8 Best Cannabis Stocks to Buy in 2025

Cannabis stocks have tumbled to multi-year lows recently due to setbacks in the removal of regulatory hurdles. Investors who believe in the eventual federal legalization of marijuana, though, may see this as an opportunity to snap up these stocks at a discount and reap the rewards when further regulatory shifts occur.

The potential for growth in the industry is enormous. Cannabis market research company BDSA sees worldwide cannabis sales expanding to $58 billion in the next five years from an estimated $36 billion in 2023, at a compound annual growth rate of 10%. Given that potential, it makes sense to invest in some cannabis stocks now while they are cheaper. We have picked 8 pot stocks that are in a strong position to weather the storm. See our shortlist below:

The top American cannabis companies to invest in right now

Here’s an overview of our top picks. Based in the US or Canada, all of these marijuana stocks trade on US stock markets.

Green Thumb Industries: The leading cannabis company that operates in multiple US states, focusing on cultivation, processing, and distribution of cannabis products.
NewLake Capital Partners: The REIT specializes in providing real estate capital to state-licensed cannabis operators through sale-leaseback transactions, third-party purchases, and build-to-suit projects.
OrganiGram Holdings: It’s a licensed cannabis producer in Canada, known for its high-quality medical and recreational cannabis products.
Jazz Pharmaceuticals: The biopharmaceutical firm develops and sells products for various medical conditions, including sleep disorders and cancer. One of its leading therapies is based on cannabidiol, an active ingredient in marijuana.
Innovative Industrial Properties: The US-based company is a real estate investment trust (REIT) that specializes in acquiring and leasing properties to licensed cannabis operators.
Tilray Brands: The pharmaceutical and cannabis lifestyle company cultivates, processes, and distributes medical cannabis products in North America and Europe.
Scotts Miracle-Gro: A leading company in the lawn and garden industry, Scotts provides products and services for lawn care, gardening, and pest control and has a subsidiary that caters to cannabis growers.
Cronos Group: The cannabis company cultivates, processes, and distributes cannabis products, with operations in Canada and international markets.

An in-depth look at these 8 marijuana stocks to buy

Let’s explore the investment case for the marijuana stocks included in our list in detail. These cannabis companies are already profitable or at least clearly headed in that direction. They have also shown revenue growth in their most recent quarterly report.

1. Green Thumb Industries: Profitable pure-play pot stock showing slow determined growth

The Chicago-based retailer and grower is one of the most consistently profitable pure-play cannabis companies. Established a decade ago, Green Thumb Industries (OTC: GTBIF) sells its brands (Shine, Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles and RYTHM) at other retailers as well as at its 98 RISE dispensaries across 14 US states. In the third quarter, it opened three new retail outlets in Florida and one in New York.

The company reported third-quarter revenue of $287 million, up 4.2%. Net income fell slightly from $10.5 million to $8.6 million, but the company is still on track to be profitable for a fifth consecutive year. Green Thumb stands out from its peers because of its solid financials, including a relatively low level of debt.

That the stock may be undervalued was illustrated by the company beginning a $50 million share repurchase program in September. The company also recently teamed with dessert chain Magnolia Baker to offer THC-infused products to customers 21 and over, with the THC coming from hemp, which is legal in the US.

The company is in a stronger position than other larger cannabis retailers of being able to survive until there’s some level of decriminalization at the federal level in the US. Company president Ben Kovler said he sees the industry growing into at least a $62 million one in the US.

2. NewLake Capital Partners: Cannabis REIT with attractive yield, growing profitability

Based in New Canaan, Connecticut, the real estate investment trust (REIT) primarily provides capital to state-licensed cannabis operators through sale-leaseback deals and by funding construction projects. NewLake owns a portfolio of 32 cannabis facilities, including cultivation sites and dispensaries, which are leased to single tenants under triple-net lease agreements. It’s a relatively new REIT as it was established in 2019 and began trading over the counter after its initial public offering in 2021.

