3 Cannabis Stocks to Buy Before They Explode Higher

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Support for cannabis legalization reached all-time highs in 2023, creating a long list of cannabis stocks to buy. For one, a new Gallup survey found that 70% of Americans believe cannabis should be legal, which is a record high. 

Two, multiple states have legalized it for adult use and medical reasons. Third, the Biden Administration pardoned those convicted of simple possession. Four federal agencies, including the Drug Enforcement Agency (DEA), may soon reschedule cannabis as a Schedule III drug.

Plus, according to Reuters, several more U.S. states could soon legalize its use, including Hawaii, South Dakota, Florida, Nebraska, New Hampshire and Pennsylvania. In addition, with U.S. elections nearing, candidates may want to latch on to what 70% of the population wants.

That being said, investors may want to look at the following cannabis stocks to buy such as:

Innovative Industrial Properties (IIPR)

When I mentioned Innovative Industrial Properties (NYSE:IIPR) on Nov. 14, I noted, “Thanks to its 9% yield, which could push even higher, it’s cheap at $80 a share. Further, earnings are coming back strong.” Today, with a yield of 7.72%, the real estate investment trust (REIT) is up to $94.35 after testing a high of $103.17.

IIPR is still one of the top cannabis stocks to buy. Helping, earnings have been strong. In its most recent quarter, the company posted Q3 funds from operations (FFO) of $2.09, which beat expectations for $2.05. That was also above the $2.07 posted in the second quarter and the $1.97 posted a year earlier. Revenue of $77.8 million was above estimates of $76.6 million. 

Plus, CEO Paul Smithers said, “Even during this macroeconomic environment, growth of the overall cannabis industry in the U.S. continues to remain strong, with BDSA projecting cannabis sales of $29.5 billion in 2023, representing approximately a 12% growth from 2022. Additionally, BDSA estimates that approximately 60% of U.S. adults could have access to adult-use cannabis by 2026 with new state programs coming online.”

Trulieve Cannabis (TCNNF)

Source: Leigh Trail / Shutterstock.com

Over the last few days, Trulieve Cannabis (OTCMKTS:TCNNF) just exploded from a low of $6.20 to a recent high of $11.86. But I wouldn’t rush to buy it just yet. It is technically overbought on relative strength (RSI), MACD and Williams’ %R and overdue for a pullback. But once it does pull back, I’d buy it for the long term—especially with improving earnings.

In its recent quarter, the company posted an EPS loss of eight cents, which beat by seven cents. And while revenue was down 8.51% year over year, it beat expectations by $5.96 million. Better, it generated cash flow from operations of $93 million and free cash flow of $87 million. It also reduced debt and expects a 2023 operating cash flow of $100 million and a free cash flow of about $70 million.

“With significant scale and service, strong cash generation, and a clearly defined strategy, Trulieve is best positioned for the coming wave of meaningful growth catalysts,” CEO Kim Rivers added.

Global X Cannabis ETF (POTX)

Or, if you’d prefer to diversify at a low cost, there’s always an exchange-traded fund (ETF) like the Global X Cannabis ETF (NASDAQ:POTX). While it’s been just as beaten up as every other cannabis stock, give it time. If we see further progress with cannabis, the ETF could double from its current price of $5.18.

With an expense ratio of 0.51%, the ETF invests in legal production, growth and distribution, pharmaceutical applications and CBD companies. Some of its top holdings include Flora Growth (NASDAQ:FLGC), WM Technology (NASDAQ:MAPS), MyMD Pharmaceuticals (NASDAQ:MYMD) and Bright Green (NASDAQ:BGXX) to name a few.

On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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