This article was last updated on April 12, 2022
When it comes to investing, everyone will tell you the same thing – “Money doesn’t grow on trees”. But with the recent advent of cannabis stocks, it does seem to be growing on bushes. The popularity of such stocks has skyrocketed, and everyone is looking for ways to invest in this new and exciting market. Retail investors, in particular, are interested in the market due to the large growth potential and novelty subject matter. However, not all companies are equal, and investing should only be done after extensive research. As a result, we have put together a list of the best penny cannabis stocks that would make for a smart and affordable investment.
Table of contents
- What Are Cannabis Penny Stocks?
- Top Cannabis Penny Stocks To Invest In
- Top Brokers To Buy Cannabis Penny Stocks From
- Closing Thoughts On Cannabis Penny Stocks
What Are Cannabis Penny Stocks?
Cannabis stocks are securities related to corporations in the cannabis industry. These include producers, growers, distributors, sellers, and all other related enterprises. While cannabis is legal to a varying degree in numerous countries around the world, the stock market for the industry is largely confined to US-based companies.
Since California became the first state to legalize marijuana for medical use in 1996, many other states have followed suit with their own legalization bills. A focal point of these has been the legalization of marijuana for recreational use, which started in 2012 with Colorado and Washington. Sixteen more states have done the same since then, sparking debate over legalization on a federal level.
Today, marijuana is legal in most states for either recreational or medical use, and this has created a 15 billion dollar industry. This is expected to reach an estimated 25 billion dollars by 2025, and many investors are looking to the burgeoning new market for future growth and profit opportunities.
As is the case with any new market where startups appear on a regular basis, there are numerous companies whose stocks trade for pennies. However, such low prices per share should not trick you into thinking that they have little value. Such organizations are oftentimes highly profitable and with ample room for future growth. Buying into them at such a point can mean getting in on the ground floor of a promising business with years of success ahead of it.
Top Cannabis Penny Stocks To Invest In
When investing in cannabis stocks, there are many options for you to choose from. The market is full of startups of varying sizes and values. However, navigating these strange new waters can be difficult at times. Due to the market’s young age, new companies are appearing every day, each one vying for success and dominance. With such stiff competition, it comes as no surprise that the industry is merciless, and many fall by the wayside.
As a result, we have put together some of the most promising and profitable penny cannabis stocks for your consideration. These are all companies that are trading at less than a dollar per share and show signs of future growth.
Red White & Bloom Brands Inc. (RWBYF)
Red White & Bloom is a Canada-based company that produces a variety of cannabis-related products. The company operates in partnership with four distinct brands that it uses to market different items. These include High Times, Platinum Vape, PV Wellness, and Mid-American Growers. The former two focus on retail distribution and branding of vapes and cannabis products for recreational use. Meanwhile, PV Wellness produces a range of CBD-infused skin care products marketed in a number of countries. Lastly, Mid-American Growers is an all-encompassing brand, producing CBD-infused products such as cosmetics, foods, wellness products, and more.
While Red White & Bloom is a Canadian company, it focuses on the US market, where its brands are industry leaders in 3 states. With its “house of brands” strategy, the company aims to become the largest national player in the United States in both cannabis and hemp-driven markets. While Red White & Bloom’s stock prices have been steadily decreasing over the past year, predictions forecast upturns in both the short and long-term.
This downward slump has created a great opportunity for any investor who is not averse to moves that are on the riskier side. With its more than 100 locations in the US and over 800 employees, the company is perfectly positioned to cement itself as one of the top cannabis growers and distributors in the country.
Sundial Growers (SNDL)
Sundial Growers is another prominent Canadian cannabis company. Focused on the Canadian market, Sundial is one of the largest players in the country. Sundial’s stocks are also listed on the NASDAQ stock exchange. This is not a common occurrence among cannabis penny stocks, as their prices are rarely high or stable enough.
When looking at Sundial’s price history, we, again, see a steady decline in prices over the past couple of years. This seems to be the norm in the cannabis industry and should not cause investors to rule out the sector. While not near the all-time highs of 2019, SNDL’s prices have stabilized at an affordable level. With an average slightly below $1 per share, prices also the occasional uptick, reaching up to $3 at times.
Another previously-seen characteristic of Sundial is the fact that they operate under several brands. These all offer different products, marketed in various ways. The four brands – Sundial, Top Leaf, Palmetto, and Grasslands each have very distinct strategies and images. For example, Palmetto offers a range of highly stylized ready-to-use vapes and cannabis strains. Meanwhile, Grasslands is a no-frills brand that markets itself towards cost-conscious consumers while still providing quality products.
This wide range of products, coupled with Sundial’s strategy of cost and debt reduction, creates the perfect environment for growth. Anyone considering the viability of SNDL should look beyond the initial hype-fueled highs. While the company’s price has significantly fallen off, its market viability remains the same.
Greenlane Holdings, Inc. (GNLN)
Founded in 2005, Greenlane is something of a pioneer in the cannabis industry. It is also headquartered in Boca Raton, Florida, making it one of the US-based cannabis companies. Greenlane markets itself as a platform for the development of various cannabis-related products. These include accessories, vapes, lifestyle products, packaging, and more. By partnering with numerous brands, both local and global, Greenlane has been able to create what it calls an “omni-channel distribution platform“.
When looking at prices historically, Greenlane has followed the industry trend of losing value. However, this is largely due to the unfettered buying craze in 2019 rather than due to deeper issues with the industry. As such, Greenlane remains a completely viable cannabis penny stock with plenty of strengths. Chief among these is the company’s vertical integration in various levels of the industry. This positions it as a key player and an invaluable part of the market.
