The marijuana industry is growing at a rapid pace, and investors have surely taken notice. Much more marijuana stocks have witnessed their valuations increase substantially, or maybe run even higher, over the trailing 12-month period.
Stemming from a 2016 Gallup poll and an April 2017 CBS News poll, the percentage of those who were receptive to seeing recreational cannabis legalized nationally which has surged to a respective 60% and 61%, both all-time highs. By comparison, Gallup’s 1995 poll showed just 25% approval for such a play, while the CBS News poll was a full 21-percentage-points lower just six years ago. The public wants change at the federal level, and investors are trying to beat that change by purchasing marijuana stocks.
The sale of legal marijuana has also risen. Investment firm Cowen & Co. is looking for $50 billion in legal annual cannabis sales by 2026, while a more recent report from Marijuana Business Daily implies that legal U.S. sales could triple between 2017 and 2021, to more than $17 billion. You’d probably struggle to find such consistent growth in any other industry or sector.
Which marijuana stock could hit $1 billion in sales first?
Yet, there are dozens of marijuana stocks to choose from, and they’re clearly not all going to be winners. The top performers, assuming marijuana remains legal in select states and that it gains broader approval in Canada and Mexico, are probably going to be the pot-based businesses that can really ramp up revenue and turn a healthy profit.
If there is a significant bench mark out there for marijuana stocks, it’s the $1 billion sales mark. The first cannabis company to hit $1 billion in sales will likely validate the industry. But which marijuana stock has the best chance at being first to $1 billion in annual sales?
1. GW Pharmaceuticals
Considered the most sensible choice is cannabinoid-based drug developer GW Pharmaceuticals (NASDAQ: GWPH), which also happens to be the largest pot stock by a mile in terms of market cap.
What makes GW Pharmaceuticals so unique is its currently experimental cannabidiol therapy Epidiolex, which hit its primary endpoint in a pivotal phase 3 trials for two rare types of childhood-onset epilepsy. In both its Dravet syndrome and Lennox-Gastaut syndrome trials, Epidiolex led to a statistically significant reduction in seizure frequency compared to the placebo.
The success of these studies puts the company on track to get Epidiolex approved by the Food and Drug Administration (FDA), though nothing is ever a guarantee when it comes to the FDA. Assuming some potential for label expansion, Epidiolex could very well hit $1 billion in peak annual sales, if not a tad higher.
2. Corbus Pharmaceuticals
Corbus Pharmaceuticals (NASDAQ: CRBP) is considerably more of a wildcard than GW Pharmaceuticals, but if one specific clinical trial goes its way, it could easily leap to $1 billion in annual sales.
Corbus’ pipeline consists of a solitary drug known as anabasum, which is a synthetic oral endocannabinoid-mimetic drug that binds to the CB2 receptors expressed on immune cells and fibroblasts. Its drug is being tested in four indications, but one stands out head and shoulders above the rest: cystic fibrosis (CF). There are few drugs to treat CF, and most that are FDA approved target a very specific mutation, making their impact limited within the CF community. Anabasum is believed to have a global anti-inflammatory effect, meaning it could be taken by most, or all, CF patients.
3. Canopy Growth Corp.
Another seemingly logical marijuana stock that could thrive is Canopy Growth Corp. (NASDAQOTH: TWMJF), a producer and retailer of medical cannabis products and oils in Canada. Medical weed has been legal in Canada since 2001.
Canopy Growth has been a busy bee of late on the acquisition front. It completed its acquisition of Mettrum Health earlier this year, and it acquired a 472,000 square foot facility that includes its current corporate headquarters.
Growth by acquisition gives the company immediate access to more medical marijuana patients and the ability to rapidly expand its growing capacity.
One of Canopy Growth’s largest competitors in the Canadian medical marijuana producing and retail business is Aphria (NASDAQOTH: APHQF). Aphria has the distinction of being the most prominently profitable marijuana stock, with the company reporting five consecutive quarterly profits.
Unlike Canopy Growth, Aphria is doing things organically. It’s been funding expansions of its existing grow capacity, and is currently working on its most aggressive growth initiative to date, Phase IV.
5. Aurora Cannabis
And how can we forget Aurora Cannabis (NASDAQOTH: ACBFF), yet another of Canada’s medical cannabis producers and retailers. Aurora Cannabis has lagged its peers in recent profits due to its expansion-based spending.
Like Aphria, Aurora Cannabis is all about organic development. Aurora Cannabis has touted its Aurora Sky project, which will increase its cultivating capacity nearly ninefold, as the most technologically advanced and automated cannabis-grow facility in the world, when completed.