Best Cannabis Stocks in Canada for 2022
Cannabis stocks in Canada are not a simple topic. You'd be seriously reckless if you threw your hard-earned cash at some pot stock half-cocked. Legalized cannabis is still an emerging industry in Canada, despite the posterity of medical marijuana. As such, it carries greater risks. In fact, many cannabis stocks are down, way down right now following a short boom time.
If you want to make money on Cannabis stocks in Canada, you need to do your research. This is true of all stocks and investing, but it's especially true for Cannabis stocks.
This article is meant for you would-be Mary Jane investors who want to know what's hot and what's not. We'll explain what Cannabis stocks are, which Cannabis stocks are the best right now, and how you can invest in them.
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Best Cannabis/ Marijuana Stocks In Canada
If you’re looking for the best marijuana stocks in Canada (including one that’s only available on the Nasdaq) look no further. This short list includes some of the highest market cap cannabis stocks available to investors today. So consider this your guide to understanding a few of the top Cannabis stocks in Canada and abroad.
Toronto Stock Exchange ticker: WEED
Market Cap: $3.28 Billion
Canopy Growth has suffered big losses in the past few years like many cannabis companies. The boom years of 2018 and 2019 didn’t last. Canopy did see a resurgence in early 2021, but it’s stock prices have continued to drop. It currently trades at around $8.5 per share.
The majority of Canopy’s brands are Canadian, but most of its earnings have come from new products in the U.S. medical or lifestyle markets or its international brands (Storz & Bickel and BioSteel).
Canopy Growth is most commonly known for its retail stores, Tweed and Tokyo Smoke.
Toronto Stock Exchange ticker: ACB
Market Cap: $870.22 Million
Aurora Cannabis is tapped into medical and recreational marijuana markets with four separate medical brands and six consumer brands all with their own lines of products spanning oils, edibles, vape, and dried flower.
Present in 25 different countries and 5 continents, Aurora is banking on its medical marijuana arm to bring it back from the depths its stock price has fallen to, around $4, a drop of nearly 70% in the last year.
However, in its investor presentation, it boasts that its global medical cannabis revenues achieved the largest gross profit margin in the last three months of 2021, a whopping 53% which is more than 20 points over the next closest competitor.
Toronto Stock Exchange ticker: TLRY
Market Cap: $1.70 Billion
Originally two separate companies, the cannabis giants merged into one company in May 2021 and now Tilray has a large global presence with over 20 products spanning the medical marijuana and recreational sectors.
Tilray’s stock climbed just after the merger, peaking at $26 about a month afterward. But, it didn’t last. Tilray is trading at just under $7 today.
The Cronos Group
Toronto Stock Exchange ticker: CRON
Market Cap: $1.57 Billion
The Cronos Group LTD is largely focussed on research, development, and emerging technology in the cannabis industry. They have extended themselves into cannabis production, hemp-based CBD, and a natural/health and wellness market.
Additionally, Cronos Group launched a totally unique product in October 2021. They combined THC and a CBD called cultured cannabigerol (CBG) into a gummy to create a new type of cannabis experience for consumers. This gummy was the first of its kind in Canada.
Cronos stock is down almost $10 per share since this time last year, falling from around $13 down to about $4.
Village Farms International
Toronto Stock Exchange/ NASDAQ ticker: VFF
Market Cap: $458.14 Million USD
Village Farms is an agricultural company operating in Canada, the U.S., and Mexico. They’ve grown vegetables for the past 30-odd years and recently moved into the pot industry by buying British Columbia-based cannabis growers, Pure Sunfarms.
In the U.S., Village Farms owns 100% of Balanced Health Botanicals, a massive CBD brand. They are also targeting other related Cannabis markets in the U.S. as long as state and federal laws surrounding the plant, which are more complicated than in Canada, are copacetic to their goals.
Despite big plans, VFF is another declining Cannabis stock on the market. It peaked last March, closing at $17.58 per share. It’s only tumbled lower since then, closing at $5.18 on March 4, 2022–less than three times it’s value 12 months ago.
*All numbers as of March 4, 2022
What Are Cannabis Stocks?
Just like traditional stocks, cannabis stocks represent shares in a company that is involved in the cannabis industry.
The cannabis industry isn’t just your local ganja retailer. It’s a global network of producers, suppliers, manufacturers, researchers, vendors, promoters, etc. Someone has to grow and harvest the marijuana plant. Someone else turns the harvested plant into a marketable product like a gummy, an infused beverage, a medication, a pre-rolled blunt, and so on. As more and more countries like Canada peel back old cannabis laws and step toward partial or full legalization, companies involved in the cannabis industry will be able to expand their reach and grow.
Are Cannabis Stocks A Good Invetment?
Right now, investing in cannabis stocks is highly risky. But, that doesn’t necessarily mean it’s a bad idea.
Many cannabis stocks are at record lows which may be attractive to some investors who believe the price will rise as more countries legalize marijuana in all its forms–medical, recreational, and everything in between. However, it’s also possible that some existing cannabis companies are sinking ships, and the best thing to do is get off as fast as your feet will carry you.
