2022 is drawing to a close and the cannabis sector is heating up again. With marijuana regulation on the ballot, major players in the industry fundamentally changing their strategies, and many companies struggling to grow their sales, there is a maelstrom of threats and opportunities for investors.
Here are three top pot companies worth keeping an eye on in December and beyond. Even if his more ambitious plans are not realized in the coming year, there is still much to be learned from his experience.
1. Crown growth
Since his announcement in late October that he would enter the US cannabis market faster than previously planned, canopy developmentShares of K (CGC 0.57%) are up nearly 45%, and there could be more to come.
The cannabis grower’s pivot to focus on the U.S. comes as it sells its Canadian retail operations, meaning Canopy Growth will look a lot less in 2023 and beyond than investors are used to. That makes it worth a look, as more changes need to be made before it has a chance to solve the company’s twin problems of lackluster profits and falling sales.
The other factor that makes this stock worth mentioning is that its sports drink segment, BioSteel, is in full swing. Net beverage sales for the second quarter (period ended September 30) increased 299% year over year. As it continues to expand its beverage-making capabilities while gaining high-profile backing from organizations like the National Hockey League, it will come to terms with management’s view that Canopy is more of a consumer products company than a cannabis company.
Over the long term, this diversification could help it weather downturns in the marijuana market, making it a slightly juicier investment than its pure-play peers.
2. Green Thumb Industries
Industries with a green thumb (GTBIF 3.02%) is one of the few Multi-State Operators (MSOs) that is growing revenue while remaining profitable, meaning it’s a company to watch.
With third-quarter sales of $261 million — a healthy 12% year-over-year increase — the company is well positioned to double its number of retail stores in state markets with a limited number of sales and distribution licenses. The company had 77 retail locations at the end of the quarter. But there are even greater opportunities for expansion in the next few years.
Through a new real estate lease collaboration with Circle’s convenience store chain, Green Thumb plans to open small dispensaries in Circle’s Florida locations to sell its medical marijuana products. Ten such pharmacies are expected to open in 2023, but Circle’s Florida footprint includes 600 stores. So if Green Thumb’s experiment goes well next year, it could potentially grab a bigger share of the market in Florida and threaten an established competitor there. Trulive cannabisAnd that could be huge for shareholders.
3. Innovative industrial properties
innovative industrial real estate (IIPR -0.60%) is often referred to as the landlord of the marijuana industry, and the Real Estate Investment Trust (REIT) intends to expand its collection of cannabis-growing properties. On Nov. 2, the company reported that it has so far collected 97% of its expected rent in 2022, despite a default by one of its tenants, King’s Garden, earlier this year.
But with a (small) crack in the facade and the potential for more turmoil on the road to the marijuana industry, investors will likely be alert for any further signs of trouble, which is why it makes sense to keep an eye on this stock. Is.
That hasn’t stopped the company from moving forward with its strategy of conducting sale-leaseback transactions to accumulate more leasable space. That year, the company purchased nine properties and underwrote nine property improvements, totaling $368.6 million in investments.
And even with the loss of revenue from the default, total revenue for the third quarter was $70.9 million, up 32% from the year-ago quarter. With this kind of growth and the prospect of marijuana legalization on the horizon, 2023 will be another watershed year for innovative industrial real estate.
Alex Carchidi holds positions in Innovative Industrial Properties. The Motley Fool has positions in and recommends Green Thumb Industries, Innovative Industrial Properties, and Trulive Cannabis Corp. The Motley Fool has a disclosure policy.