medical cannabis, adult-use cannabis, and cannabis-derived extracts and derivative cannabis products under the Solei, RIFF, Good Supply, Aphria, P'tite Pof, and Broken Coast brands. It serves patients and consumers through distributors and online. The company is headquartered in Leamington, Canada.
Aurora Cannabis Inc. produces and distributes medical cannabis products worldwide. It is vertically integrated and horizontally diversified across various segments of the cannabis value chain, including facility engineering and design, cannabis breeding, genetics research, production, derivatives, high value-add product development, home cultivation, wholesale, and retail distribution. The company produces various strains of dried cannabis, cannabis oil and capsules, and topical kits for medical patients. It also sells vaporizers; consumable vaporizer accessories, including valves, screens, etc.; and herb mills for using CanniMed herbal cannabis products, as well as grinders and vaporizer lockable containers. In addition, the company engages in the development of medical cannabis products at various stages of development, including oral, topical, edible, and inhalable products; and operation of CanvasRX, a network of cannabis counseling and outreach centers. Further, it provides patient counselling services; design and construction services; and cannabis analytical product testing services. The company's brand portfolio includes Aurora, Aurora Drift, San Rafael '71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler, Woodstock, and ROAR Sports. Aurora Cannabis Inc. is headquartered in Edmonton, Canada.
Canopy Growth Corporation, together with its subsidiaries, engages in the production, distribution, and sale of cannabis for recreational and medical purposes primarily in Canada, the United States, Germany, and the United Kingdom. It operates through two segments, Cannabis, Hemp and Other Consumer Products; and Canopy Rivers. The company's products include dried cannabis flowers, oils and concentrates, and softgel capsules. It offers its products under the Tweed, Quatreau, Deep Space, Spectrum Therapeutics, First & Free, TWD, This Works, BioSteel, DNA Genetics CraftGrow, Tokyo Smoke, DOJA, Van der Pop, and Bean & Bud brands. The company also provides growth capital and a strategic support platform that pursues investment opportunities in the global cannabis sector. Canopy Growth Corporation has a clinical research partnership with NEEKA Health Canada and NHL Alumni Association to examine the efficacy of CBD-based therapies as part of the mitigation of persistent post-concussion symptoms. As of February 14, 2020, it operated 28 cannabis retail stores under the Tweed or Tokyo Smoke name. The company was formerly known as Tweed Marijuana Inc. and changed its name to Canopy Growth Corporation in September 2015. Canopy Growth Corporation is headquartered in Smiths Falls, Canada.
Compass Diversified is a private equity firm specializing in add on acquisitions, buyouts, industry consolidation, recapitalization, late stage and middle market investments. It seeks to invest in niche industrial or branded consumer companies, manufacturing, distribution, consumer products, business services sector, safety & security, electronic components, food, foodservice. The firm prefers to invest in companies based in North America. It seeks to invest between $100 million and $800 million in companies with an EBITDA between $15 million to $80 million. It seeks to acquire controlling ownership interests in its portfolio companies and can make additional platform acquisitions. The firm prefer to have majority stake in companies. The firm invests through its balance sheet and typically holds investments between five to seven years. Compass Diversified was founded in 2005 and is based in Westport, Connecticut with an additional office in Irvine, California.
Cronos Group Inc. operates as a cannabinoid company. It manufactures, markets, and distributes hemp-derived supplements and cosmetic products through e-commerce, retail, and hospitality partner channels under the Lord Jones and Happy Dance brands in the United States. The company is also involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets. It sells cannabis and cannabis products, including dried cannabis, pre-rolls, and cannabis extracts through wholesale and direct-to-client channels under its wellness platform, PEACE NATURALS; and operates under two adult-use brands, COVE and Spinach. The company also exports dried cannabis and cannabis oils to Germany, Israel, and Australia. Cronos Group Inc. was founded in 2012 and is based in Toronto, Canada.
