Image Source: UnsplashThe future of cannabis companies is in the hands of politicians. They hold the keys to all the important potential industry reforms: Rescheduling, banking reform, and decriminalization or even legalization. There’s good news and bad news in this. But Green Thumb Industries Inc. (GTBIF) is a name I like, advises Michael Brush, editor of Cabot Cannabis Investor.The good news is that a majority of Americans favor cannabis reform and legalization — on both sides of the aisle. This suggests that sooner or later, politicians will respond and make favorable changes. President-elect Donald Trump campaigned in support of all three of the key reforms.As for Green Thumb Industries, it is the blue-chip name in cannabis. Based in Chicago, Green Thumb has over 100 stores and 20 production plants in 14 states. It sells popular brands like Dogwalkers and RHYTHM through its RISE dispensaries.CEO Ben Kolver takes a conservative approach to capital allocation, growth, and expenses. This is why Green Thumb is one of the few cannabis companies that actually makes money. It earned four cents a share in the third quarter of 2024.It’s also growing revenue despite industry headwinds. In the third quarter, it posted 4% sales growth to $28.8 million. In the first nine months of the year, the company posted $151.8 million in operating cash flow.One way you can tell Kolver is a conservative manager is that unlike many of the larger cannabis companies, he’s continued to have his company pay its full share of federal taxes. Many competitors have started to ignore the IRS ban on expense deduction, hoping that the IRS policy gets changed by rescheduling. This is risky, because meanwhile, the IRS formally disagrees with this approach.Here’s another way you can tell Kolver is a conservative manager: Green Thumb has enough financial strength to make it the rare cannabis company that can exploit the dramatic sector stock price declines by buying back shares. The company has a $50 million stock buyback plan in place.In the third quarter, the company also extended its debt maturities by inking a $150 million five-year credit facility. It negotiated an interest rate of 5%, which is low for the sector – another sign of financial strength. Green Thumb ended the third quarter with cash of $174 million, against debt of $255.6 million. That gives it the financial strength to make it through the hard times while politicians dawdle — and prosper on the other side.
About the Author
Michael Brush is an award-winning New York-based financial journalist who writes a stock market column for MarketWatch and is Chief Analyst of the Cabot Cannabis Investor newsletter for Cabot Wealth Network. He has also covered business and investing for the New York Times, the Economist Group, and MSN Money.Mr. Brush is editor of Brush Up on Stocks, an investment newsletter. He is the author of Lessons From the Front Line, a book offering insights on investing and the markets based on the experiences of professional money managers (published by John Wiley). Mr. Brush studied at Columbia Business School in the Knight-Bagehot Fellowship program, and Johns Hopkins SAIS in Italy.More By This Author:Top Picks For 2025: Vertiv HoldingsTop Picks For 2025: Peloton InteractiveTop Picks For 2025: United States Antimony
