There are more cannabis stocks than you can shake a stick at that have performed dismally over the past couple of months. Many of them, though, started out in 2019 with nice gains. Big up-and-down swings come with the territory when you invest in cannabis stocks.

However, some of these stocks are coming back, and more could be on the way to doing so. Three cannabis stocks that I think investors should consider buying on the rebound in June are CannTrust Holdings (CNTTQ), Canopy Growth (CGC 15.03%), and KushCo Holdings (KSHB). Here's why these stocks look like good picks.

Businessman pulling red line that was trending downward back up

Image source: Getty Images.

1. CannTrust

By late March, CannTrust's share price had more than doubled year to date. And then everything fell apart. The stock crashed after CannTrust posted disappointing fourth-quarter results on March 28. But I think the long-term picture for CannTrust should look much better.

The company's phase 2 expansion at its Niagara facility should reach full capacity in the third quarter. That will give CannTrust an annualized production run rate of 50,000 kilograms of cannabis. CannTrust now has supply deals with all 10 Canadian provinces. I expect the company will be able to sell all the product it can produce.

Supply chain bottlenecks caused problems for CannTrust in the early months following the launch of the adult-use recreational market in Canada. However, the company has taken the right steps to resolve those issues. We should see improvement on this front in the coming quarters.

Where CannTrust could really shine in the future is in the cannabis derivatives market. The company is ramping up its outdoor growing capabilities with a focus on this opportunity. By the end of 2020, CannTrust expects to have an annual production capacity of at least 200,000 kilograms. It should also have a very low cost per gram associated with its outdoor cultivation. 

CannTrust's market cap currently stands below $800 million. I think the stock has plenty of room to run over the next few years as CannTrust cranks up its production capacity.

2. Canopy Growth

You've probably heard the old saying that "the bigger they are, the harder they fall." That might be true, but it really hasn't been the case for Canopy Growth recently. Canopy is the biggest cannabis producer by market cap, and its stock has dropped over the past couple of months. But Canopy's decline wasn't as bad as many of its smaller peers.

I still like Canopy Growth, for several billion reasons. I'm talking, of course, about the company's huge cash stockpile resulting from the $4 billion investment Constellation Brands (NYSE: STZ) made last year. While other Canadian cannabis producers are having to raise cash by issuing additional shares or senior convertible notes, Canopy has all the money it needs to fund operations and expansion efforts.

Don't underestimate how important this cash is to Canopy Growth. It's enabled Canopy to move into the skincare and sleep solutions market through its acquisition of U.K.-based This Works. Canopy has entered the U.S. hemp CBD market with its investment in building a high-capacity hemp production facility in New York state. And the cash from Constellation has helped Canopy pave the way to potentially jump into the U.S. marijuana market with its deal for the rights to acquire Acreage Holdings (NASDAQOTH: ACRGF) should U.S. laws change in the future.

I expect that Canopy Growth will be a key player in every cannabis opportunity in every part of the world. If you think the global cannabis market will top $100 billion within the next 10 years or so, as many industry observers do, Canopy Growth should be a good pick to buy on the rebound.

3. KushCo 

In April, KushCo reported record-high Q2 revenue. But the stock has drifted downward, held back by the overall malaise for cannabis stocks. I like KushCo's long-term prospects, though.

KushCo's top market is in California. While the state got off to a rotten start in 2018 with the launch of its recreational marijuana market, the situation appears to be improving somewhat. KushCo should also benefit from the legalization of recreational pot in Illinois and potentially in other big states down the road.

The legalization of hemp in the U.S. presents another great opportunity for KushCo. The company's fastest-growing business in the last quarter was its energy and natural products segment, which markets solvents and hydrocarbons used in extracting oils and cannabinoids from cannabis plants. KushCo should reap the benefits of increasing demand for hemp-derived CBD in the U.S.

There's also one wild card that could be huge for KushCo. The company's valuation is far lower than Canadian cannabis businesses with even lower sales levels. That's primarily because marijuana remains illegal at the federal level in the U.S. and KushCo's shares aren't yet listed on a major stock exchange. But there's a distinct possibility that federal laws could change within the next two or three years. If that happens, KushCo stock would almost certainly skyrocket.