3 Cannabis Stocks to Buy Before Regulations Get Very Friendly

Investors have long been reading about cannabis stocks worth buying. However, shares in this sector remain largely a speculative game. The main reason is regulatory difficulties that have affected economic growth. At the same time, cannabis companies faced ongoing financial losses.

However, there appears to be good news on both fronts. At least 40 countries have fully or partially legalized marijuana. Recently, Germany legalized the use of marijuana by adults. In the United States, reclassification of marijuana as a Schedule III drug is imminent. Additionally, a majority of Americans support the legalization of marijuana at the federal level.

Therefore, as regulatory headwinds ease, it’s a good time to consider exposure to high-quality cannabis stocks. I must add that some of the best cannabis companies have achieved or are close to achieving break-even EBITDA. If growth accelerates thanks to friendly regulation, margin expansion is likely to occur.

With these advantages in mind, let’s talk about three cannabis stocks you can buy for a multi-bag return.

Cronos Group (CRON)

Cronos Group (NASDAQ:CRON) is one of the most undervalued cannabis stocks to buy for multi-bag ROI. The cannabis company’s current cash buffer of $855 million is almost equal to its market valuation.

It is likely that Cronos will use the cash for aggressive organic and acquisition-led growth over the next 24 months. In fact, Cronos has expanded into new geographies in recent years, including Germany, Australia and the UK.

As part of the recent development, Cronos announced that it will provide GrowCo (50% ownership) with a $51 million senior secured non-revolving credit facility to finance the expansion of the facility. The goal is to meet the increased global demand for high-quality hemp flower.

In the first quarter of 2024, Cronos saw significant revenue growth of 30% year-over-year to $25.3 million. Given its recent entry into new markets, revenue growth is likely to accelerate, supporting a significant rally in CRON stock from undervalued levels.

Tilray (TLRY)

Brand Tilray (NASDAQ:TLRY) supplies have been limited for an extended period. Taking into account the developments in the business situation, I believe that a strong breakout is approaching.

Last month, Tilray announced a $250 million at-the-market program. The company intends to use the funds to finance strategic and accretive acquisitions in the U.S. and internationally. This is in anticipation of cannabis being reclassified as a Schedule III drug in the US

Notably, in Q3 2024, Tilray reported global cannabis net revenue growth of 33% year-over-year. However, international cannabis growth during this period was 44%. Tilray recently introduced EU-GMP certified Broken Coast cannabis products to the Australian market. The medicinal cannabis segment is likely to remain a growth engine as it expands its presence in Europe and emerging markets.

At the same time, Tilray established itself as the fifth largest craft beer brewery in the US. This diversification has helped create a strong strategic infrastructure for cannabis expansion based on possible legalization at the federal level.

Canopy Growth Corporation (CGC)

Canopy growth (NASDAQ:CGC) in late April, the company’s shares rose to closing highs of $14.9. However, there was a sharp correction and CGC shares are trading at $7. The downside is a good opportunity for accumulation.

Notably, Canopy announced a $250 million stock offering earlier this month. Dilution is one of the reasons for sharp corrections, apart from profit booking after a huge rally.

However, short-term price action aside, Canopy is set for accelerated growth. An important point to note is that Canopy has a strong presence in the German cannabis market. Thanks to the legalization of cannabis in the country, the company is set for accelerated growth.

Canopy is also building its presence in the United States in anticipation of friendly regulations. During the first quarter of 2025, Canopy USA initiated acquisitions of Mountain High Products, Wana Wellness, The Cima Group and Lemurian. These acquisitions are likely to be completed in the first half of 2025.

As of the date of publication, Faisal Humayun did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing guidelines.