In this article, we will discuss 11 Best Pot Stocks to Buy According to Hedge Funds.
The global cannabis industry is undergoing a structural transformation as legalization expands for both medical and adult use across multiple regions. Countries such as Canada and Germany, along with 24 U.S. states, have established regulated recreational markets, while others, including Uruguay, Malta, Luxembourg, South Africa, and Thailand, have adopted varying legalization frameworks. As the industry transitions from illicit markets to regulated systems, analysts project the global market could approach $100 billion by 2026 and potentially exceed $400 billion by 2030.
Growth is being driven by expanding legalization, rising medical adoption, and the development of ancillary services ranging from packaging to compliance and consulting. Industrial hemp, used in textiles, food products, and wellness applications, adds another dimension to the sector’s addressable market. In the United States, a proposed move by the Drug Enforcement Administration to reclassify marijuana from Schedule I to Schedule III represents a significant potential catalyst. Such a shift could ease punitive tax treatment under IRS Code 280E, improve cash flow, and broaden access to banking services.
Investing in cannabis stocks is fundamentally a bet on the long-term normalization of a once-illicit industry that is steadily transitioning into a regulated global market. As legalization expands across medical and recreational channels, the addressable market continues to widen, with projections suggesting global sales could approach $100 billion by 2026 and potentially exceed $400 billion by 2030. For many investors, the sector represents a high-risk, high-reward opportunity to gain exposure at a relatively early stage of a structurally evolving industry.
The most compelling driver is long-term growth potential. Legalization momentum at the state and national levels continues to unlock new markets, while many countries remain untapped, providing a substantial runway for future expansion. Analysts forecast strong compound annual growth rates over the coming decade, supported by rising consumer acceptance and product innovation.
In the United States, a potential catalyst lies in the proposed reclassification of marijuana by the Drug Enforcement Administration from Schedule I to Schedule III. If finalized, this shift could ease punitive tax treatment under IRS Code 280E, improve operating cash flow, and expand access to traditional banking services—materially strengthening industry fundamentals.
The sector also offers diverse investment pathways, including multi-state operators, ancillary service providers supplying equipment and infrastructure, biotech firms developing cannabis-based therapies, and diversified ETFs. After a prolonged downturn between 2021 and 2024, valuations across many cannabis equities have compressed to more attractive levels, potentially offering long-term entry points.
Still, investors must weigh notable risks, including high volatility, regulatory uncertainty, and competition from illicit markets. Careful stock selection and a long-term horizon remain essential.
With this context in mind, here is a list of the 11 best pot stocks to buy according to hedge funds.
Our Methodology
We sifted through ETFs, screeners, and online rankings to identify the best pot stocks to buy according to hedge funds. From the resultant dataset, we limited our final selection to 11 pot companies that have recently reported noteworthy developments likely to impact investor sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11 Best Pot Stocks to Buy According to Hedge Funds
11. Aurora Cannabis Inc. (NASDAQ:ACB)
On February 17, Canaccord initiated coverage of Aurora Cannabis Inc. (NASDAQ:ACB) with a Buy rating and C$10 price target. The analyst characterizes the company as the leading medical cannabis operator in Canada and a foremost participant in key international medical markets, including Germany, Poland, Australia, and the United Kingdom. According to the initiation note, Aurora’s strategic domestic pivot toward a medical-first model has enabled expansion into structurally higher-margin international markets, where gross margins are approximately 2.5 times higher on average than those generated in its Canadian medical business. The firm views this mix shift as a durable driver of profitability and earnings quality.
Aurora Cannabis Inc. (NASDAQ:ACB) reported Q3 fiscal 2026 results on February 4 and reaffirmed its medical-first strategic direction. Management guided fiscal 2026 global medical cannabis net revenue growth of 10%–15% to $269–$281 million. Medical revenue represented approximately 81% of total net revenue and roughly 95% of adjusted gross profit in Q3, underscoring the segment’s earnings leverage. The company forecast consolidated adjusted EBITDA of $52–$57 million, representing 5%–10% year-over-year growth, alongside sustained strong adjusted gross margins (62% consolidated and 69% for medical in Q3).
