Sorry, Robinhood investors. There are some stocks that you just can't buy on the popular trading platform.
What's the deal? Robinhood doesn't allow buying and selling many stocks that trade over the counter (i.e., not on a centralized stock exchange like Nasdaq and the New York Stock Exchange.) Granted, there are a few OTC stocks you can buy on Robinhood, but the company has cherry-picked the ones that it allows.
This might not be a huge problem. However, it means that several great U.S.-based pure-play marijuana stocks can't be bought on Robinhood since they can only trade over the counter due to cannabis being illegal at the federal level. Meanwhile, five Canadian marijuana stocks rank among the 100 most popular stocks on Robinhood.
Here are three fast-growing pot stocks that Robinhood investors can't buy right now but would probably love.
Image source: Getty Images.
1. Curaleaf Holdings
Curaleaf Holdings (CURLF 5.26%) ranks as the biggest U.S.-based cannabis operator in terms of market cap and trails behind only Canopy Growth (CGC 2.41%) among all pure-play pot stocks. Robinhood investors can buy Canopy but can't buy Curaleaf. That's a shame because Curaleaf appears to be a better pick on nearly every front.
For one thing, Curaleaf already consistently generates positive earnings before interest, taxes, depreciation, and amortization (EBITDA); Canopy and most of its Canadian peers don't. Curaleaf reported revenue of $121.4 million in its latest quarter (including its managed entities), a 120% year-over-year jump. Canopy posted net revenue of 110 million in Canadian dollars (roughly US$84 million) in its latest quarter, up 22% from the prior-year period.
While Canopy can only hope to enter the lucrative U.S. market, Curaleaf already operates in 23 states. It runs 95 dispensaries, 22 cultivation sites, and more than 30 processing facilities. Growth shouldn't be a problem at all for Curaleaf. Several of the states where it operates have cannabis markets only in their early stages.
2. Green Thumb Industries
Let's compare Green Thumb Industries (GTBIF 3.56%) to the most popular pot stock on Robinhood -- Aurora Cannabis (ACB -0.15%). I'll warn you in advance, though: It's not much of a contest.
Like Curaleaf, Green Thumb already consistently delivers positive EBITDA and is on track to be profitable next year. Like Canopy, Aurora doesn't. Green Thumb's revenue soared nearly 168% year over year in Q2 to $119.6 million, only a smidgeon behind Curleaf's revenue total. Aurora's latest quarterly revenue declined both from the prior-year period and the previous quarter to CA$72.1 million (around US$55 million).
Green Thumb should have plenty of room to run. The recreational marijuana market in its home state of Illinois is sizzling hot. The company recently opened its 49th retail cannabis store nationwide in Pennsylvania, which claims a fast-growing medical cannabis market. Green Thumb still has another 47 retail licenses that allow it to launch new stores across the country.
3. Trulieve Cannabis
Trulieve Cannabis (TCNNF 3.83%) claims a key advantage over all of the stocks mentioned so far: It's already profitable. The U.S. cannabis operator has delivered positive and growing adjusted EBITDA in 10 consecutive quarters.
In its latest quarter, Trulieve reported record revenue of $120.8 million, more than double the total generated in the prior-year period and a 26% quarter-over-quarter increase. What's especially impressive is that the company posted free cash flow of $39.6 million.
You could accurately describe Trulieve as the 800-pound gorilla of the large medical cannabis market in Florida. Sixty-three of the company's 65 stores are in the Sunshine State, where it commands a 50% market share. However, Trulieve is also expanding into other markets. It now has operations in California, Massachusetts, and Connecticut. With its strong financial position, the company seems likely to continue moving into new markets in the future.
Changes could be on the way
For now, if Robinhood investors want to buy any of these top U.S. marijuana stocks they'll have to do so on a different trading platform. But changes could be on the way.
The U.S. elections in November just might set the stage for federal cannabis laws to be revised. Should Democrats win the presidency and sweep both legislative chambers, there's a good chance that legislation could be passed that legalizes medical cannabis nationwide and recognizes the rights of states to enforce their own cannabis laws. If that happens, Curaleaf, Green Thumb, and Trulieve would be able to list their shares on major U.S. stock exchanges, giving Robinhood investors an opportunity at long last to buy these hot pot stocks.
