The legal cannabis industry is still in its infancy, and so far, the vast majority of companies in it follow one of the same few business models.

Yet those models evolved in response to the burdensome (some might say stifling) regulation and taxation regimes that the industry has been operating under. Over time, as the cannabis business achieves more legitimacy (and in all likelihood, U.S. federal legalization) new ways of doing business may be necessary.

Village Farms International (NASDAQ:VFF), Trulieve Cannabis (OTC:TCNNF), and Innovative Industrial Properties (NYSE:IIPR) aren't waiting for the future to arrive -- they are already upending the status quo and changing how the game is played in their sector. These marijuana companies do things differently, and that makes them worth considering for your portfolio.

Marijuana plants on a table with vegetables

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A thoroughly modern mix

Eric Volkman (Village Farms International): At the moment, nearly every notable marijuana company traded on a U.S. stock exchange is a pure-play. Whether these businesses are cannabis growers, manufacturers of cannabis-derived products, retailers, or some combination of those, pot companies tend to concentrate only on pot.

In the bright green future, after marijuana finally becomes at least decriminalized in the U.S. and other major markets, it's likely that pure-plays will decline in number and prominence. Companies from outside the niche will push more forcefully into it, creating hybrid marijuana/legacy products operations.

Well, for Village Farms International, that future is now. Formerly only a greenhouse grower of vegetables, in late 2020, the Canadian company bought out the piece of the Pure Sunfarms cannabis production joint venture that it didn't already own.

These days, while produce is still responsible for the bulk of Village Farms' revenue, it's the weed operations that are in the black -- they booked an operating profit of nearly $5.3 million in Q2, the company's most recently reported quarter. By contrast, produce generated a more than $6.7 million loss, while clean energy -- a new and still small-scale venture for the company -- shed around $825,000.

What's nice about being a twin-barreled agricultural business is that Village Farms isn't dependent entirely on one family of crops for its fortunes. And when times are good for both veggies and cannabis, its sales can head north quickly -- on a sequential basis in Q2, produce sales were up by nearly 31% (to $45.5 million), while weed revenue rose at an even faster 42% clip (to $24.8 million).

As a result, Village Farms can and does at times net a profit -- something that most marijuana pure-plays have yet to do. It was in the red for the last two quarters, but in Q4 2020, the bottom line was in positive territory at $7 million on total company sales of $47.4 million. That, by the way, made for a nearly 15% net margin. How's that for a tasty tomato?

In the coming years, we'll see marijuana businesses become normalized as legitimate, and many of the current constraints on them will be lifted. We'll also see more companies profit from models in which cannabis is only one part of a broader operation. Village Farms is well ahead of its time, and as such, it's more than worthy of consideration as an investment.

People in a marijuana dispensary

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This company is a multi-state smooth operator

Alex Carchidi (Trulieve Cannabis): When it comes to profitable, rapidly growing, and reasonably valued pure-play marijuana businesses, it's hard to beat Trulieve Cannabis. 

Trulieve is changing the game with its strategy of building regional hubs, where it grows, processes, and sells more than 900 different medicinal and recreational cannabis products. By keeping its cultivation operations near its distribution outlets, the company saves on transportation costs. This strategy also makes it easier to integrate bolt-on acquisitions in core markets, like it recently did with Harvest Health and Recreation. This hub-based model is likely a key reason why it has been able to achieve a healthy profit margin of 12.81%, even as many of its peers struggle.

Right now, management claims that Trulieve has the largest market share in Arizona, Florida, and Pennsylvania. And, it's the largest and most profitable multi-state operator in the U.S. In Q2, its revenue grew by more than 78% year over year, and there's likely more to come. Its newer clusters in New England and the Southwest are quickly maturing, and it may soon enter other hot markets such as New York and Illinois. 

Investors can look forward to more growth in the next couple of years as the company opens up additional dispensaries. As long as its hub strategy continues to pay off, Trulieve's future looks quite bright, and in my view, it's a stock that's worth strongly considering.

Several rows of plants at a marijuana farm

Image source: Getty Images.

A formula for repeatable, profitable growth

Rich Duprey (Innovative Industrial Properties): Real estate investment trust (REIT) Innovative Industrial Properties is continuing to add to its large portfolio of marijuana-related real estate, most recently with the purchase of a 201,000-square-foot cannabis cultivation and processing facility in Desert Hot Springs, California.

Its long-term lease with Gold Flora, a vertically integrated marijuana business in the Golden State, is yet another demonstration that Innovative Industrial has a long growth trajectory in front of it, regardless of whether marijuana is legalized at the federal level.

The REIT owns 76 properties across 19 states representing approximately 7.5 million rentable square feet of space, 100% of which is leased. And it will keep adding to that portfolio as cannabis companies seek out alternative financing arrangements, since traditional lending institutions still can't do business with them. Moreover, because its average lease has 16.7 years remaining on it, investors can feel confident that Innovative Industrial Properties will enjoy steady streams of revenue for years to come.

Even if marijuana is legalized nationally, which would open up the opportunity for banks and other financial institutions to lend money to cannabis companies, Innovative Industrial has established relationships with many of the biggest players in the industry, and they would likely continue to partner with it. Also, deals with the REIT would be available to provide those businesses with funding beyond the level that banks might be willing to provide.

Through its sale-leaseback program, the REIT ensures its clients will continue showing up to access its financing, having committed approximately $1.9 billion across its portfolio to date.

California remains the world's single largest marijuana market. It generated approximately $4.4 billion in regulated cannabis sales in 2020, and has been experiencing growth rates in excess of 50% annually. In just the second quarter of 2021, some $1.4 billion in taxable sales were recorded.

As a REIT, Innovative Industrial is obligated to return 90% of its profits back to its shareholders. Since going public, it has raised its payout 11 times and quadrupled its dividend. Currently yielding 2.3%, it's a healthy income stock that investors can rely upon as the marijuana industry continues to expand.

Whether that industry growth is promoted through a patchwork of state legalization efforts or by a unifying national act, Innovative Industrial Properties is an unstoppable marijuana stock that could make some investors very wealthy.

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.