Why Marijuana Stocks Are a Hot Commodity 2021

Marijuana stocks are getting hot again. What are the best marijuana stocks for investors to buy now for 2021? What can investors expect from the sector?

Ambrish Shah - Author

Feb. 2 2021, Published 3:08 p.m. ET

Marijuana Stocks in 2021
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Over the last few years, a growing number of Americans have been in favor of making marijuana usage legal. Under the Biden administration, the U.S. marijuana industry has a big reason to celebrate. President Biden and Vice President Harris have publicly supported decriminalizing adult-use marijuana. What are the best marijuana stocks for investors to buy now for 2021?

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In the U.S., using and possessing marijuana is prohibited under federal law for any purpose. This is mainly because marijuana is classified as a Schedule I drug under the Controlled Substances Act of 1970. Currently, 35 states and Washington, D.C., have legalized the use of marijuana for medical purposes. Recreational marijuana is legal in about 15 states and Washington, D.C.

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Best marijuana stocks to buy in 2021

Aphria is Canada’s major producer and distributor of medical and recreational marijuana. The company operates domestically and internationally through retail and wholesale channels. Aphria has business operations in over ten countries across the world. The company is a primary distributor of medical marijuana to Germany.

Aphria is one of the world's largest marijuana companies by revenue. In the second quarter of fiscal 2021 (ended November 2020), Aphria generated sales of 160.5 million Canadian dollars, which represented a growth of 33 percent YoY. The growth was driven by an overall surge in marijuana sales.

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In December 2020, Aphria agreed to merge with Tilray. The combined company should be the biggest multinational marijuana company in the world in terms of sales. The merged company would also be well-positioned to have a solid European presence. Tilray has a marijuana production facility in Portugal, while Aphria has a medical marijuana distribution subsidiary in Germany. YTD, Aphria stock has gained 80 percent, while Tilray stock has gained 131 percent.

Curaleaf engages in the production and distribution of marijuana products across the U.S. The company is present in about 23 states and operates various dispensaries. Recently, Curaleaf announced that it launched adult-use marijuana operations in Arizona. In the third quarter of 2020, the company’s sales rose by 195 percent YoY to $182.4 million.

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Best marijuana penny stocks

Sundial Growers is among the top marijuana penny stocks to watch. The company focuses on premium marijuana products like oil, vapes, topicals, and flowers. Sundial Growers entered into a contract with Choklat to launch marijuana-infused chocolate bars and drinking chocolate. 

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In the third quarter of 2020, Sundial Growers generated 77 percent sales from branded marijuana products. The company’s top line should grow due to new product launches and a focus on increasing brand visibility. 

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Nextleaf Solutions is another marijuana penny stock to follow in 2021. The stock trades at less than 68 percent of its 2019 highs and has a market capitalization of a little above $30 million. Nextleaf Solutions claims that it's “the world’s most innovative cannabis extractor developing patented technology for distilling THC and CBD oils for the wholesale market.” Also, the company owns more than 70 issued patents and 50 pending patents for the extraction and distillation of cannabinoids.

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How the Biden administration will help the marijuana sector

The marijuana sector in the U.S. should benefit under Biden's presidency. The Biden administration supports decriminalizing marijuana and broadening access to medical marijuana. Also, the administration will allow individual states to determine their own marijuana policies without federal interference.

Marijuana sector's outlook

There's a huge potential for growth and an immense amount of value in the marijuana industry. The global legal marijuana market size, valued at an estimated $17.7 billion in 2019, is set to reach $73.6 billion in value by 2027, according to a research report by Grand View Research.


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