Plant propagation revenue is expected to follow typical seasonality, with 65%–75% generated in the first half of the calendar year. Management noted one-time Q4 cash costs associated with exiting select Canadian consumer markets but expects EBITDA improvement thereafter. Aurora also filed an at-the-market program for up to $100 million to fund accretive initiatives such as cultivation expansion and M&A. The quarter closed with $154 million in cash and no cannabis-related debt, reinforcing balance sheet flexibility.
Founded in 2006 and headquartered in Alberta, Canada, Aurora Cannabis Inc. (NASDAQ:ACB) cultivates, produces, and distributes medical and recreational cannabis products under federal licensing frameworks.
10. Organigram Global Inc. (NASDAQ:OGI)
On February 19, Canaccord raised its price target on Organigram Global Inc. (NASDAQ:OGI) to C$4 from C$3 and maintained a Buy rating.
That same day, Organigram Global Inc. (NASDAQ:OGI) announced a subscription agreement with BT DE Investments, a wholly owned subsidiary of British American Tobacco, in connection with its previously announced proposed acquisition of Sanity Group, including BAT’s stake. Under the agreement, BAT will subscribe for 14,027,074 shares at C$3.00 per share for gross proceeds of C$42.08 million and exercise certain top-up rights to acquire an additional 9,897,356 shares at C$2.335854 per share for C$23.12 million in proceeds, totaling approximately C$65.2 million. The capital infusion strengthens Organigram’s liquidity profile and strategic alignment with BAT as it expands internationally. ATB Financial is acting as the sole lead arranger and bookrunner.
On February 24, Organigram Global Inc. (NASDAQ:OGI) announced the expansion of its international portfolio with the launch of Edison and BOXHOT medical cannabis vape and pastille SKUs in Australia. The company already supplies indoor-grown flower through established B2B relationships in the region. The addition of 10 new SKUs under Edison and BOXHOT reflects a broadened product mix and deeper penetration into the Australian medical market.
Founded in 2013 and headquartered in Moncton, New Brunswick, Organigram Global Inc. (NASDAQ:OGI) is a Canadian licensed producer focused on innovation, branded cannabis products, and international expansion. With 7 hedge funds having stakes in the company as of Q3 2025, as recorded by Insider Monkey, Organigram Global is among the best pot stocks to buy according to hedge funds.
9. Altria Group, Inc. (NYSE:MO)
On February 23, Barclays analyst Pallav Mittal raised the firm’s price target on Altria Group, Inc. (NYSE:MO) to $63 from $57 while maintaining an Underweight rating. The firm believes tobacco equities could continue to outperform as next-generation product growth accelerates across the category.
On February 18, Altria Group, Inc. (NYSE:MO) participated in the Consumer Analyst Group of New York Conference and reaffirmed its 2026 adjusted diluted EPS guidance of $5.56–$5.72, representing growth of 2.5%–5.5% from a 2025 base of $5.42. Management expects earnings growth to be weighted toward the second half of the year, reflecting a progressive increase in cigarette import and export activity. Guidance incorporates planned investments in contract manufacturing capabilities, limited volume impact from illicit enforcement actions, and the assumption that NJOY ACE will not return to the marketplace in 2026. The reaffirmation signals confidence in earnings durability despite regulatory and volume headwinds.
Headquartered in Richmond, Virginia, Altria Group, Inc. (NYSE:MO) is a leading U.S. tobacco company with a diversified portfolio spanning combustible and next-generation nicotine products.
8. Cronos Group Inc. (NASDAQ:CRON)
On February 24, TD Securities initiated coverage of Cronos Group Inc. (NASDAQ:CRON) with a Buy rating and C$4.50 price target, citing its portfolio of iconic Canadian cannabis brands and scalable cost structure. The firm believes Cronos is positioned to expand profitability as revenue scales against a lean operating base and advanced cultivation practices.
Previously, on January 27, Canaccord analyst Kenric Tyghe initiated coverage with a Buy rating and C$4.25 price target. While Canada and Israel currently represent Cronos Group Inc. (NASDAQ:CRON)’s largest markets, the analyst views the acquisition of CanAdelaar and the expansion of Cronos Growing Company as foundational to a broader transformation strategy, potentially enhancing vertical integration and international reach.
