The Biggest Marijuana Companies In The World

There are certain basic principles they teach you at business school in exchange for that six-figure price tag. The number one goal for any business is to survive. Mergers and acquisitions (M&A) generally don’t add value. And economies of scale are what help larger companies steamroll the competition. Shares of large companies generally have lower volatility which translates to lower risk. It’s one of the reasons we don’t invest in companies with a market cap of less than one billion dollars.

Another thing you’ll learn in bee school is the notion of arbitrage. Trading desks often trade the uncertainty around M&A events because sometimes things fall through. That’s why we’ve always been puzzled as to why special purpose acquisition companies (SPACs) that announce an intent to merge suddenly start appreciating well into the triple digits. The deal hasn’t even gone through, yet everyone acts as if it has. We usually like to wait for the ink to dry before taking a look at any M&A events, but today we’re going to make an exception. That’s because we’d like to take a closer look at what may soon be the biggest marijuana company in the world by revenues.

The Biggest Marijuana Stocks

We recently wrote about how the new administration views cannabis in a favorable light – as well they should when you look at how many lives alcohol has ruined – so the outlook for marijuana to be legalized at a federal level is favorable. This translates into an uptick of interest from investors, especially since the dust has settled from all the initial cannabis hype. In order to find the best marijuana stocks, we might start with the biggest marijuana stocks. We can measure “biggest” in a number of ways, but when it comes down to it, there’s only one metric that really matters – revenues.

To find the biggest marijuana stocks out there, we can turn to the ETF providers whose job it is to provide investors exposure to the biggest and best cannabis stocks. Since the last time we looked at cannabis ETFs, there’s a new name in town – the AdvisorShares Pure US Cannabis ETF (MSOS) – and it’s managed to attract a billion dollars in assets under management (AUM) already. Here are the top-10 assets in the ETF right now along with their revenues (trailing 12 months from Yahoo Finance):

Company NameTickerWeightingMarket Cap
(billions)
Revenues (TTM millions)
GREEN THUMB INDUSTRIESGTBIF10.10%7.5455
TRULIEVE CANNABISTCNNF9.56%5.5367
CURALEAF HOLDINGS INCCURLF9.49%11472
CRESCO LABS INCCRLBF8.51%3.3355
TERRASCEND CORPTRSSF6.35%2159
RECV AYR STRATEGIES INCAYRWF6.24%0.684139
INNOVATIVE INDUSTRIAL PROPERIIPR5.00%544
HARVEST HEALTH HRVSF4.32%1.48199
GROWGENERATION CORPGRWG3.84%3.06157
COLUMBIA CARE INC CCHWF3.71%1.8126

Many of these names look familiar because we covered them in our 2019 piece on The Biggest Cannabis “Multi-State Operator” Stocks. That’s what this ETF claims to be targeting – multi-state operator stocks (MSOS). The three biggest names on the list by market cap and revenues – Green Thumb, Trulieve, and Curaleaf – are the very same names we covered in our June 2020 piece on Three Billion-Dollar U.S. Cannabis Stocks. Curaleaf remains The Biggest Cannabis Company in the United States by revenues and market cap. If we were to invest in United States cannabis as a theme, we’d put our chips on these three stocks, but we’d be missing out on what’s north of the border.

The biggest ETF right now by AUM is the ETFMG Alternative Harvest ETF (MJ) with nearly $2 billion under management. The top-10 constituents contain large Canadian growers like Tilray and Aphria, two companies that are planning to merge soon.

Company NameTickerWeightingMarket Cap (billions)Revenues
(TTM millions)
APHRIA INCAPHA9.88%6601
GW PHARM-ADRGWPH9.53%6.39442
TILRAY INC-CL 2TLRY7.48%4.3210
GROWGENERATION CORPGRWG6.07%3.06157
CANOPY GROWTH COCGC6.02%13.7506
CRONOS GROUP INCCRON5.56%4.1637
HEXO CORPHEXO3.96%0.94296
VILLAGE FARMS INVFF3.89%1.27156
VECTOR GROUP LTDVGR3.41%2.121450
AURORA CANNABISACB3.40%2.37286

There are a few exceptions in the above list of mostly Canadian growers. The first is GW Pharmaceuticals which is a British pharmaceutical company looking to create therapeutics from the devil’s lettuce. The second is Vector Group which is involved in tobacco and real estate and looking to enter the marijuana market.

The Best Marijuana Stocks

People inevitably want to know the best stock to invest in for any given theme. In the world of disruptive technology stocks, that’s a pretty simple exercise because there aren’t a lot of choices. In the world of cannabis, you have two countries to consider which are at varying levels of maturity – the United States and Canada. As the industry continues to see more consolidation, we’d be prone to stick with the largest stocks out there in both jurisdictions. For the MSOS lot, that would be Green Thumb Industries, Trulieve, and Curaleaf. Buy equal amounts in all three stocks using dollar-cost-averaging. You now have cannabis in the United States covered.

North of the border, you’re dealing with a mature market where cannabis is legal across the board. The opportunity here is to invest in a company that will dominate the market using economies of scale. Let’s assume that the Tilray/Aphria merger goes through as planned. We would then have the largest marijuana company in the world by revenues. (As measured by market cap, Tilray/Aphria would be the second largest next to Canopy Growth.) Because Canada’s market is more mature, you could just buy Tilray/Aphria and bet on the fact that they’ll continue to grow organically and via acquisition as the industry looks to consolidate.

For a lower risk approach, you could invest in what experts have dubbed the ancillary cannabis sector. These are non-plant-touching companies that stand to benefit from the growth of cannabis without any of the legal risks, names like ScottsMiracle-Gro or Hydrofarm. It’s also a way to incidentally play the indoor growing theme which has been hot as a greenhouse lately.

Conclusion

In our article on The Puzzling Paradox of Marijuana Stocks, we talked about how ETFs may not be the way forward for this theme because the large number of losers will offset the smaller subset of winners. Consequently, we want to try and cherry-pick some possible winners. You can’t go wrong placing your bets on the bigger dogs in the pack.

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