The company’s current strategy is that of further expansion and acquisitions. Most recently, Greenlane acquired DaVinci, which will strengthen its vape pen production capabilities. This is only one of a number of mergers and acquisitions that Greenlane has entered into in order to achieve its goals. This seems to be working quite well, as the company reported a record high earnings of $41.3 million in the third quarter of 2021.
Hexo is a Canadian cannabis company that partners with over 10 different brands to market its products in a number of ways. Some popular names include Hexo, Redecan, Up, Original Stash, Namaste, 48 North, Bake Sale, and more. All of these brands are Canadian and make that a core part of their identity. Apart from offering vapes and other recreational products, many of the brands have entered other markets as well. Labels such as Bake Sale and Trail Mix sell cannabis-infused cooking products like oils or concentrate.
Hexo also has a strong foothold in the medical industry, producing a variety of oils and tinctures. While focused on the American market, Hexo has also expanded into European and Middle-Eastern territories as well. As part of its expansion strategy, Hexo also acquired Zenabis for $235 million. This global approach is sure to pay off as cannabis legalization becomes more prominent across the world.
With such a rich portfolio, Hexo is definitely a cannabis-related penny stock to keep an eye on. While not near its highs from 2019 when the company saw a massive rally from retail backers, the seemingly low price should not dissuade potential investors. Although cheaper, the stock’s price is now much more realistic and allows for the company to grow without the unrealistic expectations of such a high valuation.
MedMen Enterprises Inc. (MMNFF)
MedMen is one of the most widely recognizable and widespread brands in the cannabis industry. Founded and headquartered in California, the company operates dispencaries in seven states, including New York, California, Nevada, Florida, and more. The brand is so popular, in fact, that it even had a cameo in the popular television show South Park.
While one of the most prominent brands in the space, MadMen has been experiencing significant difficulties and as a result, is now trading for pennies on the dollar. A company that was once a market-dominating force, has now moved to sell many of its dispencary licenses and limit operations.
While many have rated the company as a sell, investing in MedMen could still prove to pay off. Currenctly, the company has redirected its focus on shoring up well-preforming states and restructuring the business model. While highly risky, an investment in MadMen has the potential for great returns if the company is able to turn things around. Now might be a great opportunity to buy into the brand while share prices are so deeply discounted.
Top Brokers To Buy Cannabis Penny Stocks From
When making any investment, regardless of size or volume, it is crucial to choose the right broker for your needs. This will determine what kind of fees you will pay, what markets you will have access to, and more. Here are some of the most popular and trusted online brokers out there:
Etoro is one of the most popular online trading platforms currently on the scene. It offers access to a wide variety of markets, including several stock exchanges, forex, and crypto. It also has minimal fees and a 0% commission on US stocks. This is great for investors looking to trade in cannabis-related equities as many of the companies are located in the US. In fact, the platform gives access to more than 20 different cannabis-related stocks.
The platform is particularly friendly towards inexperienced and beginner investors thanks to its simple design and extensive educational systems. One of Etoro’s strongest features is the copy trading system which allows users to copy the trades of prominent and successful investors on the platform.
Meanwhile, the dedicated Etoro Academy section of the website offers a number of free educational recourses like articles, videos, webinars, courses, and more. These cover a range of topics such as finance, economics, investing, and the eToro platform itself.
Important to note here is that eToro does not offer access to stock markets to customers from the US at this time. While this is unfortunate, the platform does have plans to introduce this service to the US market in the coming months.
Interactive Brokers is one of the oldest and most highly regarded online brokers on the market. Founded in the ’80s, IB has been an industry leader for more than 40 years. With access to over 135 markets, it is sure to provide ample opportunity for investment in cannabis penny stocks.
Commissions are also reasonable, and the platform has been moving towards retail-friendly operations. One example of this is the elimination of the minimum balance requirement and account maintenance fee.
The platform itself is highly professional, with numerous analytical tools and charts available to users. As such, IB is the broker of choice for many industry professionals and day traders. However, at times, this can make it a bit unfriendly for beginners.
New users can become overwhelmed by the abundance of information and indicators that they are presented with. This is especially true for those who are newer to investing and trading. Additionally, many services, like real-time access to markets, are locked behind monthly payments. While the fees are reasonable for the financial world, they can stack up for a casual retail investor with limited capital.
TD Ameritrade is is another well-established online brokers, preferred by professionals and retail investors alike. This platform, however, is mostly limited to the US and a handful of other countries. As such, fewer users will be able to take advantage of its numerous features and advantages.
For those who can access the platform will be able to trade on major stock exchanges, the foreign exchange market, crypto markets, and more. The platform also offers access to the OTCBB which is great for those looking to invest in cannabis penny stocks, as most of these are listed on that market.
While TD Ameritrade’s platform is highly professional and rich in tools and features, it is not difficult to use. This is thanks to the company’s commitment to education and wide accessibility. By combining an extensive educational section with a simple design for various tools, TD Ameritrade has become the platform of choice for both seasoned and beginner investors.
Closing Thoughts On Cannabis Penny Stocks
The cannabis industry has been growing exponentially over the past several decades. This is largely due to the continuing introduction of legalization and decriminization laws across the United States and Canada. These countries are precisely where most major companies in the industry are based, offering a variety of medical and recreational products.
While the industry saw incredible interest from retail investors in 2019, this has since died down and prices have returned to stable levels. When looking at companies’ stocks, one should not pay too much attention to events from the 2019 period, as that is not representative of the current reality in the market.
Never the less, investing in the cannabis industry is definitely a high risk high reward venture. There are many startups that go bust on a regular basis. This makes investments uncertain. However, due to the prominance of penny stocks in the cannabis industry, small investments are also possible. These will give you an opportunity to be involved, without putting a hole in your wallet.