Founded in 2012 and headquartered in Toronto, Cronos Group Inc. (NASDAQ:CRON) is a cannabinoid company that cultivates, produces, and markets cannabis products globally. It sells a range of products such as dried flowers, pre-rolls, oils, vaporizers, edibles, and cannabis tinctures under its brands such as Spinach, Lord Jones, and PEACE NATURALS. With 19 hedge funds having stakes in the company as of Q3 2025, as recorded by Insider Monkey, Cronos Group is among the best pot stocks to buy according to hedge funds.
7. Jazz Pharmaceuticals plc (NASDAQ:JAZZ)
On February 25, Jazz Pharmaceuticals plc (NASDAQ:JAZZ) reported Q4 revenue of $1.2 billion, exceeding consensus estimates of $1.17 billion and marking 10% year-over-year growth. According to Renee Gala, president and chief executive officer of Jazz Pharmaceuticals, 2025 was an exceptional year for the company. Management highlighted 2025 as its 21st consecutive year of top-line growth, underscoring operational execution and portfolio durability. It boasted a revenue of $1.2 billion for the fourth quarter of 2025, reflecting 10% year-over-year growth and the company’s highest revenue quarter to date.
Jazz Pharmaceuticals plc (NASDAQ:JAZZ) cited momentum heading into 2026, including the potential launch of zanidatamab in gastroesophageal adenocarcinoma, ongoing commercialization of Modeyso and Zepzelca, and continued strength from Epidiolex and Xywav in epilepsy and narcolepsy, respectively. Jazz projects FY2026 revenue of between $4.25 and $4.5 billion, compared to consensus expectations near $4.5 billion.
On January 29, TD Cowen raised its price target on Jazz Pharmaceuticals plc (NASDAQ:JAZZ) to $220 from $205 and maintained a Buy rating ahead of Q4 results, reflecting updated modeling and pipeline visibility.
Founded in 2003 and headquartered in Dublin, Ireland, Jazz Pharmaceuticals plc (NASDAQ:JAZZ) is a global biopharmaceutical company focused on oncology and neuroscience, with a differentiated rare disease portfolio. It is considered a “stealth” cannabis company due to its ownership of the cannabidiol (CBD) drug Epidiolex.
6, High Tide Inc. (NASDAQ:HITI)
On February 24, TD Securities initiated coverage of High Tide Inc. (NASDAQ:HITI) with a Buy rating and C$6.50 price target, identifying the company as its top cannabis pick. The firm cited leading key performance indicators, including market share, same-store sales growth, store economics, and a rapidly growing 2.5M member loyalty program as key differentiators.
On February 9, High Tide Inc. (NASDAQ:HITI) announced the opening of a new Canna Cabana retail location in Scarborough, Ontario, bringing its total footprint to 219 Canna Cabana stores across Canada, including 95 in Ontario. The store sells recreational cannabis products and consumption accessories for adult use. Continued store expansion reinforces the company’s scale advantages and national brand presence, bringing High Tide’s total store count to 219 Canna Cabana locations across Canada.
High Tide Inc. (NASDAQ:HITI) operates across bricks-and-mortar retail, e-commerce, and medical cannabis distribution majorly in Canada and the United States. Alongside manufacturing, it distributes cannabis, consumption accessories, and hemp-derived products at its outlets. The company was founded in 2009 and is headquartered in Calgary, Canada. With 10 hedge funds having stakes in the company as of Q3 2025, as recorded by Insider Monkey, High Tide is among the best pot stocks to buy according to hedge funds.
5. Innovative Industrial Properties, Inc. (NYSE:IIPR)
On February 25, Piper Sandler raised the firm’s price target on Innovative Industrial Properties, Inc. (NYSE:IIPR) to $45 from $44 and maintained an Underweight rating. The firm stated that the company’s Q4 2025 earnings call highlighted the complex investment dynamic currently facing Innovative Industrial Properties, noting that both the cannabis and life science sectors appear to be at potential inflection points, though the trajectory and durability of any recovery remain uncertain. At the same time, the company continues to navigate legacy tenant credit challenges within its cannabis portfolio. Piper observed that while risks remain, early signs of stabilization are emerging. In particular, life science leasing activity is showing renewed momentum in Boston, and the company is engaged in active backfill discussions related to properties previously leased to PharmaCann, 4Front, and Gold Flora, suggesting improving demand fundamentals across portions of its portfolio.
