As many investors await what they believe is an inevitable decision to legalize marijuana at a federal level in the U.S., the stock prices of companies specializing in cannabis have dropped significantly. It seems as though growing revenue and even signs of profitability are not enough to keep investors' confidence, or to capture the interest of new investors.

But there are three companies that are doing quite well without federal legalization. Two are in the U.S., while one is based in Canada, and has been growing market share over the past few quarters. All three make a case for buying its stock right now and holding for the long term regardless of when or even if legalization happens.

Person inspecting cannabis plant

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1. Cresco Labs

Cresco Labs (CRLBF -3.12%) is among the multi-state operators looking to gain larger control of the burgeoning cannabis market through M&A activity. Its most recent move was its best yet, and one of the biggest in the industry in terms of size, when it announced in March the acquisition of competitor Columbia Care (CCHWF -5.96%) for $2.1 billion.

And it's not as if Cresco necessarily had to make the move to continue its growth. But it certainly helps as companies vie for market share position while the Senate awaits a vote on a federal legalization bill that could send cannabis stock prices skyrocketing. In 2021 Cresco doubled its number of dispensaries in the U.S. to 46, grew its revenue by 73% to a quarterly record $822 million, and narrowed its losses by 71%, while maintaining its leading market share in flower, concentrates, and vape categories. The acquisition of Columbia Care would nearly triple the number of dispensaries for the company to over 130, and broaden its footprint to spread across 18 states.

Although 2021 was good in terms of financial numbers, it was not so kind to the stock price. Cresco's share price has declined more than 50% since February of last year and has dropped 18% year-to-date. But for long-term investors, this isn't necessarily a bad thing. Eighteen states in the U.S. have legalized recreational marijuana, and many experts believe federal legalization is inevitable.

As long as revenue is growing, losses are improving, and the lowered stock price is unwarranted, it gives investors an opportunity to pad their portfolio with this potential cannabis powerhouse at a steep discount to the $21 average analyst price target.

2. Green Thumb Industries

Another potential powerhouse in the future of the cannabis market is Green Thumb Industries (GTBIF -3.57%), with its growing footprint of 77 stores across 14 states. The company specializes in cannabis consumer packaged goods, offering multiple brands serving the medical- and recreational-use market. Its approach toward supporting communities by donating first-day sales of each Rise store it opens, helps build brand and relationships with consumers. It's that type of brand building that has helped make companies like Apple, and Coca-Cola, successful. It's possible that cannabis consumers may one day think of Green Thumb as the go-to place to buy cannabis.

What sets Green Thumb apart from many competitors now is that the company is profitable, leading to it being identified in Crain's Fast 50 companies list in 2021, and as a best workplace by MG Retailer magazine. These accolades should help gain investor attention as we remain in the early stages of what could be an exploding market in years to come. 

Fourth-quarter revenue of $243 million resulted in nearly $23 million in profit or $0.10 per share. For the year, revenue grew by 61%, and net income multiplied by four to $75 million. Like Cresco, Green Thumb has shown its interest in expanding its footprint by acquiring companies already established in budding markets such as California, or markets expected to flourish like Virginia.

Although Green Thumb is producing strong numbers and showing continued signs of growth, the company's stock price has suffered like many others in the market as a result of a loss in investor confidence, and impatience at waiting for federal legalization. At some point, investors should begin to recognize profits and footprint expansion as they do with companies outside of the cannabis market, rather than waiting on signs of federal legalization. Ultimately, if federal legalization happens this stock could sneak its way northward toward analysts' price targets that represent a 200% premium over today's $16 price tag.

3. Organigram

Market share in the U.S. is considered by many the ultimate reward for cannabis companies, where annual legal recreational cannabis sales are expected to reach $25 billion by 2025. But Canada is where cannabis is legalized across the country, and Canadian-based Organigram (OGI -4.24%) is making progress in its goals. The company focuses on high-quality products and a managed inventory for the medical- and recreational-use market, unlike some of its competitors that came out in 2018. 

One major problem that cannabis companies are facing is the ability to keep costs contained which allows for quicker profitability. Organigram is making good progress in this area, narrowing its cost of sales by 20% during the quarter. This is expected to continue as the company pushes on with its plans for further automation to optimize production, which is expected to be complete by sometime this summer. Organigram's strategy to focus on quality over quantity, and to build out automation to improve efficiencies is proving successful. In Q2, net loss dropped to $4 million from a lofty $66 million for the same period a year ago.

Fiscal Q2 (period ended Feb. 28) saw Organigram grow quarterly revenue to its highest-ever at $31.8 million, helping achieve positive EBITDA two quarters ahead of the company's initial projection. Revenue growth should continue for the company as a result of an expanding product pipeline helped along by its acquisition of hash and craft cannabis producer Laurentian. That growth is already being represented by a slight bump from 7.6% to 8.4% in recreation-use retail market share, resulting in a top 3 national market share position in Canada, along with its highest-ever quarterly international sales -- in Israel and Australia.

Like Cresco and Green Thumb, Organigram's stock price has flopped over the past year. But as revenue continues to climb, and costs are reduced through automation improvements the share price may not stay down for long. At a share price of $1.60, it has been cut in half since March of last year, but a new bottom seems to have been found. Now could be a great time for investors to jump in for the long haul.