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As we continue to get closer to full legalization, more investors are seeing the potential of cannabis businesses. Global sales are expected to reach $33.6 billion by 2025, according to an analysis by Statista, and a study found that that use of medicinal cannabis to treat mental health conditions increased by 91% since March of 2020.
The various regulatory hurdles still in place haven't slowed down the pace of new investment, either. Companies like tobacco giant Altria and the pharmaceutical firm Novartis have led a huge wave of M&A action intended to support the cannabis industry, bringing together a wide variety of companies to create serious infrastructure, from production and distribution to real estate and finance.
Because of that, this is an ideal time for investors to claim a stake, and the best potential growth lies in small-cap companies expanding into new key markets.
There's still plenty of upside in the major multistate operators (MSOs) you're used to hearing about, like Green Thumb and Trulieve. But with several new up-and-comers trading for less than $1 per share, even a small tailwind could send your returns soaring.
We've found three of these stocks trading at a price way below their companies' true value, which are looking better than ever considering their recent expansions.
That means you have the chance to buy what could be the United States cannabis market's next breakout star for pennies on the dollar compared to what any of these operators could eventually be worth.
Read on for the tickers...
This Firm Just Made a Huge Profit Play
On Jan. 31, 4Front Ventures Corp. (OTC: FFNTF) announced its planned acquisition of New England Cannabis Corporation. This acquisition vastly expands 4Front's existing footprint in Massachusetts's recreational cannabis market.
The deal includes an additional 55,000 square feet of cultivation space and nearly triples 4Front's production capacity. It also doubled 4Front's total cannabis plant canopy to over 30,000 square feet, allowing the company to grow twice the amount of cannabis in Massachusetts than it did before.
According to the company's CEO Leo Gontmakher, the highlight of this Massachusetts expansion is the additional cultivation and processing capacity, which he says will "help drive [4Front's] growth in the expanding Massachusetts market for years to come."
Cannabis in Massachusetts recently became more valuable than alcohol, according to Forbes, bringing in $74.2 million in cannabis excise taxes compared to $51.3 million in alcohol taxes as of December 2021. For the full year of 2021, Massachusetts saw $112 million in new taxes from recreational cannabis sales - 206% higher than the state initially projected. Gross sales have topped $2.54 billion.
4Front also has operations in California, Illinois, Michigan, and Washington, with 20 different cannabis brands currently in stores.
Trading for around $0.75, 4Front Ventures' stock price is a bargain for the money this company is destined to make in the coming years.
Cornering Maryland's Edibles Market
The second company on our watch list is MariMed Inc. (OTC: MRMD), which just bought one of the best-selling edibles brands in Maryland.
The company's acquisition of Kind Therapeutics marks MariMed's entry into the Maryland medical cannabis market, its third limited license market including Massachusetts and Illinois.
Kind Therapeutics' assets include a 180,000-square-foot cultivation facility and a dispensary in Annapolis that will open sometime this year. This acquisition also makes MariMed the official provider of Maryland's best-selling edibles brands Betty's Eddies.
The highlight of this acquisition is access to the Maryland market itself. Just a few weeks ago, Maryland's General Assembly voted to put cannabis legalization on the ballot in 2022. With public opinion largely in favor of legalization, Maryland is poised to go recreational next year - and MariMed will be in the prime position to profit.
Trading around $0.70 per share, MariMed is trading at a price that won't last forever, and it likely won't be this low ever again.
Ohio Expansion Will Make This Company a Winner
TILT Holdings Inc. (OTC: TLLTF) is a vertically integrated cannabis operator that boasts a large portfolio of brands, and an industry leader in manufacturing cannabis vaporizers.
TILT just announced an exclusive cultivation and processing partnership to sell Timeless Refinery products in Ohio. Timeless Refinery is the top-selling brand in Arizona and one of the top 10 best-selling cannabis brands nationwide, per BDSA.
For TILT investors, the highlight of this deal is the company's stock price. Trading around only $0.29 per share, TILT is the cheapest of the penny stocks on this list, but it's also the most undervalued. It has operations in 36 other state cannabis and hemp markets - a massive footprint - and this Ohio deal could be one of its most lucrative expansions yet.
Ohio is at the top of National Institute for Cannabis Investors (NICI) Executive Director Danny Brody's legalization watch list for 2022. If its legislature legalizes recreational cannabis this year, that market will expand to more than 8 million additional customers, and TILT will be the exclusive provider of one of the country's most well-known brands.
The cannabis industry's continuing success is reflective of the American entrepreneurial spirit, and the next big business venture could be just around the corner. Right now, an innovator in the same vein as Bezos, Musk, and Jobs is hard at work right now in a garage, or a basement, or a rented space somewhere, working to make their vision a reality.
They'll need help - folks with the vision and guts to back a good thing.