On February 23, 2026, Innovative Industrial Properties, Inc. (NYSE:IIPR) reported full-year 2025 revenues of $266.0 million, net income attributable to common stockholders of $114.4 million, and adjusted funds from operations (AFFO) of $205.4 million. The company declared total dividends of $7.60 per share for the year, extending its record of annual dividend growth. Throughout 2025, the company executed several strategic initiatives aimed at diversification and balance sheet reinforcement, including a committed investment of up to $270.0 million in life science platform IQHQ. Since October 2025, Innovative Industrial Properties has raised $146 million through debt and preferred equity offerings, enhancing liquidity and capital flexibility. The company also executed or signed leases covering approximately 337,000 square feet across multiple properties in late 2025 and early 2026, addressed tenant defaults with partial recoveries, and secured a new $100.0 million secured revolving credit facility.
Innovative Industrial Properties, Inc. (NYSE:IIPR), founded in 2016, is widely regarded as the pioneering real estate investment trust (REIT) dedicated to the regulated U.S. cannabis industry, providing capital through sale-leaseback transactions and long-term property ownership.
4. Tilray Brands, Inc. (NASDAQ:TLRY)
On February 18, Tilray Brands, Inc. (NASDAQ:TLRY) announced that it has entered into an exclusive licensing agreement, effective January 1, 2027, with Carlsberg Group, one of the world’s premier brewing organizations and among the largest globally by revenue. Under the agreement, Tilray has been granted a multi-year license to produce, market, sell, and distribute Carlsberg, Carlsberg Elephant, 1664, and Kronenbourg 1664 Blanc branded beers across all channels in the United States beginning January 1, 2027. The agreement carries an initial five-year term with an automatic five-year renewal contingent on performance criteria. For potential investors, this represents a meaningful strategic expansion of Tilray’s beverage alcohol portfolio, providing access to globally recognized premium brands with established consumer demand. The partnership enhances Tilray’s scale within the U.S. beer market, diversifies revenue streams beyond cannabis, and strengthens long-term visibility through a contractual multi-year framework tied to performance benchmarks.
On February 12, Tilray Pharma, the pharmaceutical division of Tilray Brands, Inc. (NASDAQ:TLRY), announced that its European pharmaceutical distribution arm, CC Pharma, entered into a strategic agreement with Smartway Pharmaceuticals to expand the availability of pharmaceutical products across the United Kingdom. Smartway’s leadership emphasized the agreement’s focus on continuity of supply and improved access to regulated medicines throughout UK healthcare channels. For potential investors, this development signals further geographic and operational expansion within Tilray’s distribution segment, reinforcing the company’s positioning as a diversified consumer packaged goods and pharmaceutical platform. The agreement broadens Tilray’s footprint in the European pharmaceutical supply chain, supports incremental revenue opportunities in regulated markets, and strengthens recurring distribution-based revenue streams.
Tilray Brands, Inc. (NASDAQ:TLRY) operates as a global consumer packaged goods company focused on medical cannabis research, cultivation, processing, distribution, and beverage alcohol operations, with segments spanning Cannabis, Distribution, and Beverage. With 12 hedge funds having stakes in the company as of Q3 2025, as recorded by Insider Monkey, Tilray Brands is among the best pot stocks to buy according to hedge funds.
3. Incannex Healthcare Inc. (NASDAQ:IXHL)
On February 25, Incannex Healthcare Inc. (NASDAQ:IXHL) announced that its board of directors approved a 1-for-30 reverse stock split of the company’s common stock. The reverse split had previously been approved by stockholders at a special meeting held on May 27, 2025. The split will take legal effect at 4:01 p.m. Eastern Time on February 26, 2026, with trading on a split-adjusted basis commencing February 27, 2026, under a new CUSIP number on The Nasdaq Capital Market while retaining the ticker symbol “IXHL.” The stated purpose of the reverse split is to increase the per-share trading price of the company’s common stock to regain compliance with Nasdaq’s minimum bid price requirement for continued listing, thereby preserving exchange listing status and access to public capital markets.
