6 Cannabis Stocks to Buy and Hold for the Next Decade

All signs are there that the cannabis sector will continue to grow well beyond 2025. The industry has traditionally been perceived as volatile and unpredictable, but with an ever-strengthening regulation, there is now no reason to believe long-term investments are not game. 

Writing for the Motley Fool, Alex Carchidi picks three companies that are involved in different ways with the cannabis market, and as he says, each has a clear path to steady but massive growth. 

For serious investors who might be looking for suitable additions to their portfolio, and if you resonate with Carchidi's choice, those three companies include Scotts Miracle-Gro, Green Thumb Industries, and 22nd Century Group. 

Earlier in July, Jim Halley, also writing for the Motley Fool, picked three other companies that have established themselves as consistent revenue growers. Halley's picks included GrowGeneration, Trulieve, and Innovative Industrial Properties. 

Below is a short overview of each of these six stocks.

Scotts Miracle-Gro

Scotts Miracle-Gro is a noted merch of nutrients, fertilizers, and top-notch gear that well serves the growers. The company also has pesticides and herbicides on offer as part of its home gardening stuff. While various cultivators purchase Scotts Miracle-Gro equipment and garden supplements, its worth on the stocks has skyrocketed largely due to the interest expressed by those in the cannabis sector.

The company's management reportedly predicts that revenue from cannabis farming products will end 2021 up to 45% higher than in 2020. If the company retains the quality of its products, there's no reason to believe it will perform less as the cannabis sector grows and more jurisdictions open up to cannabis business opportunities in the future.

Green Thumb Industries

A lot has been written about Green Thumb Industries before. This cannabis operator has seen consistent growth over the last five years. According to Wall Street analysts, Green Thumb could accumulate more than $800 million in net revenue by the end of 2021. 

As Carchidi also notes, the strength of Green Thumb lies in its strong distribution network and the visibility of its brands. Green Thumb holds some of the most prominent market locations, including in California and Pennsylvania. The company is performing well even in those places where it has a significant number of competitors. 

As long as Green Thumb retains customer trust for its assemble of recreational and medical cannabis products, there's no reason to believe it will perform less in the future. The company has, simply put, become the preferred brand among a significant chunk of consumers. Its revenue is anticipated to grow further from introducing delivery services and penetrating deeper into regional markets. 

22nd Century Group

This company does something entirely different in relation to cannabis. It does not sell weed nor nutrients how to grow it. Instead, the 22nd Century Group is betting on its intellectual property (IP), which entails its next-level cannabis genetics technology.

The company's tech helps cultivators increase the yield of relevant psychoactive chemicals from their cannabis crops, so it's quite a catch to license 22nd Century's tech. As a leading plant biotechnology company, 22nd Century Group is also helping tobacco cultivators alter the level of nicotine in tobacco crops.

The company has taken some time to develop its plant genetics IP. According to the company's management, the income from licensing is barely beginning to flow in cash on the company's account. And who will say no to tech that can help you manufacture better and more potent products? If this is going to make all the difference for higher profit margins among cannabis product retailers, 22nd Century's success is guaranteed for the next decade.

GrowGeneration

This is another popular name among investors. The company is the nation's largest seller of hydroponic equipment and has almost 60 outlets, plus an online superstore. As it doesn't sell cannabis directly, its shares are traded on the Nasdaq. 

Through March 31, the company reported $90 million in sales, up 173% year over year in the first quarter. Net income was $7.7 million, up from a loss of $2 million in the same period in 2020, the Motley Fool reports.

GrowGeneration customers include both cannabis companies and regular consumers. The company's pool of customers is expected to grow as the number of states with a regulated cannabis market continues to grow. The market projection for hydroponic sales is also in favor of GrowGeneraion; Precision Reports estimates the compound annual growth rate for hydroponic sales to be 6.8% up from 2021 to 2024.

GrowGeneration recently increased its guidance to say it expected annual revenue of $450 million to $470 million, compared to $193 million last year, and adjusted EBITDA of $54 million to $58 million, up from $19.2 million in 2020. It has been actively acquiring hydroponic stores, adding 14 in the last quarter, with an aim to bring its number of stores to 100 by 2023.

Trulieve

Trulieve Cannabis shares jumped over 8% in 2021. As one of the most profitable cannabis operators of all time, Trulieve dominates its home state market of Florida and it's also posing to take over dominance of the Arizona market. 

Trulieve has 86 stores in Florida, and in Arizona, it purchased Harvest Health & Recreation, the most significant player in the Grand Canyon state medical cannabis program. The recent opening up of Arizona to the recreational market is a bonus for a company such as Truelieve.

Truelieve is living up to its reputation. Its brand retains high trust and visibility. The numbers are another good indicator of how Truelieve is performing. In the first quarter of 2021, the Florida operator reported a record revenue of $193.8 million, up 15% sequentially and 102% year over year. It also had net income of $30.1 million, up 27% year over year, and gross margin of 70%. As it took over control of Harvest, an operator not quite so profitable, the new management shows signs it can significantly improve sales there as well. If Trulieve continues to run business in a similar fashion, there's no reason to doubt they are one of the big players for the next five to ten years.

Innovative Industrial Properties

Based in San Diego, Innovative Industrial is by far the most profitable pure-play pot stock on a per-share basis. It's another company that does not directly generate sales from cannabis sales. In fact, it's a super successful real estate investment trust (REIT) with a focus on cannabis. 

Innovative Industrial Properties acquires assets for medical cannabis cultivation and processing and leases them out to others for extended periods of time. The company has made fortunes from its rental income. It's one of the best stocks to invest in this year, and it will likely continue to be an attractive option way up in 2031.