3 Cannabis Stocks Ready to Rise as Regulations Ease

Regardless of your views on cannabis use, it seems that the current administration has begun to soften the stance of federally regulated cannabis. While several states have already legalized the drug for both medical and recreational use, its federal regulation has stood in the way of several potential cannabis stocks. These stocks could now start to rise, as the U.S. Drug Enforcement Administration (DEA) from the federal government confirms that marijuana will be reclassified from a Schedule I drug to a Schedule III drug.

As a reminder, these drug schedules do not determine nationwide legality; rather, they are federal guidelines for drug use and safety. In the case of cannabis, its Schedule I status has designated it as a compound with no significant medical use and significant health risks, placing it in the same category as drugs like heroin and LSD. Now, with a potentially new government perspective, cannabis research and cannabis stocks could see a new era of growth.

Cronos Group (CRON)

By focusing on a highly scientific and detailed approach to cannabis cultivation, Cronos Group (NASDAQ:CRON) is one of the more exciting cannabis stocks available to buy. That’s because the company is focused on developing and delivering what it calls “rare cannabinoids.”

With this approach, the company hopes to expand the range of applications and experimental spectrum of cannabinoids such as tetrahydrocannabinol (THC) and cannabidiol (CBD). These are the two main active ingredients in cannabis, with THC providing the psychoactive effects while CBD is considered more therapeutic. There are other cannabinoids, but their effects on the human endocannabinoid system are relatively unknown.

If Cronos discovers more cannabinoids and begins mass-producing them, it could change the nature of how the cannabis industry operates. This is because companies could start focusing on custom-growing cannabis strains that produce unique cannabinoids for their uses, rather than the current industry standard of increasing THC yield or CBD concentration.

Tilray Brands (TLRY)

Although he is currently more successful in the alcohol department, Tilray Brands (NASDAQ:TLRY) offers a more stable and established position among cannabis stocks. This is the result of the company’s broad diversification into recreational and medical products.

So Tilray represents a slightly safer way to invest in cannabis, as its primary value drivers aren’t 100% reliant on legalizing or reclassifying cannabis. Instead, these products are part of its portfolio that it can strategically manage or sell if the pendulum swings the other way on cannabis adoption.

While the stock is down 22% year-over-year, the company’s fiscal third quarter of 2024, released in April of this year, provides a glimpse into the company’s long-term trajectory. The company grew revenue by 23% year-over-year while reducing cost of revenue by 11%. This trend, if it continues into the next quarterly report, could significantly lift the stock from its current decline.

Curaleaf Holdings (CURLF)

Currently, 350,000 patients are undergoing treatment Curaleaf Farms (OTCMKTS:CROSS) for its medical marijuana products. This gives the company a unique opportunity to capitalize on the federal legalization of medical marijuana. Beyond federal regulations, Curaleaf is smartly positioning itself as a wellness brand that goes beyond traditional perceptions of marijuana. As a result, the company is more like an alternative medicine brand than a recreational drug brand and the connotations that come with it.

For consumers, this makes Curaleaf a more likely and convenient way to begin exploring the effects of marijuana from a wellness perspective, rather than a recreational one. This branding strategy will likely play out very well in the event of a broader relaxation of federal regulations, as many people who were hesitant about marijuana change their perspective. Additionally, the company’s financial performance bears close watch as it continues to pursue a profitable path, increasing revenue and profit margins.

As of the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are the author’s own and subject to InvestorPlace.com Publication Guidelines.

At the time of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.