When investors look back on the cannabis industry a decade from now, they’re liable to find one of the fastest growth trends on the planet. Depending on your preferred Wall Street source, legal marijuana sales could hit between $50 billion and $200 billion annually 10 years from now.
However, it may not be the best-known mid-cap cannabis stocks that lead the charge higher. Instead, I believe small-cap marijuana stocks with unique business models are poised to outperform their larger counterparts over the long run. Here are five small-cap cannabis stocks you can consider buying right now that should outperform the best-known pot stocks…
Planet 13 Holdings
Arguably the most intriguing small-cap of the bunch is vertically integrated dispensary operator Planet 13 Holdings (OTC:PLNHF), which is headquartered in Las Vegas, Nevada. Unlike most dispensary operators, which are opening as many grow farms, processing sites, and retail locations in legal U.S. states, Planet 13 is focused solely on making its stores a must-see for cannabis consumers and enthusiasts.
Just west of the Las Vegas Strip, Planet 13’s SuperStore is slated to be the largest marijuana retail store in the world at 112,000 square feet. For context, that’s larger than the typical Walmart. Aside from a huge selection of dried cannabis product and derivatives, the SuperStore will also host an events center, pizzeria, coffee shop, and consumer-facing processing center. Since opening in November, the Planet 13 SuperStore has seen its average daily visitor count more than double, with the average ticket for paying customers rising by about $12. There’s simply no other dispensary operator that can provide the experience that Planet 13 can.
Additionally, Planet 13 has done an admirable job of incorporating self-pay kiosks into its SuperStore to improve checkout speed (allthough consumers still need to wait for budtenders to package their product), and has an immaculate store layout that’s designed to drive high-margin sales. With Planet 13 being incredibly transparent with its monthly sale reports, and operating in a state that’s expected to lead all others in per-capita cannabis spending by 2024, Planet 13 looks like a good bet to outperform.
Ancillary marijuana stocks typically tackle one thing very well. In the case of KushCo Holdings (OTC:KSHB), it has a three-pronged business model that makes it unique among ancillary companies.
KushCo currently generates most of its revenue from the sale of vaporizers. Canada is set to launch derivative products — e.g., vapes, edibles, infused beverages, topicals, and concentrates — in licensed cannabis stores by mid-December. Since derivative products have significantly higher margin potential than dried cannabis flower, they’re an absolute must-have product offering for growers. And among derivative products, vapes are projected to lead the charge (at least in Canada) in aggregate sales. That puts KushCo in good position to be a leader in vaporizer sales moving forward.
Secondly, KushCo provides packaging and branding solutions to cannabis growers. Every legalized country, state, county, or locale can have differing laws on cannabis. KushCo is responsible for creating packaging that complies with those laws, as well as allows individual growers to stand out in an increasingly competitive marketplace.
Lastly, KushCo is a supplier of hydrocarbon gases and solvents, which are used in the respective production of cannabis oils and concentrates. Again, with derivatives viewed as a hot commodity, KushCo’s role as a middleman for the pot industry should allow it long-term success…
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