Sometimes the best time to invest in a relatively new market is after the initial euphoria evaporates. That could very well be the case with investing in CBD stocks.
CBD is short for cannabidiol, which is a chemical found in the cannabis plant. CBD doesn't produce a high but has been found to have therapeutic benefits.
The U.S. legalized hemp-derived CBD at the federal level with the 2018 Farm Bill. The mere anticipation of the passage of this legislation stoked investors' interest in the stocks of companies involved in the CBD industry.
Although federal legalization served as a key milestone, the U.S. Food and Drug Administration (FDA) chose to exclude CBD in food supplements. As a result, the CBD opportunity in the U.S. hasn't delivered on investors' lofty ambitions.
The CBD market could expand if the FDA reverses its stance. In the meantime, here are four CBD stocks to consider.
| Company | Market Cap | Overview |
|---|---|---|
| Cresco Labs (OTC:CRLBF) | $448.2 million | U.S. multi-state cannabis operator that markets CBD products. |
| Green Thumb Industries (OTC:GTBIF) | $2.1 billion | U.S. multi-state cannabis operator that markets CBD products. |
| Jazz Pharmaceuticals (NASDAQ:JAZZ) | $7.7 billion | Pharmaceutical company with the first FDA-approved CBD drug. |
| Trulieve Cannabis (OTC:TCNNF) | $1.2 billion | U.S. multi-state cannabis operator that markets CBD products. |
Cresco Labs
Cresco Labs
Cresco Labs is an Illinois-based cannabis operator that markets recreational and medical cannabis products in eight states. It commands the leading market share in three of those states: Illinois, Massachusetts, and Pennsylvania.
The company isn't just a cannabis producer and retailer. Cresco also markets branded cannabis products containing CBD, including its Wonder gummies.
Cresco has grown significantly through the years, both organically and through acquisitions. It consistently generates solid free cash flow. The company stands to benefit from tax changes related to the federal rescheduling of marijuana.
Perhaps the biggest knock against Cresco is that the company can't list its shares on a major U.S. stock exchange as long as marijuana remains illegal at the federal level. However, Cresco has proven that it can still attract investors through U.S. over-the-counter (OTC) markets.
Green Thumb Industries
Green Thumb Industries
Like Cresco Labs, Green Thumb Industries is a U.S. cannabis operator based in Illinois. The company has retail stores in 14 states, including California, Florida, Ohio, Pennsylvania, and New York.
Green Thumb markets multiple brands in its Rise dispensaries. Its Rythm brand features a lineup of products containing CBD.
The company is profitable. It continues to grow, adding new dispensaries in Florida and New York in the third quarter of 2024. Green Thumb has been able to retire its $225 million senior secured debt scheduled to mature in 2025.
More growth could be on the way. Green Thumb has operations in Minnesota, where a new recreational cannabis market will launch in 2025.
Jazz Pharmaceuticals
Jazz Pharmaceuticals
You might be surprised to find a pharmaceutical stock listed among the top CBD stocks to consider. But Jazz Pharmaceuticals has a direct and important connection with CBD. In 2018, the company's Epidiolex became the first CBD product made from the cannabis plant to win FDA approval.
Jazz actually didn't own Epidiolex at that time. It acquired GW Pharmaceuticals, which developed the CBD drug to treat epileptic seizures, for $6.7 billion in 2021 .
Epidiolex isn't too far away from generating annual sales of $1 billion or more, as some analysts projected after it was first approved in the U.S. Sales continue to pick up as the drug is now approved in more than 35 countries outside of the U.S.
Jazz also has other growth drivers in its lineup. Sleep disorder drug Xywav is gaining momentum. Sales are also rising for lung cancer drug Zepzelca.
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Trulieve Cannabis
Trulieve Cannabis
Trulieve Cannabis is a Florida-based U.S. cannabis operator. It has retail dispensaries in eight states with cultivation and processing facilities in seven states.
The company is especially dominant in its home state's medical cannabis market. Roughly 70% of Trulieve's retail locations are in Florida.
Like Cresco Labs and Green Thumb Industries, Trulieve generates most of its revenue from cannabis sales. However, it also markets CBD products, including tinctures.
Trulieve experienced a setback when Florida voters rejected a constitutional amendment in November 2024 that would have legalized recreational marijuana. The amendment required 60% approval to pass but only received around 56%. However, supporters plan to continue pushing for the legalization of recreational marijuana. Trulieve could still have a major growth opportunity in its home state in the future.
