Investing in marijuana stocks now might be the smartest decision you could make. The industry is still a nascent one with tremendous space to grow both nationally and internationally. U.S. cannabis stocks could get a boost once the drug is federally legalized, a development many see as inevitable. In anticipation of that day, the marijuana sector provides a fruitful opportunity for investors to grow their wealth five to 10 years down the line (and beyond!).

That said, it is a common myth that you need a truckload of money to invest in the stock market. Starting small is easier and safer. If you have $1,000 left after paying all your bills, consider growth stocks like Illinois-based multi-state operator and pure-play cannabis company Cresco Labs (CRLBF 4.09%), which saw an outstanding revenue jump of 271% year over year in 2020 to reach $476 million.

The business had a strong start to 2021, as well. The company is not profitable yet, but it has consistently reported positive earnings before interest, tax, depreciation, and amortization (EBITDA). It is set to report its second-quarter results (ended June 30) on Aug. 13. Analysts expect this quarter to be profitable. Here are three reasons to consider buying the stock on the dip now.

Cannabis leaf on a American dollar bill.

Image source: Getty Images.

1. Smart growth strategies could play out well this year for Cresco

After an outstanding 2020, Cresco started 2021 on a strong note with 168% growth in revenue for Q1 (which ended March 31) from the year-ago period. The company's strength is its wholesale segment, which contributes 54% of total revenue. This segment grew 151% year over year to $96 million, while retail revenue also saw growth of 193% to $83 million from just 24 stores. Retail revenue includes medical and recreational cannabis sales in the U.S. and vape sales in Canada. The company has added to its operations since that report and now operates 33 stores in 10 U.S. states.

Even though the revenue growth didn't manage to bring in profits, it did provide the company with another quarter of positive EBITDA. This came in at $35 million, up from $16.5 million in the year-ago period.

A few acquisitions that Cresco Labs completed in the first quarter could contribute to Q2 revenue. One, Verdant Creations, allows the company access to four dispensaries in Ohio, bringing its total to five in the state. It also acquired Massachusetts dispensary chain Cultivate Processing, which operates two dispensaries in that state with plans to open a third soon.

In addition, Cresco completed the acquisition of Bluma Wellness, a vertically integrated operator in Florida, in April. This acquisition marked its entry into the Sunshine State, where hometown player Trulieve Cannabis (TCNNF 2.75%) is dominating the market with 87 operating dispensaries and a 50% market share. Bluma operates eight dispensaries in the state with plans to open seven more. Florida hasn't legalized recreational cannabis, but establishing a strong footing now could be beneficial for Cresco in the longer term.

2. Cresco's second quarter could bring in profits

Another reason investors shy away from cannabis stocks is because most of them are not profitable yet -- Canadian stocks in particular. However, Wall Street analysts expect Cresco Labs' bottom line to improve this quarter. According to estimates, Cresco Labs could report a triple-digit revenue jump of 106% year over year to $194 million. For full-year 2021, analysts expect revenue to be about $843 million, further rising to $1.2 billion in 2022. Cresco's management, meanwhile, is even more optimistic, predicting in the earnings report that the company would reach an "annualized revenue run-rate of more than $1 billion by the end of 2021."

Analysts also expect a net profit per share of $0.01 in Q2, compared with a loss of $0.11 per share in the year-ago period. That profit could rise to $0.05 per share for 2021, climbing up to $0.38 per share in 2022.

3. State legalization could boost the company's stock price

Cresco credits much of the revenue growth in 2020 to the Illinois market, which legalized recreational cannabis last year. Total legal cannabis sales in the state hit $1 billion in 2020, with $669 million coming from recreational marijuana; estimates show that sales of recreational cannabis alone this year could top $1 billion. The company operates 10 dispensaries in its home state.

Up-and-coming cannabis markets in New York and New Jersey, both of which recently legalized recreational marijuana this year, could also be thrilling opportunities for Cresco. It operates four dispensaries in New York but none in New Jersey yet. The New York market is expected to generate $245 million in marijuana revenue annually by 2024. 

Arizona, which legalized recreational cannabis in January, could also be another great market for the company; it operates one dispensary there now. 

The continuing spread of state legalization in the U.S. will open exciting doors for the company. The average target price for the stock is $18.80, implying a 68% upside in the next 12 months. It's currently incredibly cheap, trading at just 4 times sales. Its Canadian counterparts' revenue numbers are much lower.

CRLBF PS Ratio Chart

CRLBF PS Ratio data by YCharts

Cresco Labs' stock has surged by 127% since its IPO even with a limited legal market. If the company manages to beat analysts' estimates this quarter and bring in profits, I see no reason why this wouldn't boost the stock price. Furthermore, if growth continues at a slightly higher rate in the next three years as legalization spreads, an investment of $1,000 (or any other amount!) could more than triple by then. Note that investing is a long-term game, so starting slow and expanding your portfolio with growth stocks over time is a smart way to build your wealth.