Earlier this year, SNDL (SNDL 2.19%) dropped a big hint that it might end up owning a controlling stake in not one but two multi-state marijuana operators. That would be a huge move for the Canadian-based alcohol and cannabis company. It's a similar playbook to the one that its rivals Canopy Growth and Tilray Brands have been working out of: Expanding in the U.S. has been a cornerstone of their growth strategies.

This month, SNDL identified which companies it has invested in, and that could give some hints as to the ones it might be looking to partner with.

Its investment arm has exposure to six marijuana companies

It was a few years ago, in 2021, that SNDL announced it was partnering with private equity company SAF Group to enter into a joint venture, SunStream Bancorp, that would give the companies a way to pursue investment opportunities in the cannabis industry. 

When SNDL reported its fourth-quarter earnings back in April, it mentioned that it had "six credit exposures in the SunStream portfolio" and that "it may become a majority owner of one or more multi-state operators [MSOs]." At the time, it was unclear which marijuana companies it might have been talking about.

But on the company's most recent earnings release, earlier this month, it mentioned the specific companies that SunStream has invested in: Jushi Holdings, Skymint Brands, Ascend Wellness Holdings, Parallel, Columbia Care, and AFC Gamma.

Which of these companies could be potential partners for SNDL?

Here's a breakdown of the companies and why they might or might not be partners with SNDL:

  • Jushi Holdings: An MSO with a presence in seven states, the bulk of its stores are in Pennsylvania. At a market cap of less than $100 million, it wouldn't require a huge investment to get a controlling stake in the business.
  • Skymint Brands: This privately held company mainly operates in Michigan. Given its narrow scope, it doesn't appear to be one of the companies prominently on SNDL's radar.
  • Ascend Wellness: This is an MSO that has operations in seven states, mainly on the East Coast. Its market cap is around $170 million, and it could make sense for SNDL because it is in many top markets, including New Jersey and Massachusetts.
  • Parallel: An MSO that previously attempted to go public through a special purpose acquisition company. The company remains privately held and has a presence in multiple markets, including Florida, where it has 45 stores under the Surterra Wellness brand. It's another business that could be attractive to SNDL.
  • Columbia Care: This MSO plans to merge with Cresco Labs later this year. It has more than 90 retail locations with operations in 16 U.S. markets. While it is a large MSO, its pending deal with Cresco suggests that this is not a business that SNDL is likely targeting.
  • AFC Gamma: A real estate investment trust that says it has expertise with the cannabis industry. This does not appear to be one of the companies SNDL might end up partnering with since it is not an MSO.

From the list above, the likely candidates that could fit the criteria SNDL has hinted at appear to be Jushi Holdings, Ascend Wellness, and Parallel. 

Would these be good fits for SNDL?

All three of those companies, assuming SNDL is indeed targeting them, could help expand the Canada-based marijuana company's presence south of the border. The big question mark is how it will be able to do so since the federal ban on marijuana in the U.S. makes consolidation difficult, if not impossible -- assuming SNDL wants to remain listed on the Nasdaq.

But if it can be done, it would definitely be a big positive for SNDL, which could not only improve its growth prospects but also potentially help rally investors around its beaten-down stock, which has fallen 56% in the past 12 months.

Should you buy SNDL's stock?

SNDL has been achieving some good growth in recent quarters, but that has been primarily due to acquisitions. Its cannabis operations are still dependent on the highly competitive and saturated Canadian pot market, so the growth potential for the business remains limited.

If the company were to find a way to expand into the U.S. and obtain a controlling interest in one or more of the MSOs listed above and be able to stay on a major exchange, then it could be worth taking a closer look at the stock. Until that happens, however, I would just keep this stock on a watch list because it's still a risky buy right now.