Over the past year, a number of marijuana milestones and trends have taken hold. We've seen Canada legalize recreational marijuana, pot players move into the hemp and cannabidiol space, and more recently witnessed a push by publicly listed pot stocks to uplist from the over-the-counter exchange to reputable U.S. exchanges, like the New York Stock Exchange (NYSE) and Nasdaq.

This last trend, uplisting, might not seem like a big deal, but it's been crucial in increasing the visibility, validity, and access to equity for the legal cannabis industry. It's also encouraging Wall Street firms to initiate coverage of marijuana stocks.

A tipped-over clear jar packed with cannabis buds that's lying atop a small pile of cash.

Image source: Getty Images.

Cowen puts Aurora Cannabis on a pedestal but overlooks already profitable pot stocks

This past week, Cowen Group, which is arguably the most bullish analyst on the legal weed industry with a $75 billion annual sales target by 2030, initiated coverage of Wall Street darling and millennial investing favorite Aurora Cannabis (ACB -3.20%). Pinned as one of Cowen's favorites, the investment bank set a price target on Aurora of 14 Canadian dollars (about $10.50 U.S.) and proclaimed that it would be among the first of its peers to become profitable on an EBITDA (earnings before interest, taxes, depreciation, and amortization) basis. This is certainly consistent with Aurora's second-quarter operating results, which guided for recurring positive EBITDA beginning in the fiscal fourth quarter (April 1, 2019 to June 30, 2019).

Cowen pointed to Aurora's impressive share of Canadian cannabis that's been sold thus far, as well as its reach into two dozen markets, including Canada, as reasons for its impending success. For comparison, Cowen sees Canopy Growth and Cronos Group achieving positive EBITDA further down the line. 

While I wouldn't disagree with Cowen's assessment of Aurora reaching a positive EBITDA before Canopy and Cronos Group, Cowen's research seems to overlook that there's a broad gamut of pot stocks beyond just the three or four big names that Wall Street obsesses over. Among these dozens of other pot stocks are three companies that have actually beaten Aurora Cannabis to profitability.

Check out the latest earnings call transcripts for Canopy Growth and other companies we cover.

Four vials of cannabidiol oil lined up on a counter.

Image source: Getty Images.

Charlotte's Web Holdings

Charlotte's Web Holdings (CWBHF -3.56%) is a retailer of hemp-derived cannabidiol (CBD) oil that's been delivering the green to investors for some time now. CBD is the nonpsychoactive cannabinoid best known for its perceived medical benefits.

The company has received a nice boost since Dec. 20, 2018, which is when President Trump signed the Farm Bill into law. The Farm Bill legalized hemp production and hemp-derived CBD products, which greatly expands Charlotte's Web's reach. Already in close to 3,700 retail doors prior to the Farm Bill announcement, the company should be able to reach new stores in presumably all U.S. states in short order.

But even prior to the Farm Bill, Charlotte's Web was doing just fine. Through the first nine months of fiscal 2018, the company recorded $48 million in sales, $37.1 million in gross profit before fair-value adjustments, and $24.4 million in operating expenses. Inclusive of relatively minor fair-value adjustments, that works out to $11.7 million in operating profit through the first three-quarters of fiscal 2018. 

Charlotte's Web was also profitable in the previous year. Through the first nine months of fiscal 2017, it netted $27.5 million in sales, $20.6 million in gross profit before fair-value adjustments, and recorded $11.9 million in operating expenses. All told, it logged $8.1 million in operating profit.

Charlotte's Web is consistently profitable, and the green flag waving on hemp-derived CBD should only further enhance the company's sales, visibility, and operating margins.

Clearly labeled jars filled with individual cannabis strains on a dispensary store counter.

Image source: Getty Images.

Trulieve Cannabis

One industry that's been a minefield of losses is the vertically integrated dispensary space in the United States. It takes quite a bit of capital to construct greenhouses, operate processing facilities, and renovate or construct dispensaries for the sale of cannabis. But none of this has been a problem for Trulieve Cannabis (TCNNF 0.38%).

Trulieve is a vertically integrated dispensary company with two dozen open stores in Florida, a state with a highly lucrative medical marijuana industry. To be fair, Trulieve is pushing into the recreationally legal states of California and Massachusetts via acquisitions, but its primary focus has been and remains Florida.

By centralizing its focus on Florida -- a state that has issued just over a dozen cultivation licenses -- Trulieve has been able to localize its costs up until now and has cemented significant market share in a state with relatively limited competition. Through the first nine months of fiscal 2018, the company reported $66.9 million in sales, $47.8 million in gross profit, and $19.4 million in operating expenses. Even removing a $24 million boost from fair-value adjustments, Trulieve Cannabis would have generated $28 million in operating income through Q3 2018.

Although costs are bound to rise a bit as it expands into two new states, Trulieve's established stores in Florida should keep the company decisively profitable.

An outdoor cannabis-growing greenhouse.

Image source: Getty Images.

Innovative Industrial Properties

Another pot stock to have beaten Aurora Cannabis to the punch of profitability is marijuana real estate investment trust (REIT) Innovative Industrial Properties (IIPR -1.96%).

As with most REITs, the goal is to acquire land and facilities for a particular industry, then lease these facilities out for an extended period of time, reaping the rewards of a rental-income stream. Much further down the line, REITs can choose to sell some of their properties for a profit in order to raise capital and start the process anew.

In Innovative Industrial Properties' case, it has one dozen properties in 10 states that range from weed cultivation to processing facilities. Its most recent acquisition in Sacramento, California of 43,000 square feet of industrial space moved the company into the most lucrative cannabis market in the United States.

What makes Innovative Industrial Properties so special is its ability to grow organically and inorganically. Obviously, the company is expected to acquire new properties each year to boost its adjusted funds from operations. But of its one dozen already leased properties, the company nets a 3.25% annual rent increase, as well as a 1.5% management fee based on the base rental rate. This isn't blazing hot organic growth, but when operating costs are minimal, it can lead to very strong profits.

As a REIT, Innovative Industrial Properties is also required to pay out a significant portion of its earnings as a dividend in order to avoid normal corporate income tax rates. Doing so has led to two dividend hikes since going public on the NYSE in December 2016. In terms of profit consistency, Innovative Industrial Properties is tough to beat.