The #1 Pot Stock for 2022

February 1, 2022

When the Democrats last controlled the House, the Senate, and the White House, there were zero states with legal cannabis laws.

As they enter 2021 regaining all three important parts of the government, there are 15 states plus D.C. with full recreational cannabis. Many more have legalized medical marijuana.

In fact, the United States has gone from a blanket ban for all forms of cannabis to a patchwork green quilt of legalization in the last decade.

For the first time ever, a Presidential or Vice Presidential candidate has won on a platform of the federal decriminalization of marijuana in Kamala Harris.

And guess who has the tiebreaker in the Senate if new cannabis laws come up for a vote in this 117th Congress.

2021 doesn’t guarantee across-the-board legalization, with dispensaries on every corner of the country. But it does grant the greatest chance for the country to open up what could be a $74 billion industry.

There’s no question that cannabis stocks, therefore, offer among the highest potential profits for the year.

However, not all pot stocks are the same. And not all cannabis laws are either…

The “Federal” In the Federal Banking System

You might have thought that it doesn’t matter if the federal government acts on cannabis. The states have already proven quite solidly that they are more than capable of opening up their own pot industries.

But that’s far from the whole truth. What those states are doing right now is technically illegal.

The federal government still classifies cannabis as a Schedule 1 drug. It is considered by federal law enforcers and federal courts to be the same as ecstasy, cocaine and heroin.

That has real-world effects even if the federal government has a stated policy not to interfere in state decisions on the plant.

For instance, dispensaries all across the country aren’t able to use the banking system like other industries. That can mean anything from the inability to secure small business loans to even making deposits in a business checking account.

Why? Because banks rely on the federal banking system. The keyword there is “federal.” If any bank does business with a company that willingly breaks a federal law, it can lose all access to federal monies and FDIC insurance.

In other words, if the federal government decides to crack down even the slightest, it could immediately bankrupt that bank.

No one is willing to take that bet just to secure the business of a pot shop or grow farm.

That’s why it’s important to know exactly what this newly-Democratic federal government is up to on cannabis laws.

Decriminalization vs. Legalization

Full legalization would make everything you just read moot. If the federal government de-scheduled cannabis and allowed the sale of it like alcohol, there’s probably no pot investment that would lose.

Of course, as noted, the federal government just isn’t there yet.

It could certainly leapfrog decriminalization. But neither President Biden nor Harris ran on that. In fact, you’d be hard-pressed to find 50 Senators, including all the Democrats that support that right now.

Decriminalization, along with banking reform is a much more logical first step.

That’s an important distinction.

You see, while legalization lifts all cannabis boats, access to the banking system lifts some higher than others.

In this report, you’ll find the single best way to play decriminalization and the obvious 2021 catalyst for the cannabis industry.

Best Pot Stock of 2022

The cannabis industry is highly fractured, especially in the United States.

You have mom-and-pop dispensaries. You have hundreds of privately-held growing operations. But you do have a few larger players ready to pounce.

Multi-state operators like MedMen Enterprises Inc. (OTC: MMNFF) with stores in a handful of different states would be big winners with any kind of decriminalization and access to the banking system.

But the biggest winners won’t be those retail stores or at least only those retailers. Many have too high of operating expenses as is. Federal action would add more initial regulation, not less.

Instead, there’s a secondary segment of the industry that stands to see immediate benefits from federal action: the pot companies themselves.

Those who have spent the past handful of years navigating state laws while building out their brands.

When the federal government acts, the multi-state retailers will be competing for space. But the brands will automatically follow without the cost of setting up shop in a new state.

Their brands will gain access to cross-state sales. The ones with ties to the retailers already will only have more store space to sell their products.

And of all the pot companies with major brand recognition, one stands out: Green Thumb Industries Inc. (OTC: GTBIF).

New Markets for Free

Green Thumb is already a leader in cannabis consumer products. Its brands might not be as recognizable as Coca-Cola or McDonald’s. But it has been able to get its products in front of customers with great success.

Even without cross-state trade, it has been able to produce and distribute products through 12 states as of January 2021. And any federal easing will only allow that number to grow.

The best part is, it will be able to grow its footprint for free.

You see, those retailers salivating at the idea of opening up stores in multiple states will take their products with them.

Green Thumb is already a company with recognizable brands like Rhythm and Beboe selling in those retailer’s stores. They’ll just have more store space without needing to spend the money.

But what separates Green Thumb from the rest of its competition is the breadth of its product offerings.

Capturing All of the Market

Since the industry is so fragmented, many players specialize in just one type of cannabis product. Green Thumb is a bit of an exception.

You see, it sells vapes, CBD and even medical cannabis products already. Unlike others when new laws come down the line, it won’t have to come up with new, untested products and brands. It already has a large foothold in several categories… all of which are showing tremendous growth.

There’s a second major reason why Green Thumb has a huge leg up for this opening up of the industry: its scale.

It is a fully vertically-integrated company. Meaning it has 13 cultivation and manufacturing facilities. It has the distribution chain to major retailers I previously mentioned. And it even has one toe in retail itself through its already-successful Rise stores.

Though, it isn’t attempting to become the McDonald’s of pot with stores all over. It still prefers the Coke approach of making the products and letting others sell them.

That’s exactly what you want right now, as we find ourselves on the verge of decriminalization in this country.

Its largest footprint is in Illinois, where it is based. Even without federal action, that state has the potential to be the second-largest market for the industry in the country behind California (where it also sells its products).

It’s got the right products, in the right categories, in the right markets. But that’s not even what makes Green Thumb the best cannabis play of 2022.

In fact, the real reason comes down to what it always does: the numbers.

Profits Are Hard to Come By… For Some

Green Thumb is not the smallest company, with a market cap of $6 billion. But it is by far not the largest pot company on the market.

That said, it just achieved what even the largest of cannabis companies have failed to do: turn a profit.

The company’s most recent quarter showed a net profit of $9.6 million.

I know, it’s not much… yet.

But that came from 131% year-over-year revenue growth, an industry-leading 55.4% gross margin and its third straight quarter of positive free cash flow. 2021 will only see these profits grow exponentially.

What is truly remarkable about this feat is that it came during a quarter when Green Thumb broke ground on its brand-new manufacturing facility in Illinois, a massive undertaking that isn’t cheap.

Its balance sheet is also very healthy with $78 million in cash and manageable debt not due anytime in 2022.

There’s one final piece to this amazing story that could add yet another catalyst for a spike in 2021. Green Thumb currently only trades on an exchange in Canada and over the counter here in the States.

Any jump to the Nasdaq or NYSE would garner many more eyes on this stud cannabis company, including from major indexes and ETFs. That would mean more potential buyers in the months to come.

Beyond a doubt, this is the best pot play to own in 2022.

But with so much uncertainty surrounding potential decriminalization or even legalization, you might not have much time to act.

Action to take: Buy shares of Green Thumb Industries Inc. (OTC: GTBIF).

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%