For a number of years, marijuana stocks were the hottest investment on Wall Street. Investors could seemingly throw a dart at a list of publicly traded pot stocks and come out a winner. But that's not the case any longer.

Over the past 14 months, cannabis stocks have been mired in a fairly precipitous downtrend that's been brought on by regulatory-based supply concerns in Canada, high tax rates on legal product in the U.S., and financing worries throughout North America. In many instances, we've seen pot stock valuations fall by 50% or more from where companies ended the first quarter of 2019.

To add to this misery, the coronavirus disease 2019 (COVID-19) pandemic has complicated matters for the industry. The shutdown of nonessential businesses in certain states and provinces has forced retailers to adopt a delivery-only or curbside-pickup model. In other words, it's just piling on the challenges that marijuana stocks are facing.

Yet, in spite of these hurdles and the COVID-19 pandemic, there are still four pot stocks on track to generate a full-year profit in fiscal 2020. Though things could obviously change, the following four cannabis pure-plays look to be among the most fundamentally sound of their peers.

A close-up of a flowering cannabis plant.

Image source: Getty Images.

Innovative Industrial Properties

The hands-down most profitable pot stock on a per-share basis is real estate investment trust (REIT) Innovative Industrial Properties (NYSE:IIPR). Like any REIT, its purpose is to acquire assets (in this case cannabis cultivation and processing sites) that can be leased for long periods of time.

As of mid-May, Innovative Industrial Properties had 56 assets in 15 different states in its portfolio. For context, it began 2019 with 11 assets, meaning it's really beefed up its cannabis rental portfolio over the past 17 months. The best part is the weighted-average lease length of these assets is 16 years, with the company last reporting a yield on invested capital of better than 13% during the first quarter. At these returns, Innovative Industrial Properties will net a complete payback on its invested capital in less than six years. 

Another factor working in IIP's favor is the lack of access to basic banking services for cannabis companies in the United States. With multistate operators (MSO) needing cash to bolster their balance sheets, they've regularly been turning to IIP to execute sale-leaseback agreements. Under these deals, IIP purchases a property from an MSO in cash, but immediately leases the property back to the seller for between 10 and 20 years. Both sides win, with the MSO netting much-needed cash and IIP gaining a long-term tenant.

With COVID-19 unlikely to seriously disrupt Innovative Industrial Properties' rental model, look for the company to be quite profitable in 2020.

Clear jars packed with unique cannabis buds on a dispensary countertop.

Image source: Getty Images.

Green Thumb Industries

Although Wall Street has it eking out only a very small per-share profit in 2020, U.S. MSO Green Thumb Industries (OTC:GTBIF) definitely looks to be trending the right way with its bottom line, even though COVID-19 has made operating cannabis stores challenging.

Green Thumb has 45 currently operational dispensaries, with licenses to open as many as 96 stores in a dozen states. Were it not for COVID-19, Green Thumb's profitability in 2020 probably wouldn't be in question. It's opened a number of locations in Illinois, which began adult-use weed sales on Jan. 1, 2020, and it's moved into the tourist-heavy Nevada market, which could feature the highest per-capital cannabis spending by mid-decade.

Green Thumb has also leaned heavily on derivatives to drive its growth. Derivatives are alternative consumption options, such as edibles, vapes, infused beverages, concentrates, and topicals. Derivatives offer substantially juicier price points and margins than dried cannabis products, which is great news given that roughly two-thirds of Green Thumb's sales are generated from non-flower products.

Though profitability isn't guaranteed considering that Green Thumb is spending aggressively to open new stores in core markets, it appears likely to happen in 2020.

A person holding a vial of cannabinoid-rich liquid in front of flowering cannabis plants.

Image source: Getty Images.

Valens

The only Canadian pot stock that looks to have a clear path to profits in 2020 is extraction-service provider Valens (OTC:VLNCF). Though per-share estimates have fallen over the past three months, Wall Street is still looking for $0.23 Canadian per share in 2020 profit.

Valens finds itself in great position as an ancillary player due to the rise of derivatives. Since these alternative consumption options provide superior margins to dried cannabis flower, all licensed producers want derivatives in their product portfolios. But to produce derivatives, you first need to extract the desired resins, distillates, concentrates, and targeted cannabinoids from hemp and cannabis biomass. That's where Valens comes into play. With Canada having recently launched derivative products in mid-December, demand should only grow from here.

What's more, Valens relies on price and volume commitments via contracts. These contracts tend to run longer than a year, providing the company with plenty of cash flow visibility, as well as the ability to plot out its capital expenditures while still maintaining profitability.

For such a relatively new company (Valens began its extraction operations in 2018), to already be profitable is pretty incredible.

A large cannabis dispensary sign in front of a retail store.

Image source: Getty Images.

Trulieve Cannabis

Finally, there's U.S. MSO Trulieve Cannabis (OTC:TCNNF), which is the most profitable pure-play pot stock on a nominal basis, rather than per share. In 2019, Trulieve generated $252.8 million in sales, a $163 million gross profit, and had $76.4 million in operating expenses. In other words, it delivered $86.6 million in no-nonsense operating income before accounting for fair-value adjustments and interest expenses.

One thing that makes Trulieve special is the company's laser focus on Florida. Trulieve has opened 48 of its 50 operational dispensaries in the Sunshine State, despite its being only a medical marijuana-legal state, and in the process gobbled up the lion's share of Florida's medical marijuana market share. By focusing its efforts in a single state, Trulieve has been able to effectively build up its brand without having to spend a fortune on marketing.

Keep in mind that Trulieve does have access to other markets and will likely utilize what it's learned in Florida to be successful. Acquisitions and organic licensing should see Trulieve push for a presence in California, Massachusetts, and Connecticut in the years ahead.

Among pure-play seed-to-sale growers, there are none that offer more surefire profit potential in fiscal 2020 than Trulieve Cannabis.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.