3 Stocks to Invest in for Exposure to Cannabis

Marijuana stocks, such as Aurora Cannabis Inc. (TSX:ACB), present a great opportunity to invest in an industry before it goes truly mainstream. But which should you buy?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Imagine you’re sitting on your computer a decade ago, and you’re presented with an opportunity to buy shares of Alphabet Inc. (NASDAQ:GOOG)(NASDAQ:GOOGL) for US$297 per share. Would you? You might have looked at the fact that it had gone up by 495% since its IPO and wondering if it could it keep going up.

But let’s say that you did buy Alphabet (Google) one decade ago. You would have experienced close to US$700 per-share growth for a total return of 233%. Alphabet is now one of the most powerful companies on the planet and doesn’t appear to be slowing down.

Fast forward to today, and I believe that cannabis companies are in a similar position that Alphabet was a decade ago. The world is beginning to recognize that cannabis laws are not working. Here in Canada, the government is moving forward with legalizing it, and provinces are beginning to release some of their own rules.

For example, in September, New Brunswick agreed to acquire four million grams of marijuana from Canopy Growth Corp. (TSX:WEED) every year. The province will even allow pot stores, which could be a big win for distribution.

Ontario won’t allow pot stores, but it will allow specialty stores to sell it. Alberta is putting a system in place that echoes the distribution of alcohol, effectively saying that only a government-regulated distributor can be the wholesaler of marijuana to specialty stores.

The government appears to be fairly regulating marijuana, and as it begins to gain mass production, it could mean major wins for many of the producers around the country.

While there used to be a lot of search engines, now there are really only a couple. In my opinion, a decade from now, there will be a few major players in the cannabis space. But here’s the question: which one?

Frankly, it’s impossible to know right now. But there are three worth considering. The first is Canopy, and its stock is up 74% over the past three months. You’ve got Aphria Inc. (TSX:APH), and its stock is up 50% over the past three months. And finally, you’ve got Aurora Cannabis Inc. (TSX:ACB) with the stock up 9% over the past three months.

What’s important to understand is that all of these companies are still very early in their life cycles. Canopy seems to have the lead right now, thanks to its distribution deals both domestically and internationally, but anything can happen. For example, Yahoo! used to be a major search engine player, but it lost out to Google, even though the former had the head start.

So, here’s what I think you should do: determine how much you want to invest in marijuana companies. Take 40% and put it into Canopy, and take the remaining 60% and split it between Aphria and Aurora. Because Canopy has the lead, you want to be part of the that company. But if you see Aphria and/or Aurora taking the lead, you can reinvest accordingly.

But buyer beware: these companies carry incredible risk. Google is a much safer investment today than it was a decade ago, because you really didn’t know just how great it would do. The same is true for these cannabis companies.

Should you invest $1,000 in Alphabet right now?

Before you buy stock in Alphabet, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Alphabet wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. 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, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jacob Donnelly has no positioned in any stocks mentioned. David Gardner owns shares of Alphabet (A shares) and Alphabet (C shares). Tom Gardner owns shares of Alphabet (A shares) and Alphabet (C shares). The Motley Fool owns shares of Alphabet (A shares) and Alphabet (C shares).

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

A airplane sits on a runway.
Stocks for Beginners

Where Will Bombardier Stock Be in 5 Years?

Bombardier stock has made such an amazing turnaround that it has investors wondering: what's next?

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

How I’d Structure My TFSA With $14,000 for Almost Constant Monthly Income

These four choices could make any $14,000 investment a strong one, especially with solid dividends that will stand the test…

Read more »

Muscles Drawn On Black board
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $4,000

Seeking strength from your investments? Then these are the three stocks to consider first.

Read more »

worker carries stack of pizza boxes for delivery
Dividend Stocks

I’d Invest $8,000 in These 3 Monthly Dividend Stocks for Passive Income

These three monthly-paying dividend stocks with high yields could deliver a stable passive income.

Read more »

Woman in private jet airplane
Investing

1 Magnificent Canadian Stock Down 12.3% to Buy and Hold Forever

A magnificent Canadian stock with solid fundamentals and a long growth runway is a screaming buy in May.

Read more »

money goes up and down in balance
Dividend Stocks

1 Magnificent Canadian Stock Down 22% to Buy and Hold Forever

This could be a rare opportunity to buy this unique income and growth stock.

Read more »

senior relaxes in hammock with e-book
Investing

Where Would I Invest $4,000 in the TSX Today?

These TSX stocks have the potential to generate above-average returns, making them worry-free investments despite macro uncertainty.

Read more »

monthly desk calendar
Dividend Stocks

This 6.6% Dividend Stock Pays Cash Every Single Month

A high-yield renewable energy stock paying monthly dividends is a brilliant choice for income-focused investors.

Read more »