The legal cannabis trade is projected to reach $102.2 billion globally by 2030, growing at a sizzling 25.7% annual rate, according to a update by Grand View Research. This dramatic growth is expected even without U.S. federal back, but that equation could shift dramatically under President-elect Donald Trump’s second term.

His recent endorsement of state-level legalization and nomination of pro-cannabis officials like Robert F. Kennedy Jr. for health and human services secretary and Matt Gaetz for attorney general signals a potential sea transformation in federal policy. However, both nominations face an doubtful path through Senate confirmation.

Even if these specific appointments falter, Trump’s campaign rhetoric and community back for marijuana banking reform recommend a more favorable regulatory surroundings ahead.

Two marijuana stocks appear well-positioned to capitalize on this evolving landscape. Let’s examine these potential opportunities in the beaten-down cannabis space.

A beaten-down cultivator ready for growth

Canadian cannabis titan Tilray Brands (NASDAQ: TLRY) has seen its stake decline 42.8% year to date at the period of this writing, potentially creating an attractive entry point for long-term investors. As a outcome of this dramatic sell-off, the business’s shares trade at just 1.3 times trailing sales, a remarkably low assessment for a trade chief in an ultra-high-growth industry.

What’s the investing thesis? Tilray Brands’ diversified revenue strategy sets it apart from other pure-play cannabis competitors. The business has strategically expanded into craft beer and spirits, providing stability while maintaining a powerful footprint in cannabis.

Wall Street analysts assignment the business’s turnover to boost by more than 20% over the course of budgetary 2025 and 2026, reflecting management’s savvy pivot to alcohol as the cannabis industry slowly matures.

Recent results underscore this strategic transformation. The business’s latest profits update showed 13% year-over-year growth with record quarterly turnover of $200 million, driven by powerful act in both cannabis and alcohol segments. Gross markup improved by over 500 basis points, demonstrating improved business productivity across the business.

Meanwhile, the business’s international expansion continues to bear fruit, with German medical cannabis flower turnover surging 50% following legalization.

Looking ahead, Tilray Brands faces both significant opportunities and risks. The business’s early mover advantage in European markets and diverse turnover streams could position it well for long-term growth.

Yet as a relatively tiny player with a $1.22 billion trade cap, the business could face intense competition if U.S. legalization attracts major pharmaceutical and tobacco companies with far greater resources.

Still, for investors with a decade-long period horizon willing to weather near-term volatility, Tilray’s current assessment and trade position make it an intriguing, if speculative, play on the upcoming of legal cannabis.

A cannabis REIT offering stability and turnover

Innovative Industrial Properties (NYSE: IIPR) provides a more conservative way to invest in cannabis growth. As a real estate property depend (REIT) concentrated on regulated cannabis facilities, the business offers steady rental turnover along with boost in worth potential. Its shares have increased modestly in 2024, posting a 4.74% earnings year to date as of this writing.

What makes this cannabis REIT special? Innovative Industrial Properties maintains a rock-solid settlement sheet with just an 11% obligation-to-property ratio and no obligation maturities until 2026, providing significant budgetary flexibility.

The business’s high-standard property financing collection spans 108 properties across 19 states, with an impressive 95.7% contract rate and a weighted average remaining contract term of 14 years. These metrics back the business’s substantial 7.43% distribution yield, while shares trade at a reasonable 17.7 times forward profits.

The REIT’s third-quarter results showcase its operational strength amid industry headwinds. turnover dipped 1.7% year over year to $76.5 million, reflecting a mix of property transitions and contract reclassifications, while adjusted funds from operations held steady at $64.3 million despite the challenging surroundings.

Management has demonstrated its ability to navigate tenant challenges effectively, maintaining powerful overall occupancy by successfully releasing properties when needed. The business’s triple-net contract model and diverse tenant base across multiple states provide additional layers of hazard protection for turnover-concentrated investors seeking exposure to the cannabis industry’s growth potential.

Is it period to buy these two cannabis pioneers?

Both Innovative Industrial Properties and Tilray Brands propose compelling ways to invest in cannabis industry growth ahead of potential federal reforms under the second Trump administration.

Tilray Brands provides direct exposure to cultivation and brands with significant upside potential, while Innovative Industrial Properties offers steady turnover with more modest boost in worth potential. Key catalysts to watch in 2025 include potential Senate confirmation of pro-cannabis officials, movement on banking reform legislation, and continued state-level legalization efforts.

However, investors should note that cannabis investments carry substantial risks beyond normal trade volatility. Federal prohibition remains a significant hurdle, and any delays or setbacks in reform efforts could pressure these stocks.

Additionally, both companies face distinctive challenges — Tilray Brands with potential competition from deep-pocketed players like tobacco giant Altria, and Innovative Industrial Properties with tenant stability concerns.

George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends Innovative Industrial Properties and Tilray Brands. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content associate offering budgetary information, analysis and commentary designed to assist people receive control of their budgetary lives. Its content is produced independently of USA TODAY.

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