One of the primary attractions for Newlake, as with many REITs, is its dividend. It has raised its quarterly dividend each of the four years since it went public, including a 4.6% boost this year to $0.43, equaling a yield of 8.95%. Even with that high yield, the payout ratio is only 84%, well within the safety guidelines for a REIT, which is required to distribute at least 90% of taxable income.

The biggest concern about the REIT is that two of its clients, Revolutionary Clinics and Calypso Enterprises have struggled to pay rent, but even with those two factored in, the company collected 97% of contracted rent in the third quarter.

In the third quarter, NewLake had revenue of $12.6 million, up 9.3%, year over year. One of the best measures of a REIT’s profitability is adjusted funds from operations (AFFO) and AFFO per share. While net income is important, it can be misleading for REITs due to non-cash expenses and the cyclical nature of the real estate industry. NewLake’s AFFO rose 6.7% from the same period a year earlier, to $10.8 million. AFFO per share was $0.51, up 8.5% year over year.

3. OrganiGram Holdings: Profitable cannabis company, focusing on growing brands

OrganiGram (NASDAQ: OGI), based in Toronto, is a producer of cannabis and cannabis-derived products in Canada. It doesn’t own any dispensaries but sells its indoor-grown cannabis through other retailers for recreational and medical use. It’s known for its brands, including Edison, Holy Mountain, Big Bag O’ Buds, SHRED, Monjour and Trailblazer.

Its US $63.6 million purchase of Motif Labs, announced on Dec. 6, makes it, according to OrganiGram, Canada’s largest pure play cannabis company by market share, and adds additional brands. Motif, based in Ontario, makes cannabis concentrates, extracts, topicals and vapes.

In the third quarter, the company reported that revenue grew 25% year over year, to CAD $41.1 million. It also saw net income of CAD 2.8 million, compared to a net loss of CAD $213.5 million in the same period of the previous year.

Thanks to a big investment by British American Tobacco (NYSE: BTI), Organigram is expanding its presence in Europe and the US in a plan to gain market share. It’s invested in Roxboro, North Carolina-based cannabis wholesaler Open Book Extracts and it spent CAD $21 million to invest in German cannabis company Sanity Group. It now has supply agreements with seven partners in Germany, UK, Australia and Israel and said it’s looking at more global partnership opportunities. The cannabis company is funding a strategic investment tool it calls Jupiter to help deliver its expansion efforts overseas and in the US.

4. Jazz Pharmaceuticals: Drugmaker using cannabis products for medicine

The Dublin-based pharmaceutical company focuses on medicines to treat sleep disorders and epilepsy and is growing its portfolio of cancer treatments. It inherited cannabis-based therapies when it bought GW Pharmaceuticals in 2021 for $7.2 billion.

In the third quarter, Jazz Pharmaceutical (NASDAQ: JAZZ) revenue rose 9% to $1.05 billion compared to the same period a year earlier, while net income was up 46.5% year over year to $215.1 million, and EPS was up 59.8% over the same period the year before to $3.42. The company reiterated its annual revenue guidance of between $4 billion and $4.1 billion and increased its annual EPS estimates to be between $6.70 and $8.50 compared to earlier projections of between $6 and $8. The reason for the optimism is increased sales for Xywav, used to treat excessive daytime sleepiness, and Epidiolex/Epidyolex, an oral based cannabidiol therapy to treat epileptic seizures.

The company’s cancer therapies are showing progress as well. In October, it announced positive Phase 3 trial results for Zepzelca as a combination therapy to treat extensive-stage small cell lung cancer. It also got approval from the US Food and Drug Administration for Ziihera as a treatment for a type of biliary tract cancer.

5. Innovative Industrial Properties: Cannabis REIT with solid dividend, steady cash flow

It’s the largest cannabis REIT and owns $2.5 billion worth of real estate, with 108 properties spread across 19 states and 30 tenants. It was founded in 2016 to provide capital to legal cannabis companies and is the publicly traded cannabis REIT on the NYSE (NYSE: IIPR). Its business model is that of a triple-net lease operator, meaning that it doesn’t have any recurring capital expenditures during its long-term leases with all property expenses paid by the tenants, including capital repairs, property taxes and property insurance.