On January 29, Incannex Healthcare Inc. (NASDAQ:IXHL) also announced the appointment of three additional members to its Clinical Advisory Board: Murray Stein, MD, MPH; Andrew Cutler, MD; and Amir Kalali, MD. The Clinical Advisory Board was established to provide independent scientific and clinical guidance as the company advances PSX-001 into its next phase of clinical and regulatory development. The board will advise on trial design, endpoint selection, regulatory strategy, and overall development planning, supporting disciplined progression through clinical milestones.
Incannex Healthcare Inc. (NASDAQ:IXHL) is a clinical-stage biopharmaceutical company focused on developing combination therapeutics targeting underlying biological pathways, including medicinal cannabis and psychedelic-based therapies.
2. Green Thumb Industries Inc. (OTCQX:GTBIF)
On February 20, Green Thumb Industries Inc. (OTCQX:GTBIF) increased its existing syndicated credit facility led by Valley National Bank by $50 million, bringing the total facility to $189 million. The company stated that proceeds will be used for general corporate purposes, potential strategic investments, and working capital requirements. For potential investors, the expansion of the credit facility strengthens liquidity and financial flexibility, providing additional capital to pursue growth initiatives, opportunistic acquisitions, or market expansion while maintaining operational stability in a capital-intensive industry.
In Q3 2025, Green Thumb Industries Inc. (OTCQX:GTBIF) reported revenue of $291.4 million, representing a 1.6% year-over-year increase, alongside GAAP net income of $23.3 million. The company highlighted continued expansion in adult-use cannabis markets, particularly in Minnesota. Adjusted EBITDA totaled $80.2 million, representing 27.5% of revenue, and operating cash flow reached $74.1 million, reflecting solid profitability and cash generation. Green Thumb ended the quarter with $226.2 million in cash and authorized a $50 million share repurchase program, signaling confidence in its balance sheet and intrinsic valuation. Additionally, adult-use cannabis sales were expanded across all eight RISE dispensaries in Minnesota, reinforcing its presence in emerging state markets.
Green Thumb Industries Inc. (OTCQX:GTBIF), headquartered in Chicago, Illinois, is a leading national cannabis consumer packaged goods company and retailer operating across multiple U.S. markets.
1. The Scotts Miracle-Gro Company (NYSE:SMG)
On February 17, Wells Fargo raised its price target on The Scotts Miracle-Gro Company (NYSE:SMG) to $75 from $70 and maintained an Overweight rating. The firm noted strong sector momentum, citing one of the strongest relative starts for Staples versus the S&P 500 on record, and refreshed price targets to reflect broader sector moves.
At its January 26, 2026, virtual annual meeting, shareholders approved an amendment and restatement of the company’s Long-Term Incentive Plan, increasing the pool of common shares available for grant by 2,750,000 shares. Beginning January 30, 2026, The Scotts Miracle-Gro Company (NYSE:SMG) implemented new standardized equity award agreements, including restricted stock units, performance units, and nonqualified stock options for certain employees and named executive officers, as well as restricted stock units and deferred stock units for non-employee directors. These actions reinforce the company’s reliance on equity-based compensation to align management and board incentives with shareholder value creation. Shareholders also elected four directors to terms extending through the 2029 annual meeting, approved executive compensation on an advisory basis, and ratified Deloitte & Touche LLP as independent auditor for fiscal 2026. Approximately 91% of outstanding shares were represented at the meeting, reflecting strong shareholder engagement in governance matters.
Founded in 1868 in Marysville, Ohio, The Scotts Miracle-Gro Company (NYSE:SMG) markets branded lawn and garden products across North America and has historically been viewed as a cannabis industry proxy through its Hawthorne Gardening subsidiary, which supplies hydroponic equipment and cultivation inputs to cannabis growers.
While we acknowledge the potential of SMG as one of the best pot stocks to buy according to hedge funds, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SMG and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 12 Best Retail Stocks to Buy According to Analysts and 13 Best Internet of Things (IoT) Stocks to Buy Now.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
