Where & How to Buy Cannabis Stocks in 2024

Cannabis is unique in the world of investment. Largely frowned upon in society just 10 years ago, it now features in the portfolios of countless investors, with the industry estimated to be worth $67bn in the US by 2028.

Indeed, attitudes towards cannabis have evolved rapidly. While historically an illicit substance, more than half of US states have now legalized the drug, triggering a major boom in the industry surrounding it.

With the popularity of cannabis stocks as an investment option increasing by the day, we have compiled a comprehensive guide on where and how to buy cannabis stocks in 2024.

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What Are Cannabis Stocks?

Quite simply, cannabis stocks are shares of companies in the cannabis industry. However, this definition goes beyond the direct sale of cannabis – those involved in the cultivation, processing and distribution of cannabis-related products would all be considered cannabis stocks.

As is the case for any company or industry, the value of cannabis stocks is influenced by developments in regulation and public perception. With cannabis having been illegal across the US until relatively recently, these are areas that have developed rapidly in recent years.

Most importantly for retail investors, the industry’s rapid growth and changing perceptions have rendered cannabis a potentially lucrative investment opportunity. But as with any investment vehicles, inherent risks remain, and investors must ensure they are abreast of the latest market trends.

Are Cannabis Stocks a Good Investment in 2024?

The cannabis industry has experienced mixed fortunes in recent years. Despite being handed a huge boost in November 2012 when Colorado and Washington became the first states to legalize the substance, numerous political and economic roadblocks have halted progress.

This trend has continued into 2024. At the time of writing, the Global Cannabis Stock Index sits at $8.53, close to its decade low of $6.93, and a far cry from its decade high of $930. This is reflected in the languishing stock performance of the industry’s major players, with Scotts Miracle-Gro Company, for instance, having lost nearly ¾ of its value since 2021.

However, with cannabis stocks currently in a market valley, now could be the time to capitalize, particularly with some promising signs for the sector on the horizon.

One such cause could be TerrAscend, a high-profile Canadian cannabis operator, up-listing from the Canadian Securities Exchange to the Toronto Stock Exchange (TSX). With the TSX considered to be a stepping stone to the Nasdaq or the US Stock Exchange, it is thought that the move could provide a template for other players in the future, opening the cannabis industry up to a much greater source of capital than anything Canada has to offer.

In addition, major states such as Ohio, Florida and Pennsylvania are expected to join 24 others in legalizing cannabis in years to come, while a number of states are undergoing a process to establish medical cannabis markets, even in more conservative, Southern regions such as Alabama and Mississippi.

The potential vastness of the cannabis industry must also be acknowledged. While the direct sale of the substance is the obvious vertical, there are huge opportunities in areas such as cultivation technology and equipment, pharmaceuticals, real estate, education and security, in addition to the various different stages along the cannabis supply chain.

Taking these prospects into account, particularly in tandem with the faltering value of the industry, 2024 is an opportune moment for investors to add cannabis stocks to their portfolios, providing the requisite research and diversification is applied.

Where to Buy Cannabis Stocks in 2024

Investors can choose to purchase Cannabis stocks through various online brokerage platforms, and eToro emerges as a preferred option. eToro distinguishes itself with a user-friendly interface, minimal minimum deposit requirements, and the ability to trade fractional shares, making it particularly accessible for beginners.

Other well-regarded choices include Robinhood, Webull, and Charles Schwab.

1. eToro – Best platform to buy Cannabis stocks

eToro is a popular stock broker that gives you access to cannabis stocks along with 2,400 global markets, and all of the offered stocks can be purchased at 0% commission.

Boasting a global community surpassing 20 million traders, this brokerage distinguishes itself with competitive trading and non-trading fees. It offers complimentary trading for stocks and ETFs, and there are no account or deposit fees.

Operating as a social trading platform, eToro fosters user communication and interaction within its trading community, akin to social networking sites.

For US-based investors, the entry barrier is low, demanding only a $10 minimum deposit without additional fees. This affordability extends to investing in cannabis stocks, facilitated by eToro’s support for fractional share trading, enabling traders to acquire a portion of higher-value stocks.

Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

2. Robinhood – Commission-free stock investments

Robinhood, a well-known platform with zero-commission trading, is renowned for its user-friendly interface and has garnered millions of users since its inception.

Distinguishing itself with a no-commission model, Robinhood extends this benefit to cover zero trading fees for stocks, ETFs, and options. Going beyond traditional trading, the platform promotes social trading, fostering a community atmosphere reminiscent of social networks.

With a low minimum deposit, accessible fractional share trading, and the absence of account fees, Robinhood stands as a cost-effective entry point for investors. It particularly caters to beginners seeking an affordable and user-friendly platform to initiate their investment journey.

