Investors are familiar with the headline names in the cannabis industry, but the very fact they're so well known indicates they may be trading at valuations that reflect the attention they've received.

For those wanting to catch the green wave ahead of the rest of the market, looking in out-of-the way places or in stocks that aren't typically associated with marijuana is a good way to profit. 22nd Century Group (XXII -8.55%), Planet 13 Holdings (PLNH.F), and Clever Leaves (CLVR -22.00%) are three under-the-radar stocks that could offer investors their best chance of getting in ahead of the crowd.

Technician putting cannabis bud into a test tube

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A cannabis biotech prepares for liftoff

Alex Carchidi (22nd Century Group): 22nd Century Group is low-profile because it doesn't sell any cannabis products to consumers, nor does it plan to. Instead, the company is establishing an unprecedented level of control over the level of psychoactive chemicals contained in marijuana plants via its cannabis genetics platform. That's something other cannabis businesses are going to be willing to pay big for because it'll improve their ability to make money.

Much like how different types of beer taste distinct despite containing the same active ingredient (alcohol), cannabis products also provide different experiences depending on the proportions of their active ingredients, called cannabinoids. Controlling the mix of cannabinoids in marijuana plants is thus key to differentiating products from the competition and creating brand power to protect market share. And that's 22nd Century's forte, which makes it a great collaborator for almost any other business in the industry. 

In particular, 22nd Century's plant genetics technologies will help other companies maximize their plants' yield of economically important cannabinoids like cannabidiol (CBD), thereby improving their profit margin. When each plant you grow produces more of the chemical you need for processing into other products, you don't need to grow as much. Customers will also be able to fine-tune the different cannabinoids in their crops to fit consumer preferences. What's more, the first revenue from licensing of its cannabis genetics intellectual property (IP) should start to roll in by the end of 2021. And while it isn't profitable yet, that could change over the next couple of years as more revenue comes online. So be sure to keep an eye on this stock -- it might not stay out of the public's eye for much longer.

Employee in marijuana dispensary.

Image source: Getty Images.

An out-of-this world weed experience

Eric Volkman (Planet 13 Holdings): Most marijuana companies concentrate on one, several, or all of the following activities: growing, shipping, and selling weed products. At the end of the day there is a rigidity to the business, with success coming from how efficiently a company can perform its chosen undertakings.

But Planet 13 Holdings, which is centered on retail, is different. The company aims to make shopping for weed an experience, with the idea of making its dispensaries more than just outlets in which to buy product. In fact, these massive facilities are more like garishly decorated IKEAs for cannabis, with sprawling product selection amid vibrant, trippy design elements -- giant interactive lotus flowers, anyone?  

This approach is successful enough to make the company's flagship "SuperStore" near the Strip in Las Vegas a big tourist draw for enthusiasts visiting Casino City, not least because it's the largest dispensary on Earth, according to the company. Recently, it opened a second SuperStore in Santa Ana, California. That part of the country offers a significantly different demographic; nevertheless there are many thousands of cannabis enthusiasts in the region.

Happily for Planet 13, tourism is roaring back in Las Vegas; from January to June of this year total visitor volume more than doubled, to nearly 3 million in the latter month. And the more tourists, the more traffic there is in the city's top marijuana attraction. This helped boost the company's top line in its first quarter by 42% on a year-over-year basis, to $23.8 million. In the quarter Planet 13 even squeezed out a small profit -- a rare feat for a pot company -- of roughly $400,000 against the year-ago loss of $1.4 million.

Planet 13 is ripping a page from some of the smarter operators in the "legitimate" retail sector by making its stores experiential, must-visit destinations for its demographic. That approach seems to be working, and if it can succeed in Las Vegas and (though it's still too early to tell) Southern California, it can surely scale elsewhere in the country. This is a distinctive company that has escaped notice from many "serious" pot investors. But if it continues to bring in the crowds and grow its business, that'll change before long.

Cannabis farmer inspecting plant.

Image source: Getty Images.

A unique global cannabis stock

Rich Duprey (Clever Leaves): Clever Leaves is a small marijuana grower with big potential. Rather than growing cannabis in either the U.S. or Canada, Clever has grow operations in Colombia and Portugal, giving it access to low-cost labor that significantly reduces its expenses relative to its North American counterparts. 

Because the minimum wage in Colombia is under $2 per hour, Clever's cost to produce fell 13% to just $0.13 per gram, a significant discount to Canadian producers, which have a cost per gram in excess of $2 because their minimum wage is between $8 and $12 per hour.

Colombia also just issued a new decree allowing for the global export of dry cannabis flower. Because flower represents half the world's medical marijuana market, that means Clever's Colombian operation's addressable market just doubled in size.

One of the obvious risks in a Clever Leaves investment is the violent drug cartels that operate in Colombia. Clever recognizes that risk in its SEC filings, noting "Colombia is also home to South America's largest and longest running insurgency and portions of the countryside may be under guerrilla influence."

It further points out the corrupt nature of the Colombian government at all levels. It's easy to imagine the bigger and more successful Clever Leaves grows, the greater the pressure will be on it by these two forces.

There may be good reason Clever Leaves is an under-the-radar cannabis stock, but the greater the risk an investor assumes with it, there may very well be much greater reward.