Cannabis Stock VRNOF Soars 178% in a Month: Time to Buy, Sell or Hold?

One of the largest cannabis operators in terms of geographic scope, Verano Holdings Corporation VRNOF, saw its shares staging a staggering rally of 178% in the past month, driven by hopes of federal reform and encouraging dispensary growth.

While revenue trends remain under pressure, signs of margin improvement and operational efficiencies have renewed investor interest in this cannabis stock.

Let’s delve into the company’s fundamentals to gain a better understanding of how to play the stock amid this price surge.

Pricing Pressures on VRNOF’s Operations

What sets Verano apart from many peers is its vertically integrated model — cultivating, processing and selling cannabis through its own retail and wholesale operations. However, with 100% of the company’s revenues tied to U.S. markets, it remains highly exposed to domestic regulatory risks, particularly the lack of federal legalization, which continues to restrict access to capital and interstate commerce.

In its recently reported Q2 results, Verano’s revenues fell 9% year over year and 4% sequentially to $202 million. Although the top line benefited from strong performance in the states of Florida and Ohio, as well as a boost from last year’s acquisition of The Cannabist Company Holdings, these gains were more than offset by price compression in existing markets and the negative impact of the company’s wholesale accounts receivable strategy.

However, the company’s bottom line showed a mixed picture. Gross profit margins improved 450 basis points year over year to 55.9%, driven by cultivation/production efficiencies in the states of Florida and Illinois. SG&A expenses also declined nearly 1% year over year to $86.3 million, driven by operational efficiencies.

Yet, the bottom line was negatively impacted by the state and federal tax burden, which rose 15% year over year to $35.2 million. Though this resulted in Verano posting a loss of 5 cents per share, it improved when compared to 6 cents in the year-ago period.

Verano has struck an optimistic tone for the remainder of the year. This is backed by the ongoing efficiency measures, new dispensary openings and product innovations such as vape extensions and wellness items as catalysts for growth. Based on operational efficiencies across its business, the company expects its cash balance to rise in the second half of 2025.

Stiff Competition From Other Cannabis Players

Verano is targeting an overcrowded market. It faces stiff competition from its peers — Aurora Cannabis ACB, Curaleaf Holdings CURLF and Green Thumb Industries GTBIF — all pursuing similar expansion and cost-cutting strategies, intensifying competition.

Companies like Aurora Cannabis and Curaleaf Holdings are also expanding their footprints beyond geographic borders, in markets like Europe and Australia. This international exposure gives them an edge over Verano and Green Thumb, which remain fully dependent on an increasingly saturated and fragmented U.S. market.

VRNOF Stock Performance and Estimates

Shares of Verano have risen nearly 33% year to date compared with the industry’s 7% growth, as shown in the chart below.

While loss estimates for 2025 have remained consistent at 17 cents per share, the same for 2026 have been slightly raised from 15 cents to 16 cents over the past 60 days.

How to Play VRNOF Stock?

Verano’s operational efficiencies — marked by margin gains, cost discipline and dispensary growth — are beginning to reflect in its fundamentals. However, revenue headwinds and stiff competition remain near-term challenges. President Trump’s recent comments on marijuana rescheduling have reignited optimism in the cannabis sector, but investors may prefer to wait for clearer signs before initiating or expanding positions.

Existing shareholders may consider maintaining exposure while monitoring this Zacks Rank #3 (Hold) company’s execution on its profitability roadmap.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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