3. Charles Schwab – Educational tools and resources for stock trading

Charles Schwab is a renowned online brokerage platform recognized for its extensive range of investment options and comprehensive services, catering to a diverse investor base and earning esteem for its reliability.

Ensuring access to various financial markets and investment products through a user-friendly interface, Charles Schwab, while not adopting a zero-fees model, compensates with a robust suite of research tools and educational resources.

Accommodating various account types, Charles Schwab’s platform is suitable for both novice and experienced investors. With a dedicated focus on customer service and a commitment to innovation, Charles Schwab stands out as a prominent choice for those seeking a comprehensive online brokerage experience. To obtain the latest information, it is advisable to verify current details on their official website.

4. Webull – A modern and affordable brokerage platform

Introduced in 2018, Webull functions as a dynamic commission-free trading platform celebrated for its intuitive design and advanced features. It has garnered popularity due to its user-friendly interface, which is equipped with real-time market data and analysis tools.

Specializing in equities and options, Webull caters to both novice and experienced traders, standing out by providing commission-free trades across a diverse array of assets, including stocks and ETFs. Additionally, the platform distinguishes itself by supporting extended trading hours, ensuring flexibility for active traders.

Webull’s appeal is further enhanced by its accessible mobile app and desktop platform, complemented by the absence of minimum deposit requirements. These features collectively position Webull as an attractive option for individuals seeking a contemporary and cost-effective trading experience.

Best Cannabis Stocks to Buy in 2024

Having analyzed whether cannabis stocks are a good investment in 2024 and where to buy them, all that remains is to take a look at some key players in the industry and how they measure up as potential investment options.

Here are three key cannabis stock picks, and why they could be right for your portfolio.

Colgate-Palmolive (CL)

Colgate-Palmolive is a multinational consumer goods company, renowned for its oral care and personal hygiene products. Established in 1806, it has become a global leader in its industry, manufacturing and distributing a diverse range of items, including toothpaste, toothbrushes, soaps, and household cleaners.

Colgate-Palmolive is the archetypal example of how far the ‘cannabis industry’ stretches beyond the direct sale of cannabis itself. While residing primarily in household and consumer goods, the giant roared into the cannabis game in 2021 when it filed three patents for CBD-based formulations, with a view to using them in the production of oral products such as mouthwash and toothpaste.

The firm’s dominant industry position stands it in good stead to achieve success in these endeavors, boasting a $66bn market capitalization and a profit to earnings ratio of 41.

Moreover, the stock has shown resilience in recent years, its value surging between 2020 and 2022 amid pandemic-era turbulence.

Innovative Industrial Properties (IIPR)

Innovative Industrial Properties, while more directly involved in the cannabis trade, is another example of the industry’s breadth. Formally known as a real estate investment trust (REIT), the firm is trying its hand in the cannabis market by investing in facilities for growing and processing crops.

Despite seeing losses at the hands of wider market trends in recent years, IIPR performed handsomely in H2 2023, adding more than 30% to its value. Analysts also expect the firm to post year-on-year gains of close to 10% in forthcoming quarterly results.

In addition to a respectable EPS and profit to earnings ratio, IIPR boasts one of the industry’s best dividend programmes, offering investors a 7.5% yield, equating to $7.20 per share.

Scott’s Miracle-Gro Company (SMG)

While not a ‘pure play’ cannabis firm, Scotts Miracle-Gro, a renowned lawn and garden company, has become a significant stakeholder in the cannabis industry, specializing in hydroponics, lighting and nutrient products.

As the cannabis market expands, Scotts Miracle-Gro’s strategic pivot into cannabis-related products has positioned it as a key player, meeting the specific needs of the growing cannabis cultivation sector. This diversification reflects the company’s adaptability to emerging market trends and its recognition of the opportunities within the evolving cannabis industry, which arguably plays into its attractiveness as an investment option.

Aside from this, SMG has demonstrated great resilience in recent years. While economic and sector conditions saw the firm shed 75% of its value between 2021 and 2023, the stock has rebounded in the past 12 months to achieve 10% growth.

The firm’s Q4 2023 results also demonstrated advancements in its strategy to reduce excess inventory and operate plants at lower capacity to alleviate debt.

Our Verdict on the Best Cannabis Stocks to Buy in 2024

Overall, it’s clear that the cannabis industry has undergone quite the transformation in recent years, shaking off its longstanding societal stigma and evolving into a multi-billion dollar market.

Though firms in the sector have faced stubborn challenges in recent years, the sector undoubtedly still presents some exciting opportunities, with potential up-listings, increased legalization and diversification opportunities all coming into place.

In addition, Colgate-Palmolive, Scott’s Miracle-Gro and Innovative Industrial Properties all stand out as excellent stock picks in 2024, going far beyond the direct sale of cannabis to offer diverse avenues for investors in the cannabis market.

Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

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