If you belong to the former group, and you see untapped value in cannabis stocks ahead of a meteoric rise, then read on, because cannabis stocks are currently declining, and the more information you have the better decisions you can make.
How To Choose The Right Cannabis Stocks
Choosing the right cannabis stocks can be broken into two major factors: what’s right for you and what stocks are demonstrating the best performance/potential for growth.
Here are some factors that you should consider before choosing a Cannabis stock:
What is the market cap?
Market capitalization (market cap) is how the stock market evaluates a company’s value. The market cap of a particular company is calculated by multiplying the price of a single share by the number of the company’s outstanding shares. So, a company with 1 million shares at $20 each would have a market cap of $20 million dollars.
Market cap is usually split into three or four categories: large-cap ($10 billion or more), mid-cap $2 billion to $10 billion), small-cap ($300 million to $2 billion), and less commonly, micro-cap companies (less than $300 million).
Most cannabis stocks currently fall in the small and micro-cap categories. This makes them more speculative and less reliable in the eyes of investors, brokers, and analysts. This is partly because cannabis, especially recreational cannabis, is a comparably burgeoning market.
If you want to invest in cannabis stocks, it may be wise to choose a company with a higher market cap to avoid some of the inherent risk.
Is it on an official exchange?
Another way to reduce your risk when investing in cannabis stocks is to choose a company that is traded on the Toronto Stock Exchange (TSX), the New York Stock Exchange (NYSE), NASDAQ, or similarly reputable stock exchange.
Stocks that aren’t traded on these exchanges may be called over-the-counter stocks, or penny stocks. These are usually companies that don’t meet the size or financial stipulations to qualify to be traded on a formal exchange. Instead, they’re traded on a broker-to-dealer network that doesn’t always require the same amount of transparency that formal exchanges demand. This makes OTC stocks highly risky. If you’re comfortable with that risk, great! If not, then stick to cannabis stocks present on reputable exchanges.
Is it a direct or indirect marijuana company?
A direct marijuana company is primarily or exclusively active in the cannabis industry. An indirect marijuana company is active in other industries while also dabbling in marijuana to some extent.
Direct marijuana companies are subject to a single market and its ups and downs. This makes them a bigger investment risk. On the other hand, since they have “more skin in the game”, they may be more motivated to achieve profits in the cannabis industry than an indirect company which has a more stable business foundation and may treat their cannabis arm as expendable if the market isn’t moving in the right direction.
What are analysts saying?
Choose your experts wisely.
Anyone can claim that a certain stock is primed to blast off, but expert analysts don’t chase fads. Thorough research and reputation are the two surest ways to separate the pros from the posers.
Morningstar, for example, is an excellent option for reliable investment research and analysis. And no, they aren’t sponsoring this article.
How To Buy Marijuana Stocks in Canada
It’s one of the best online brokers, and you can do everything from your phone. Wealthsimple Trade offers several Canadian and U.S. cannabis stocks including HEXO corp., Cronos Group, Aurora, Canopy Growth, and more.
Another benefit of investing with Wealthsimple is free ETF trades, though, they don’t currently list any cannabis ETFs on their app.
Questrade is another highly lauded favourite among online brokers. The app is easy to use and offers both self-directed and managed accounts. Cannabis stocks on major stock exchanges are also available in Questrade.
Questrade also offers free ETF trades and has fantastic research tools and resources. Trading individual stocks on Questrade costs between $4.95 and $9.95 which may deter small-scale investors.
Our Final Thoughts
While many cannabis companies’ stocks are declining, the industry is poised to recover, but that depends largely on the U.S. and other markets steam-rolling legalization laws through the political process. For courageous, or reckless, investors, now might be the time to buy. Money is made in buying, not in selling. Maybe cannabis stocks can only go up now.
Frequently Asked Questions
Cannabis ETF’s (Exchange Traded Funds) are groups of individual cannabis stocks rolled together to form a different entity as far as the stock market is concerned. If you invest in a cannabis ETF, like Horizons Marijuana Life Sciences Index ETF (HMMJ) your money is instantly diversified among many cannabis stocks. The value of the ETF is based on the overall performance of all the stocks in the fund. ETFs are a fantastic way to invest your money while assuming less risk. They are often recommended by brokers and analysts because of their inherent diversification and excellent track record over time.
Almost all cannabis stocks have been steadily falling for the past year or more–some peaked nearly four years ago in 2018 or 2019 and have only nosedived since.
However, I think there is an answer to this question. If forced to choose, I’d say Canopy Growth (WEED) would be the “best” cannabis stock in Canada.
With a market cap over $3 billion, a global presence, and a wide variety of brands in all sectors of the marijuana industry, they would be my first pick to survive and pull through these lean years.
Any cannabis stock traded on a major stock exchange like the TSX, NASDAQ, or NYSE is available to be purchased by real flesh-and-blood brokers. You can find financial advisors in pretty much any bank or credit union, and there are plenty of private wealth management firms who can help you purchase cannabis stocks. There will likely be larger fees when consulting with real people instead of robo-advisors. That isn’t necessarily a bad thing, but you should know what you’re walking into if you prefer to work with a person.