Innovative has improved its AFFO per share every year while growing its dividend. It has a low debt-to-equity ratio of 0.15x, giving it plenty of liquidity to continue to grow.

In the third quarter, the company reported AFFO through nine months of $192.8 million, up 0.003%, year over year and revenue was $231.7 million, up 0.006% over the same period a year earlier and revenue rose slightly. AFFO per share was $6.75 per share, down 0.007%, year over year. Of its 105 operating properties, 95.7% were leased, with an average remaining lease term of 14 years.

That means the company has steady cash flow, which has enabled it to increase its dividend every year since it instituted one in 2017. It recently raised its dividend by 5% to $1.90, which equals a yield of 7.17%. The AFFO payout ratio is 84%, well within the safety confines of a REIT, which are required to pay out 90% of its taxable income to investors.

6. Tilray Brands: Cannabis stock with diverse revenue sources, including craft beer

Tilray’s headquarters are in Nanaimo, British Columbia, Canada. Founded in 2013, the company has operations in 20 countries in North America, Europe, Latin America and Australia. What sets it apart from other cannabis retailers is it doesn’t own dispensaries as it focuses on producing and distributing cannabis products, as well as other consumer packaged goods, through other channels. Its Tilray Medical division focuses on providing access to its global portfolio of medical cannabis brands, including Tilray, Aphria, Broken Coast, Symbios and Navcora.

Tilray has an edge over pure-play cannabis retailers because it’s the fifth-largest craft beer brewer in the US. In September, it added to its portfolio of craft beers with a purchase of three craft brands (Hop Valley Brewing Company, Terrapin Beer Co., and Revolver Brewing) from Molson Coors (NYSE: TAP).

Tilray’s stock fell in November to a 52-week low, despite improving financials, as part of the larger trend affecting cannabis industry shares.

In the first quarter of fiscal 2025, the company said its revenue grew 13% year over year to $200 million, while its net loss shrank by 38% to $34.7 million. Net loss per share was $0.01, compared to a per-share loss of $0.04 in the same period in 2024.

The company made nearly as much money in the quarter from beverage sales ($56 million) as it did from cannabis sales ($61.2 million).

7. Scotts Miracle-Gro: Cannabis-growing equipment and lawn retailer sees improved revenue, profitability

Scotts Miracle-Gro Company (NYSE: SMG), based in Marysville, Ohio, is the world’s largest marketer of branded consumer lawn and garden products as well as a leader in indoor and hydroponic growing products used by cannabis companies and individual growers, sold by its Hawthorne hydroponics segment.

The company is in the midst of what it says is a three-year turnaround and so far this year, its stock is up more than 14%. In the fourth quarter of fiscal 2024, Scotts saw revenue climb 11% year over year to $414.7 million, and it cut its net loss nearly in half. It reported a net loss of $244 million, or $4.29 per share, compared with the prior year’s fourth quarter loss of $468.4 million, or $8.33 per share.

Its Hawthorne segment, though, continues to underperform, with sales falling 46% compared to the same period a year earlier, to $80.5 million. The company said the drop was due to Hawthorne’s exit from distribution of third-party brands and a decline in sales from its professional horticultural lighting business.

One thing that makes holding onto the stock and waiting for a turnaround easier is the company has a quarterly dividend of $0.66 per share, which equals a yield of 3.59%.

8. Cronos Group: Small marijuana firm growing more profitable, focusing on international markets

The Toronto-based company doesn’t own dispensaries and instead focuses on marketing its brands to an international audience. Cronos (NASDAQ: CRON) cited Hifyre retail analytics data to show its Spinach brand of cannabis took over the No. 1 spot in Canada, earning the top spot in cannabis flower with a 6% market share and leading the edibles category with a 17.2%. On top of that, its Peace Naturals brand is the No. 1 medical cannabis seller in Israel.

In the third quarter, revenue rose 38% year over year to $34.3 million. The company had net income of $7.32 million, compared to a loss of $1.59 million in the same period a year earlier, its first quarter of profitability since 2021.