Curaleaf Holdings, Inc. operates as an integrated medical and wellness cannabis operator in the United States. It operates in two segments, Cannabis Operations and Non-Cannabis Operations. The Cannabis Operations segment engages in the production and sale of cannabis through retail and wholesale channels. The Non-Cannabis Operations segment provides professional services, including cultivation, processing, and retail know-how and back office administration, intellectual property licensing, real estate leasing services, and lending facilities to medical and adult-use cannabis licensees under management service agreements. It offers oil-based formulations, such as vaporizing, cartridges, tinctures, and capsules; and ground-flower. The company also provides hemp-based CBD products. As of March 9, 2021, it operated 101 dispensaries, 23 cultivation sites, and 30 processing sites in 23 states of the United States. The company was founded in 2010 and is headquartered in Wakefield, Massachusetts.
Market capitalization: $8718283776
Dividend yield: 0%
Green Thumb Industries Inc. manufactures, distributes, and sells various cannabis products for medical and adult-use in the United States. It offers cannabis flower; and processed and packaged products, including concentrates, edibles, and topical and other cannabis products under the Rythm, Dogwalkers, The Feel Collection, incredibles, Dr. Solomon's, Beboe, and other brands. The company distributes its products primarily to third-party retail stores, as well as sells finished products directly to consumers in its own retail stores. As of March 25, 2021, it owned and operated 55 retail stores in the United States. The company was founded in 2014 and is headquartered in Chicago, Illinois.
Market capitalization: $6326969344
P/E ratio: 408.1429
Dividend yield: 0%
GW Pharmaceuticals plc, a biopharmaceutical company, focuses on discovering, developing, and commercializing novel therapeutics from its proprietary cannabinoid product platform in various disease areas. Its lead product is Epidiolex, an oral medicine for the treatment of seizures associated with Lennox-Gastaut syndrome, Dravet syndrome, or tuberous sclerosis complex. The company also develops and markets Sativex for the treatment of spasticity due to multiple sclerosis. In addition, it develops various product candidates for the treatment of schizophrenia, autism spectrum disorder, neuropsychiatric symptom, and neonatal hypoxic ischemic encephalopathy. It primarily operates in Europe, the United Kingdom, the United States, and internationally. GW Pharmaceuticals plc was founded in 1998 and is based in Cambridge, the United Kingdom.
Harvest Health & Recreation Inc. cultivates, processes, sells, and retails inhalable, ingestible, and topical cannabis products in the United States. The company offers cannabis oil products; inhalables, including flower, dabbable concentrates, pre-filled vaporizer pens, and cartridges; and capsules, tinctures, and cannabis product edibles, including chocolates, gummies, mints, fruit chews, and dissolvable mouth strips under the brands of Avenue, CBX SCIENCES, EVOLAB, ALCHEMY, CHROMA, CO2LORS, GOODSUN, MODERN FLOWER, and ROLL ONE. It also operates retail dispensaries that sell proprietary and third-party cannabis products to patients and customers; and provides support services and financing to a Utah licensed medical cannabis cultivator. Harvest Health & Recreation Inc. was founded in 2011 and is headquartered in Tempe, Arizona.
Market capitalization: $1140055552
Dividend yield: 0%
HEXO Corp., through its subsidiaries, produces, markets, and sells cannabis in Canada. It offers dried cannabis under the Time of Day and H2 lines; Elixir, a cannabis oil sublingual mist product line; and Decarb, an activated fine-milled cannabis powder product. The company offers its adult-use and medical products under the HEXO brand name. Additionally, it offers cannabis beverages under the Little Victory, House of Terpenes, Mollo, Veryvell, and XMG brand; and cannabis products under Original Stash and Up brand names. The company was formerly known as The Hydropothecary Corporation and changes its name to HEXO Corp. in August 2018. HEXO Corp. was founded in 2013 and is headquartered in Kanata, Canada.
Organigram Holdings Inc., through its subsidiaries, produces and sells cannabis and cannabis-derived products in Canada. It offers cannabis flowers, extracts, edibles and oils, beverages, and other cannabis products for adult recreational market under the Edison Reserve, Edison Cannabis Co., ANKR Organics, and Trailblazer brands; and medical cannabis products, including strains, cannabis oils, extracts, edibles, beverages, and vaporizers for the medical market. The company also engages in the wholesale shipping of cannabis plant cuttings, dried flowers, blends, pre-rolls, and cannabis derivative based products to retailers and wholesalers for adult-use recreational cannabis. It sells its products through online, as well as telephone channels. Organigram Holdings Inc. was founded in 2013 and is headquartered in Moncton, Canada.
