A market crash is hard to predict, but all investors can prepare by safeguarding their portfolios with some growth stocks -- ideally in an evolving industry, such as cannabis, that has tremendous potential. And the coronavirus pandemic that hindered almost every other sector has actually been beneficial to the marijuana industry, with cannabis sales booming in the U.S. and Canada during lockdowns. The industry is still in a developmental stage, but U.S. cannabis stocks have outshone Canadian pot stocks even in a limited legal market.

If you have $2,000 left to spare after paying all your bills, these two growth stocks might just be a perfect fit for your portfolio. Both of them allow you to be a part of this nascent industry that has huge growth prospects. While one of them is a profitable marijuana company, the other allows investors an indirect entry into the market.

A person pointing at a red growth line painted on the wall.

Image source: Getty Images.

Trulieve Cannabis has an outstanding future ahead

The recent acquisition of Arizona-based Harvest Health Recreation has made Trulieve Cannabis (TCNNF -2.14%) the talk of the town.

But that is not the only reason this Florida-based cannabis company is an exciting stock to include in your portfolio. Trulieve has established a name for itself by dominating the medical cannabis market in its home state. Though earlier investors worried that focusing on just one segment (medical cannabis) and one state could be a downside for the company, the results proved otherwise. Its numbers for the first quarter (which ended March 31) are proof of that. The company has been consistently growing its revenues and profits, both rare qualities among marijuana companies.

With 87 operating dispensaries, the company holds a 50% market share in Florida and is also advancing to other state markets. The Harvest Health acquisition provided Trulieve an entryway into the market in Arizona, which recently legalized recreational cannabis. The deal also allows Trulieve to add dispensaries in Pennsylvania and Maryland. All in all, it will have 126 dispensaries in 11 states, adding up to a robust presence in the U.S. cannabis market.

With growing revenues and profits and a stable balance sheet, Trulieve is more than ready to become a top contender as legalization ramps up. The company had cash and cash equivalents of $162 million and net debt of $117 million at the end of Q1.

2 perks of investing in Innovative Industrial Properties

Investors who normally shy away from the ups and downs of the volatile cannabis industry in the U.S. might be interested in Innovative Industrial Properties (IIPR -0.72%). As a real estate investment trust (REIT), this company offers an indirect entry into the sector while taking advantage of the marijuana boom.

The federally illegal status of cannabis makes it difficult for companies to acquire financing to set up large production facilities. Innovative solves this problem by buying smaller properties from medical cannabis companies, then leasing them back. This brings much-needed capital to the marijuana companies and reliable rental revenue for Innovative Industrial Properties. It's all been working exceptionally well, as is evident from the company's consistent revenue growth and profits. Its total revenue saw a jump of 103% year over year to $43 million in the first quarter of this year (ended March 31).

Net income also grew to $25.6 million from $11.5 million in the year-ago period, which helped adjusted funds from operations (AFFO) increase by 116% year over year to $38 million for the quarter. Similar to the way net earnings determine the performance of a company, AFFO does the same for a REIT, telling us how much cash is available to be paid out to shareholders as dividends.

REITs are mandated by law to pay out 90% of their taxable income to shareholders. Innovative's consistent profitability and AFFO help maintain the steadiness of its dividends. Not only is its dividend yield of 2.6% (twice the S&P 500's average yield of 1.3%) attractive, but the consistent increases offer investors a stable source of income. The June dividend increase of 32% year over year marked the 11th increase since Innovative went public in 2016.

The stock market and risk go hand in hand, and a dividend stock provides a safety net for investors.

Primed to grow as the marijuana industry expands

Trulieve will have a competitive edge if Florida legalizes recreational cannabis. Trulieve also made an entry into the recreational segment in Q3 2020 when it launched high-margin cannabis derivatives in the state, including gels, chocolates, cookies, and brownies for its medical cannabis patients.

Some researchers project that the global marijuana market could grow by a compound annual growth rate (CAGR) of 28% to be worth $90 billion by 2026, with the recreational segment contributing the most to this increase.

If Trulieve is already profitable just with medical cannabis, imagine its position once it makes its mark in the recreational segment as well. In the past three years, even with a limited legal cannabis market, Innovative's stock has soared 355%, while Trulieve's shares have gained 201%, both of which have easily outpaced the S&P 500's gain of 50%.

IIPR Chart

IIPR data by YCharts.

Innovative Industrial Properties will continue growing as more states legalize marijuana, helping it to expand its customer base. Acquisitions are the driving factor for this company's rising revenue and income. It made four new purchases (which included three new properties and a land expansion at an existing property) in just the first three months of 2021.

These factors make both of these exciting companies the best growth stocks in the marijuana industry to invest in right now.