President and CEO Mike Gorenstein said the company is focusing on improving margins while growing its presence in Germany, the UK and Australia. Cronos Group tightened its administrative, sales, marketing, research and development spending, and said it remains on track to meet its savings target of $5 million to $10 million for 2024. It’s also worth noting that the company has no debt, which gives it plenty of flexibility in determining its growth plans.

Performance of these top-ranked pot stocks at a glance

The following table shows a quick overview of recent revenue and stock-price performance:

Stock, symbol	Last quarter’s revenue growth (YOY)	One-year price performance
Green Thumb Industries (OTC: GTBIF)	4.2%	-23.66%
NewLake Capital Partners (OTC: NLCP)	9.3%	8.49%
OrganiGram (NASDAQ: OGI)	25%	23.37
Jazz Pharmaceuticals (NASDAQ: JAZZ)	9%	-2.98%
Innovative Industrial Properties (NYSE: IIPR)	0.006%	-34.14%
Tilray Brands (NASDAQ: TLRY)	13%	-40.09%
Scotts Miracle-Gro (NYSE: SMG)	11%	3.03%
Cronos Group (NASDAQ: CRON)	38%	-4.27%

Why invest in pot stocks?

As marijuana legalization and the consumer base continues to expand, the global cannabis industry is bound for rapid growth, attracting significant investor interest. With potential federal legalization on the horizon, the industry is poised to offer substantial long-term opportunities for investors seeking to capitalize on this emerging market.

However, investing in cannabis stocks comes with inherent risks. Regulatory uncertainties can impact the industry’s growth and stability. Additionally, many cannabis companies have relatively small market caps, which can make them more volatile. While some major cannabis companies are listed on major exchanges like the New York Stock Exchange, many trade over-the-counter (OTC) with less stringent regulatory oversight, increasing investment risks.

Despite these challenges, the cannabis industry offers substantial potential for long-term growth and significant returns. To mitigate risks, investors should conduct thorough research, diversify their cannabis stock portfolio, and carefully consider their risk tolerance. It also makes sense to check out stock predictors, stock screeners, or stock tip services as part of your research.

The regulatory framework for cannabis companies

Currently, there are 24 states and the District of Columbia (Washington D.C.) in the US that have legalized marijuana for adult recreational as well as medical use. A further 15 states allow it for medicinal purposes only. Worldwide, cannabis for personal use is legal in neighboring Canada and 9 other countries.

Pot stocks surged in mid-2024 when the Biden administration took a step toward the reclassification of cannabis as a less dangerous substance, which could pave the way for easing federal restrictions on the drug. However, the headwinds from referendum defeats and the result of the US election put paid to that optimism and brought weed stocks under renewed pressure.

The defeat of a ballot referendum in Florida that would have legalized adult-use sales of marijuana in the Sunshine State was a major blow to hopes of further decriminalization. Ballot initiatives to allow marijuana possession for adult use also failed in North Dakota and South Dakota.

Another setback came from the US election with Republicans, many of whom oppose further decriminalization of cannabis, taking control of both houses of congress. This complicates the prospect of federal decriminalization of the drug. While President-elect Donald Trump said he would vote in favor marijuana legalization in Florida, his views on federal-level legalization remain ambiguous.

What’s in store for the US cannabis sector in 2025?

In May 2024, President Joe Biden announced plans to reclassify cannabis as a less dangerous, Schedule III, drug. The US Drug Enforcement Administration (DEA) is following a process to consider that, with the next step being a procedural hearing, likely in mid-January.

John J. Mulrooney, the DEA’s chief administrative law judge, said the trial portion of that rule-making process will start in mid-January. Parties for and against the rescheduling will be able to call witnesses at the hearing to testify on the medicinal uses of cannabis and the risk for addiction.

What does reclassifying cannabis mean for the industry?

Under the DEA’s proposal marijuana, which has been a Schedule I drug, the same class as heroin and LSD, for more than 50 years, would get a Schedule III drug status, putting it alongside Tylenol with codeine and anabolic steroids, considered to have a moderate to low risk of physical dependency.

