Now’s a good time to look at cannabis stocks as part of a growth portfolio
At different times, being different can become quite profitable. In an industry like cannabis, there are many stocks that fit the requirements of investors. Generally, many tend to put money into those companies that think outside the box, as they are based on smart business or have a track record of refuting assumptions about the players in their industry. One of the biggest advantages of investing in companies that are not so common is that the risks they face are usually quite different from their more conventional peers. There are currently three stocks that definitely fit these criteria and could provide good returns.
Real estate investment trust (REIT) AFC Gamma, which went public earlier this year, is a company that provides a solution to the lack of access to capital, one of the main drawbacks of the cannabis industry today. Although there are financial institutions that support marijuana companies, there are many others that refuse to provide their services, especially because the plant is still illegal in the eyes of federal law. To close the funding gap, AFC issues secured loans to cannabis businesses, and AFC starts making money when its borrowers begin to repay those loans.
Innovative Industrial Properties is also a cannabis REIT that lends a hand to medical marijuana companies so they can access capital. However, its model is not based on loans; it simply buys cultivation facilities from cash-strapped companies and then leases them to sellers. This business model has served it well, and because the lease payments are fixed for years, they are highly reliable.
And then there is Cresco Labs, which is a company that is dedicated to selling cannabis products to consumers, showing a booming business so far. Its second-quarter revenue was up 17.7% quarter-over-quarter, and it looks like this is a trend that won’t stop for a while. So far this year, the company has made some complementary acquisitions, which are driving its market share and revenue base up exponentially.