Curaleaf Holdings (OTC:CURL.F) is a large multistate cannabis operator with operations in 17 states. Its growing presence in the U.S. pot market has made it one of the most well-known marijuana stocks in the country. Acquisitions have helped Curaleaf grow and capture significant market share along the way.

But with the COVID-19 pandemic roiling global markets and economies, and cannabis companies struggling to stay afloat with limited cash on hand, there's even more risk in the industry than there was just a few months ago. Let's take a closer look at Curaleaf to see whether it's a safe stock to invest in today, or if investors are better off looking elsewhere.

What its most recent earnings results say

Curaleaf released its year-end results on March 26. During the full year of 2019, it recorded sales of $221 million, which is nearly triple the $77.1 million that it brought in the year before.

However, the problem with most cannabis stocks isn't that they aren't growing, it's that they're not making nearly enough headway toward profitability or being cash flow positive. And those are two areas of concern for Curaleaf as well. Despite its impressive sales growth, the company's net loss of $69.8 million was 13% higher than the $61.9 million loss Curaleaf incurred in the previous year. One reason it's struggling to turn a profit is that all that growth comes with a lot of overhead. The company's selling, general, and administrative costs nearly doubled from $65.3 million in 2018 to more than $121 million in 2019.

Cannabis greenhouse.

Image source: Getty Images.

An even more pressing issue may be the company's rate of cash burn. In 2019, Curaleaf used $38.3 million to fund its operating activities, compared to $33.1 million the year before. Its cash balance went from $266.6 million at the start of 2019 to just $42.3 million by the end of it. The company simply can't keep up with that burn rate without issuing more shares and crippling its stock price in the process.

Investors will get an updated view of where the company stands on May 18 when Curaleaf releases its first-quarter results of 2020.

Why 2020 could be a challenging year

COVID-19 has led to spikes in cannabis sales but it's also created lockdowns, which could adversely impact Curaleaf's sales this year. The company has dispensaries in Nevada, including one in Las Vegas. And while customers are able to pick up orders curbside or have their purchases delivered, tourism will take a major hit. With travel restrictions in place, Nevada will see a steep decline in the number of tourists, which will negatively impact Curaleaf's sales.

In February, Curaleaf also announced the completion of its acquisition of Cura Partners, which owns the popular Select brand. Curaleaf now prides itself on being the largest cannabis operator in the U.S. with 53 open dispensaries -- at the time of the announcement. However, that large footprint can work against it. Cannabis companies need to be lean and efficient right now. Having the most dispensaries would've attracted investors a year or two ago, but what's important today amid the pandemic, is that the business is sound and sustainable. And with more costs and dispensaries to worry about, Curaleaf isn't making things easy on itself this year.

Is Curaleaf too good of a growth opportunity to pass up?

There's no denying that Curaleaf has incredible growth potential given its acquisition of Cura Partners and all the different markets it's in today. Over the longer term, there's even more potential if the U.S. federally legalizes marijuana. The problem is that without sufficient cash to run its business, Curaleaf may struggle to get to that point. And that's why investors may be better off waiting for a couple of quarters to see the impact of COVID-19 on Curaleaf's financial performance before making an investment decision.

Shares of the pot stock are down 17% this year, which is better than the Horizons Marijuana Life Sciences ETF's 29% decline in 2020. Unfortunately, things may not get any better as the year goes on and Curaleaf investors could be in for a rough ride.