More importantly for the industry, though, reclassification would significantly reduce the federal tax burden on cannabis firms, lifting profits and unlocking funds for investment.

In the US, 280E tax code regulations currently prevent cannabis businesses from deducting normal business expenses, such as rent, salaries and advertising, from their taxable income. On top of that, reclassification would remove some regulatory barriers on cannabis research.

Federal penalties for the illegal manufacture, distribution or sale of cannabis could change. As a Schedule I drug, the penalty is five to 40 years’ imprisonment for the first offense. For a Schedule III drug, the maximum is five years imprisonment.

One thing that reclassification wouldn’t change is cannabis companies’ current inability to work with federally insured banks.

In addition, 2025 could bring movement in the following areas:

There have been efforts to allow federally insured banks to lend capital to cannabis, something that would come with the SAFER banking bill, if it passes.

The year 2025 will also be a crucial year for hemp. Early 2025 could bring significant regulatory advancements in the intoxicating hemp sector and they could be addressed in the Farm Bill. Efforts to integrate intoxicating hemp into legal cannabis channels, potentially allowing hemp beverages to be sold via alcohol networks, would address critical issues like inadequate testing, underage access, and inconsistent taxation. This shift is projected to boost legal cannabis revenues.

The different types of cannabis stocks

Cannabis stocks encompass a diverse range of companies operating within the cannabis industry, from pure-play cannabis growers and retailers to cannabis-adjacent companies, or larger businesses with exposure to marijuana.

They include:

Pure-Play Marijuana Retailers: These companies focus solely on the cultivation, production, and sale of cannabis products. Examples include multi-state operators such as Green Thumb Industries, Organigram Holdings and Chronos Group.
Cannabis Service Providers: These companies offer support services to the cannabis industry, such as real estate investment trusts (REITs) and specialized grow lighting companies with Innovative Industrial Properties, Newlake Capital Partners and Scotts Miracle-Gro fitting in this group.

Beyond pure-play cannabis companies, the category also includes:

Healthcare Stocks with Cannabis Connections: These companies are involved in research and development of cannabis-based therapies and medications. Jazz Pharmaceuticals is a good example.

Diversified Companies: These companies engage in both cannabis and other businesses, such as alcohol, beverages. Tilray is one such company.

What are the most profitable cannabis industry niches?

Some of the most profitable cannabis companies are not pure-play cannabis stocks, but cannabis adjacent firms whose connection to the plant is more limited. Here are a few examples:

Cannabis REITs: Companies such as NewLake Capital Partners and Innovative Industrial Properties are essentially landlords to cannabis companies. While they face risks because a struggling cannabis company that is a tenant may not be able to pay rent, most cannabis REITs are profitable and have fewer downsides than pure-play cannabis companies.

Diverse cannabis companies: Companies such as Scotts Miracle-Gro merely sell products to aid the growing of cannabis and have plenty of other revenue streams. There are other cannabis-related stocks, such as Tilray Brands, that in addition to its cannabis sales, is a craft beer brewer, or Jazz Pharmaceuticals, which has a stable of therapies in addition to cannabinoid-related drugs.

Pure-play growers: Some of the most profitable cannabis companies are ones who only sell their product wholesale, selling their brands to cannabis retailers, while having no dispensaries of their own, such as Organigram or Cronos Group.

Pros and cons of investing in weed stocks

Despite the industry’s sluggish performance this year, cannabis stocks have a huge future. As more states open up to legal sales of medical and recreational cannabis and as federal laws are relaxed, the industry is expected to boom. That doesn’t mean that investing in any weed stock is a guaranteed win. Here are some pros and cons to consider.

Pros

Above-average growth rate: Grand View Research estimates that the legal marijuana market will be worth $73.6 billion worldwide by 2027, a growth rate of 18.1% over the next seven years.

Changes to federal laws are likely to make business easier. The potential for the rescheduling of cannabis to a Schedule III substance eliminates some of the current hurdles in the industry, including tax burdens.
Cannabis stocks don’t trade in tandem with other sectors. That means they can provide good diversification for investors.