TerrAscend Corp. cultivates, processes, and sells medical and adult use cannabis in Canada and the United States. It produces and distributes hemp-derived wellness products to retail locations; and manufactures cannabis infused artisan edibles. The company also operates three retail dispensaries under the Apothecarium brand name in California and Pennsylvania. The company was incorporated in 2017 and is based in Mississauga, Canada.
Market capitalization: $1825385984
Dividend yield: 0%
Tilray, Inc. engages in the research, cultivation, processing, and distribution of medical cannabis. The company offers its products to patients, physicians, clinics, pharmacies, governments, and hospitals; and for researchers for commercial purposes, as well as compassionate access and clinical research applications. It operates in Argentina, Australia, Canada, Chile, Croatia, Cyprus, Germany, Israel, New Zealand, Portugal, Spain, Africa, Switzerland, the United States, Malta, and the United Kingdom. The company was incorporated in 2018 and is headquartered in Nanaimo, Canada.
Trulieve Cannabis Corp., together with its subsidiaries, operates as a medical cannabis company. The company cultivates and produces products in-house and distributes its products to Trulieve branded stores (dispensaries) in Florida, California, Massachusetts, Connecticut, Pennsylvania, and West Virginia, as well as directly to patients through home delivery. It produces approximately 550 stock keeping units, including flower, edibles, vaporizer cartridges, concentrates, topicals, capsules, tinctures, dissolvable powders, and nasal sprays. As of April 07, 2021, the company operated through 84 dispensaries in the United States. The company is headquartered in Quincy, Florida.
Market capitalization: $4578689536
P/E ratio: 73.4906
Dividend yield: 0%
Village Farms International, Inc., together with its subsidiaries, produces, markets, and distributes greenhouse-grown tomatoes, bell peppers, and cucumbers in North America. It operates through three segments: Produce Business, Energy Business, and Cannabis and Hemp Business. The company also owns and operates a 7.0 megawatt power plant that generates and sells electricity to British Columbia Hydro and Power Authority; and produces and supplies cannabis products. It markets and distributes its products under the Village Farms brand name to retail supermarkets and fresh food distribution companies, as well as products produced under exclusive arrangements with other greenhouse producers. The company was formerly known as Village Farms Canada Inc. and changed its name to Village Farms International, Inc. in December 2009. Village Farms International, Inc. was founded in 1989 and is headquartered in Delta, Canada.
ETFs contain a bundle of stocks, usually hundreds, and these often track an index of stocks. There are a handful of cannabis ETFs listed in the US.
AdvisorShares Pure Cannabis ETF (YOLO)
Cambria Cannabis ETF (TOKE)
ETFMG Alternative Harvest (MJ)
Horizons Marijuana Life Sciences (OTC:HMLSF or TSX:HMMJ)
The Cannabis ETF (THCX)
Why invest in cannabis stocks?
Despite its lack of legality in numerous states, cannabis is a popular product. And state-level government is becoming more open to its use.
Medical marijuana was first legalized in California in 1996. And in 2012, Colorado and Washington became the first states to legalize the plant’s recreational use. Today, recreational marijuana is legal in 11 states and medical marijuana is permitted in 33 states.
As more states become accepting of medical and recreational marijuana use, the cannabis market grows. And as the cannabis market grows, so do sales, profits and company valuations.
The shift in attitude towards cannabis isn’t limited to the US. In 2018, Canada legalized recreational marijuana use across the country. And other international governments are reassessing their cannabis laws too, potentially paving the way for an explosion of new businesses.
Statista reports that in 2018, the global cannabis sector was worth $13.8 billion. By 2025, it predicts the sector will swell to $43 billion. The cannabis market is one poised for growth — and for investors, growth means profit.
