Top Marijuana Penny Stocks 2021

Looking to invest in marijuana for a lower cost? Find out the top marijuana penny stocks to watch in 2021.

Federal legalization of cannabis in the U.S. seems like an inevitability at this point, with 15 states that have now legalized cannabis for recreational purposes, and 35 states that have legalized it for medicinal purposes.

As such, investors are looking out for which company will take center-stage when federal legalization takes effect, as they may enjoy sizeable gains if they bet on the right horse.

However, many are also looking toward marijuana penny stocks so that they may capitalize on the growing cannabis industry without spending too much money.

So what is a marijuana penny stock?

According to the U.S. Securities and Exchange Commission (SEC), a penny stock is any share that trades below five dollars.

As such, companies that trade penny stocks are usually in a developmental phase or have yet to turn a profit. This means that their stocks are much cheaper, but often much riskier for investors.

With all of that in mind, let's look at the top 3 marijuana penny stocks for 2021.

Top Marijuana Penny Stocks For 2021

1. Liberty Health (OTCMKTS:LHSIF)

Located out of Gainesville, Florida, Liberty Health Sciences Inc. (OTCMKTS:LHSIF) cultivates cannabis to be sold via its 31 Florida-based dispensaries.

Liberty Health has a series of brands under its umbrella, including Pretty Pistil, Zentient, Mary's Medicinals, and several others.

Liberty has the latest extraction and processing equipment, a cultivation capacity of 19,500 kg per year, as well as a host of dispensaries across Florida that are capable of providing consultations to see if patients are eligible for medical cannabis.

As of last June, Liberty health was acquiring 4,500 new patients each month for its medicinal products, achieving net sales of USD $13,048,315 in its most recent results ending Nov 30, 2020.

Disclaimer: Past performance is not an indicator of future performance.

Admittedly, this is down from $16,122,254 over the same period in the previous year, however COVID-19 left almost no cannabis company unscathed. Similarly, while the company achieved a positive EBITDA of USD $2,547,406, this fell short of the USD $4,420,409 Liberty generated over the same period in the previous year.

Though, as we have stated before here at The Green Fund, Florida is a prime location for cannabis sales, and the numbers back it up.

In 2020, 15,000 new jobs were created in the Floridian medical marijuana industry, with the state generating close to $1.23 billion in marijuana sales for the year. This puts Florida's sales at the third highest in the U.S., after California and Colorado.

Investors may have cottoned onto this fact, as Liberty Health hit a 52-week-high recently.

At the time of writing, investors can pick up shares of Liberty Health for USD $1.17.

2. KushCo Holdings (OTCMKTS:KSHB)

KushCo Holdings (OTCMKTS:KSHB) is an ancillary cannabis company that specializes in packaging, merchandising, and vaporizer technologies for cannabis and CBD companies.

KSHB stock is valued at USD $1.52 at the time of writing, down from high's of over USD $7 in January 2019, qualifying the ancillary company as a marijuana penny stock.

As we've covered previously, ancillary companies are often referred to as the "picks and shovels" of the cannabis industry, as they offer crucial services to major marijuana producers, such as soil yield optimisation, packaging and branding solutions, and real estate investment.

Disclaimer: Past performance is not an indicator of future performance.

Ancillary pot stocks offer a safer way of getting in on the green rush—as they are often insulated from fluctuations in the cannabis market—for risk-averse investors who want to avoid the volatility associated with pharmaceutical developers or Multi-State Operators (MSO).  

After a difficult 2020, in which many of its Chinese supply chains were impacted by COVID-19, KushCo Holdings has since turned things around and achieved a positive EBITDA (earnings before interest, taxations, depreciation and amortization) of $0.5 million in the previous quarter, as well as net revenue of USD $28.1 million in FQ1 of 2021.

As a result of its positive traction, KushCo has increased its full-year sales forecast by $10 million to sit within the range of $130 million to $160 million.

KushCo offers investors a low-cost ancillary cannabis stock that is establishing a growing footprint throughout the U.S., and is moving in the right direction.

3. Supreme Cannabis (TSX:FIRE)

The Supreme Cannabis Company (TSX:FIRE) is a licensed producer based in Canada that has focused on selling their products wholesale.

Supreme Cannabis has a series of brands under its umbrella, including 7ACRES, which boasts a 440,000 sq. ft. facility in Kincardine, ON, and BlissCo, which has a 12,000 sq. ft. facility in Langley BC.

Supreme cultivates high-end cannabis for both the medicinal and recreational market in Canada, though rather than selling their medicinal cannabis directly to retailers or the Provinces, Supreme instead supplied its premium 7ACRES product B2B to other licensed producers.

However, 2020 was not a good year for the company, when it revealed a negative EBITDA of 10 million in December of that year, and had to engage in debt restructuring which diluted share values.

Disclaimer: Past performance is not an indicator of future performance.

Though the company has since turned a corner, achieving a positive Adjusted EBITDA of CA $3.6 million in its latest results, which the CEO, Beena Goldenberg, states was the result of "increased sales and marketing efforts in partnership with Humble & Fume Inc., [which] enabled Supreme Cannabis to secure 3,446 net new listings during the second quarter, up from 2,258 new listings in the previous quarter."

The CEO then continued to say that Supreme is a "top-10 player in Canada in flower and 7ACRES is a top-5 player in pre-rolls. We are also in the top three in concentrates. This reinforces the traction we're gaining with consumers."

The strong performance for Supreme Cannabis this past quarter has prompted analysts to upgrade their evaluations for the company moving forward.

Investors can pick up shares of Supreme Cannabis for CAD $0.28.

Penny Stocks: Worth the Risk?

As we mentioned at the beginning of this piece, penny stocks are a double-edged sword. They offer investors an affordable way to invest in a cannabis company, which will yield them sizeable returns should that company begin to grow more successful.

However, the reason these companies are penny stocks is precisely because they aren't yet considered safe investments, and as such, cannabis penny stocks can be considered more risky than their more established counterparts.

Though given the current momentum of the U.S. cannabis industry, particularly over 2020 which saw a rise in cannabis consumption, a legislative wave, and Democrats gaining the Presidency and the Senate, federal legalization doesn't look so far away.

As such, having a few marijuana penny stocks in an investment portfolio mightn't be such a bad idea.

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Louis O'Neill
Louis O'Neill

Louis is a writer based in Sydney with a focus on social and political issues. Having interviewed local politicians and entrepreneurs, Louis now focuses on cannabis culture, legislation & reform.