3 Best Marijuana Stocks to Buy in October

Key Points

• Tilray's beverage business now generates $241 million annually, nearly matching its $249 million in cannabis revenue.

• Canopy Growth narrowed its adjusted EBITDA loss to 7.9 million Canadian dollars last quarter, showing that it's making operational improvements.

• Innovative Industrial Properties' dividend yields nearly 14% at the current share price, but its revenue was down 21% year over year in Q2 due to tenants defaulting on lease payments.

• 10 stocks we like better than Tilray Brands ›

The cannabis sector remains one of the most challenging areas to invest in successfully. The space is volatile, highly regulated, and filled with companies that have yet to demonstrate that they can produce long-term profitability. At the same time, the potential for policy changes, endorsements of cannabis for medical or wellness uses, and renewed investor interest keep the industry on investors' radar. And with valuations in the sector beaten down, even small catalysts can spark outsized moves by the stocks.

For investors looking to put money to work in it today, these three top pot stocks stand out: Tilray Brands (NASDAQ: TLRY), a diversified player with the scale to survive a shifting regulatory environment; Canopy Growth (NASDAQ: CGC), a high-profile name that often rallies first when sentiment turns positive; and Innovative Industrial Properties (NYSE: IIPR), a landlord that offers a steadier way to benefit from cannabis growth without betting directly on cultivation.

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The diversification play

Tilray Brands isn't just a cannabis company anymore -- it has become a consumer packaged goods conglomerate that happens to sell pot. It owns eight craft beer brands that it acquired from Anheuser-Busch, including Shock Top and Blue Point. In its fiscal 2025 (which ended May 31), its beverage unit generated $240.6 million in sales, up 19% year over year, versus $249 million for cannabis. It also has distribution and wellness businesses. That gives it a revenue balance that most of its marijuana industry competitors lack.

Total fiscal 2025 revenue reached $821.3 million, up 4% year over year. In fiscal Q4, international cannabis revenue jumped 71% as markets like Germany expanded access. The company ended the year with $256.4 million in cash and marketable securities on its books, providing it with financial flexibility to make moves to consolidate the fragmented industry. The risk: Tilray is still posting GAAP losses due to impairments and restructuring charges, and there's still no guessing how long the U.S. will have to wait for federal legalization of marijuana.

The sentiment leader

Canopy Growth often serves as a cannabis industry bellwether -- when pot stocks rally, it typically leads the way, and when they crash, it falls the hardest. The company maintains this position through brand recognition and with help from Constellation Brands, which invested $4 billion in it and remains a major stakeholder.

In its fiscal 2026 first quarter (which ended June 30), Canopy reported consolidated net revenue of 72.1 million Canadian dollars, up 9% year over year, with cannabis revenue reaching CA$57 million. Its adjusted EBITDA loss was CA$7.9 million. Free cash flow was an outflow of CA$12 million, representing a 79% improvement from the prior year, primarily thanks to lower selling, general, and administrative expenses, lower working capital use, and the timing of interest payments. The company ended the quarter with CA$144 million in cash and short-term investments on its books.

While its cash-flow improvement shows operational progress, Canopy is still burning cash as it waits for U.S. market access. The company's Storz & Bickel vaporizer brand is providing it with some non-cannabis revenue diversification, but its path to meaningful profitability remains tied to federal legalization.

The landlord approach

Innovative Industrial Properties doesn't cultivate or sell cannabis; instead, it focuses on collecting rents from those who do. The real estate investment trust (REIT) owns 108 properties across 19 states, primarily cultivation and processing facilities.

In the second quarter, it reported $62.9 million in revenue, a 21% decline from the prior year, after some tenants defaulted on their lease payments. Despite that, management maintained the quarterly dividend at $1.90 per share, which gives it a yield of nearly 14% at the current share price.

The risk is clear: If cannabis operators continue to struggle, more rent defaults could follow, leaving Innovative Industrial Properties with vacant buildings or the need to renegotiate leases at lower rates.

October's cannabis catalyst

These three stocks offer distinct ways to play the cannabis sector without betting everything on federal legalization. Tilray provides diversification through beverages, Canopy offers maximum torque to sentiment shifts, and Innovative Industrial Properties delivers income while you wait.

With the industry overall down by 80% from its 2021 highs and October historically bringing speculation about policy shifts ahead of elections, even modest catalysts could drive significant share price moves. Just size your positions appropriately -- cannabis stocks remain speculative holdings, not investments.

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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.