Risks of investing in cannabis
Positive growth projections aside, cannabis may not be a practical addition to your portfolio. And that’s because this sector is riddled with risks — many of which stem from the legality issues that surround the product.
As laws that surround the legalization of recreational marijuana continue to shift, investors must be wary about how high tax rates could impact the market. Tax rates have the potential to cripple cannabis providers in states that allow recreational marijuana because of how high consumers are taxed.
For example, in California consumers are taxed close to 45% for recreational cannabis. With taxes that high, it’s little wonder that Golden State consumers turn to the black market to purchase their product, leaving cannabis providers high and dry.
Financing for cannabis companies is also a concern, as cannabis companies are seen as high-risk merchants in the eyes of many financial institutions. As a result, many of these banks aren’t willing to provide essential banking services and funding must be found elsewhere. One way cannabis companies can raise funds is to issue common stock, but this dilutes the holdings of existing investors.
Overall, the cannabis market seems to be gaining traction. And for investors that can tolerate risk, this is an exciting prospect. But ultimately, the variables that factor into the profitability of this market are constantly in flux — and this sort of instability can lead to price volatility.
Market projections for Cannabis stocks
The global cannabis market as a whole is expected to grow and it may gain significant traction in the U.S., where its legality remains contended at the federal level. The market value of the cannabis industry in the U.S. is projected to climb to $30 billion annually by 2025, according to New Frontier Data.
More U.S. states have aimed at relaxing laws around its usage. New Jersey, Arizona, Montana and South Dakota in December 2020 approved ballot measures to legalize recreational use of marijuana. However, marijuana stocks fell following this news as federal elections remained in question. The MORE Act which would decriminalize marijuana at the federal level passed the House in December 2020. But its future is foggy. So it’s important to carefully analyze cannabis stocks to find where the potential long-term winners may be.
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While smoking weed is perhaps the most well-known use of cannabis, there are many types of businesses that are positioned to benefit from the growing sector. As more cannabis products are given the green light, we’ll see the market continue to expand. The legalization of many of these products is new and in some cases, still underway:
Medicinal products. Medicinal cannabis is used for the treatment of cancer pain, epilepsy, palliative care, chemotherapy nausea, neuropathic pain, anorexia and neurological conditions. Cannabidiol, also known as CBD, is a derivative of the marijuana plant that’s become increasingly popular for medical uses in recent years.
Research. The scientific study of marijuana has accelerated in recent years with the discovery of many other beneficial compounds besides the psychoactive THC.
Recreational use. Marijuana as a recreational drug is still illegal or restricted in many states. That said, legalization of both recreational and medical marijuana continues to roll out across the US. The plant is consumed to achieve feelings of relaxation or euphoria, but negative side effects have been reported, including headache, dizziness, nausea, delusions and hallucinations. Long-term use of the substance may cause cannabinoid hyperemesis syndrome (CHS).
Food products. Hemp is used as an ingredient in a range of products, including cooking oils, snacks, protein powder, cooking flour and more. The sale of food products made from hemp seeds was authorized under the Agriculture Improvement Act of 2018.
Building materials. Hemp is used in insulation and building construction materials under several names, including hempcrete, hemp masonry and hemplime.
Clothing. Hemp is broadly recognized as one of the most sustainable materials available in the manufacture of clothing.
Beauty products. Hemp is commonly used in various health and beauty products, such as moisturizers, lip balm, makeup and skin oils.
Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
The legal cannabis sector is positioned to grow in the coming years and there are a number of ways to invest. But keep in mind that past performance is not a guarantee of profit and all investments come with inherent risks.
Yes, it’s legal to buy cannabis stocks, regardless of whether the consumption of recreational or medical marijuana is legal in your state. When you purchase a stock, you purchase a slice of ownership in a company — not the product itself.
As of this writing, AbbVie, Altria, Aurora Cannabis and Compass Diversified Holdings all pay dividends to investors.
Shannon Terrell is a senior writer for Finder who has written over 400 personal finance guides. With a focus on investments and personal finance, she breaks down jargon-laden topics to help others make informed financial decisions. She studied communications and English literature at the University of Toronto.
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