Throughout 2020, tech stocks have dominated discussion within the investment community. But when it comes to high-growth potential, don’t discount cannabis…
There’s no question that expectations got way ahead of reality for the pot industry in 2019. Canada’s regulatory issues completely destroyed its chance to be the global cannabis leader. Meanwhile, high tax rates in select legalized states have constrained legal-channel sales in the United States.
But this long overdue shakeout isn’t all bad news. We’ve witnessed a handful of financially strong and operationally efficient pot stocks and ancillary players emerge in recent months.
As we enter the homestretch for 2020 and near Election Day in the U.S., here are four marijuana you should consider buying for the fourth quarter and beyond.
Green Thumb Industries
Among vertically integrated U.S. multistate operators (MSO), I’d probably anoint Green Thumb Industries (OTC:GTBIF) as the most exciting growth story of the group.
Green Thumb currently has 49 operational dispensaries, but holds enough licenses to open 96 total retail locations in a dozen states. It’s been busy opening up stores in Illinois, which officially began the sale of recreational cannabis on Jan. 1, 2020, and bought its way into the Nevada market through the acquisition of Integral Associates last year. By mid-decade, Nevada’s tourist-heavy economy should allow the Silver State to lead the country in cannabis spending per capita.
But the single most important thing about Green Thumb is that close to two-thirds of the company’s revenue is derived from derivatives (i.e., non-dried-flower product, such as edibles, vapes, and infused beverages). Dried cannabis is easily commoditized and generally produces so-so margins. Comparatively, derivatives are a higher-priced, higher-margin product that’ll play a key role in pushing Green Thumb to recurring profitability by late 2020 or early 2021.
As one last note, look for Green Thumb to be the second marijuana stock in North America, behind Curaleaf, to eventually reach $1 billion in annual recurring sales.
Planet 13 Holdings
I’m a huge fan of marijuana stocks that can stand out in a crowded industry, and U.S. MSO Planet 13 Holdings (OTC:PLNH.F) does just that.
Whereas many of its peers are planting their proverbial flags in multiple legalized states, Planet 13 has developed a business model that’s turned it into the Disneyland of cannabis. It has only one operational store at the moment, but it’s a doozy. Located just west of the Las Vegas Strip in Nevada, the Planet 13 SuperStore spans 112,000 square feet — that’s 7,000 square feet larger than the average Walmart — and includes a restaurant, events center, consumer-facing processing center, and dozens upon dozens of counters filled with dried flower, derivatives, and paraphernalia. There’s no other pot shop in the U.S. like it.
Having visited the SuperStore firsthand while on vacation in April 2019, I can attest that it’s built for success. Planet 13 has incorporated technology throughout the store, including…
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