If you’re looking for a top marijuana stock to add to your portfolio, two worth considering are Columbia Care (OTC:CCHWF) and Jushi Holdings (OTC:JUSHF). Both have been posting some strong numbers and are expecting more growth ahead. They operate in some great markets, and could become much hotter buys in the future.
Is Columbia Care, with its larger footprint across the country, the safer bet for growth investors, or would you be better off buying shares of Jushi Holdings, which is coming off an explosive performance in 2020?
The case for Columbia Care
Columbia Care is one of the top multistate operators, with 126 facilities total and licenses in 14 states and the District of Columbia. And its business continues to get bigger. Most recently, the company announced the launch of its medical marijuana operations in West Virginia. Columbia Care has also been growing its presence in Ohio; on July 2, it announced that it completed the acquisition of CannAscend, which has four dispensaries in the state. For Columbia Care, Ohio is a “top-five market” in which its sales have grown 110% year over year. It’s also a limited-license state, meaning there aren’t many dispensaries there (0.4 dispensaries per 100,000 people is minuscule compared with, for example, Oregon, which is at more than 16 dispensaries per 100,000). And in June, it completed a much larger acquisition of multistate operator Green Leaf Medical, which has operations in Maryland, Ohio, Pennsylvania, and Virginia.
There could be plenty more M&A to come from Columbia Care, as the company had cash and cash equivalents of $176 million as of the end of March — compared to just $26 million a year earlier. With long-term debt accounting for $77 million, the business has plenty of room to seek out more acquisitions if it so chooses. And the great news for investors is that some solid growth is already expected.
Columbia Care forecasts that its 2021 revenue will climb as high as $530 million, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of up to $105 million — for a margin of 20%. That would close to triple the $180 million in revenue that the company reported in fiscal 2020. Its adjusted EBITDA last year was a loss of $4 million.
Year to date, the pot stock is down 23% while the Horizons Marijuana Life Sciences ETF has risen by more than 20%. However, that could have been caused by some investors cashing out their gains — in 2020, Columbia Care’s stock soared 143% while the Marijuana Life Sciences ETF was down 10%.
The case for Jushi Holdings
Jushi operates in some of the same markets that Columbia Care does. And on July 15, it closed on a deal to acquire Ohio-based cultivator OhiGrow. However, Jushi is more focused on the Pennsylvania market, where the bulk of its retail operations are. In June, it opened its 13th Beyond/Hello location in the state (the 20th in the country).
Pennsylvania is another relatively uncompetitive market, with about 0.6 dispensaries per 100,000 people. However, the market is also more lucrative than Ohio’s; cannabis data company Headset estimates that from April 2020 to March 2021, the medical marijuana market in Pennsylvania brought in more than $900 million in revenue. Ohio, meanwhile, is less than half that size and is on track to hit more than $400 million this year.
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