Cons

Cannabis companies are frequently undercapitalized. This creates a problem if there’s an economic slowdown as some companies won’t have the ability to withstand an extended period of sagging sales.

Illegal marijuana sales continue to cut into the margins of legal companies. Illegal marijuana sales have been a problem in nearly every state and keeps the price of cannabis low.
Many cannabis companies, despite their stock slumps, may be overpriced considering their price-to-earnings ratio. That means that their potential earnings may already be priced into the stock.

Are there any cannabis ETFs?

Yes, and buying cannabis ETFs is one way of investing in the industry while diversifying your risk. Most cannabis ETFs have fallen recently. Three of the top-performing cannabis ETFs include:

AdvisorShares Vice ETF (VICE): The ETF is up more than 25% this year. Unlike some cannabis ETFs, it also invests in tobacco and gaming stocks.

Cambria Cannabis ETF (TOKE): The ETF is down more than 5% so far this year. It’s a global, all-cap portfolio that has exposure to the wider cannabis industry.

Amplify Alternative Harvest ETF (MJ): It tracks the Prime Alternative Harvest Index, seeking investment results that generally correlate (before fees and expenses) to the total return performance of the Index. It’s down more than 20% in 2024.Do I need to pay tax on marijuana stocks?

Do I need to pay tax on marijuana stocks in the US?

Yes. Income from any source, including cannabis stocks, is taxable. However, you can delay the taxes associated with owning marijuana stocks if you hold them in a traditional IRA or 401(k) account. In that case, the income you earn, even from dividends, isn’t taxed until you sell the stocks or cash in the dividend.

How we chose the best cannabis stocks

We consider a wide range of factors before choosing the best cannabis stocks for US investors. We take into account the following:

Stock Performance: One of the key factors we look at is the performance of the stock. Specifically, we want to know if the stock has a history of outperformance, consistently beating its benchmarks over the long term. In a nascent industry such as legal cannabis, though, the performance we look at is just over the past three to five years.
Revenue Growth: We examine how consistent the company has been in generating year-over-year revenue growth. Ideally, we are looking for stocks that generate revenue growth over the past few quarters. Profitability is less of a focus initially as many companies are investing heavily in expansion.
Reasonable Valuations: Cannabis stocks often trade at high valuations. We want to ensure that the price-to-sales (P/S) ratio, and other relevant metrics are not excessively high compared to industry peers, and given the company’s growth trajectory.
Market Share: It’s important to consider how dominant the company is in its given market or markets. Expanding market share in a rapidly growing industry is crucial.
Competitive Advantages: A key to a company’s enduring success is its competitive advantages. We look at whether or not the stock has advantages over its competitors, whether its strong brand recognition, cultivation expertise, distribution network, or intellectual property provides a significant edge.
Growth Catalysts: In addition to any competitive advantages, it’s important to look for other growth catalysts that could spur the stock higher. Key catalysts include:
- Expansion into new legal markets: As legalization progresses, companies with the ability to scale operations will have a significant advantage.
- Product innovation: Developing new and differentiated products (e.g., edibles, beverages, high-THC strains) can drive consumer demand.
- Regulatory changes: Federal legalization or changes in state regulations can significantly impact the industry.
- M&A activity: Strategic acquisitions can accelerate growth, expand market reach, and enhance product offerings.
Financial Strength: The foundation upon which a company can grow is its financial or capital strength. We look to see if it has sufficient cash reserves or access to capital to fund operations, research and development, and expansion plans. We also consider the company’s ability to manage debt effectively.
Operating Efficiency: While profitability may be less of a priority in the early stages, we still consider how efficiently the company is operating. Key metrics include gross margins, operating margins, and return on invested capital (ROIC).
Experienced Management: We look at the leadership of the company and their experience in the cannabis industry or related sectors. A strong management team with a proven track record is crucial for navigating the complexities of the market.
Analyst Coverage: We gauge the consensus recommendations and price targets of reputable analysts covering the cannabis sector, while acknowledging that analyst opinions can be subject to significant variation.