2021 was a horrible year for cannabis stocks. The industry benchmark Horizons Cannabis Life Sciences ETF fell 54%, while the S&P 500 Index rose 20%.

However, this does not mean that the industry is doomed and all hope is lost. Savvy investors realize that highs and lows are common in an evolving industry. The industry took a hit last year due to the lack of positive developments in federal marijuana legalization. But the industry's growth is unstoppable and is expected to double by 2025.

While I am not in favor of Canadian cannabis stocks that may take a few years to rebound (with the exception of Tilray), U.S. cannabis companies continue to impress with their excellent financial and expansion strategies. These growth stocks are excellent additions to a portfolio that can yield long-term returns.

Let's look at why 2022 is not the time to give up on cannabis stocks.

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Ample growth opportunities for potted plant growers

Investors are skeptical about investing in marijuana stocks, wondering if federal legalization will ever happen. But even so, there is still plenty of room for domestic multi-state operators to grow as state legalization continues. The industry offers some notable growth stocks that could hit new highs as the industry matures.

Trulieve Cannabis (OTC: TCNNF) started as a small medical marijuana company in Florida, but now dominates the Sunshine State with 112 dispensaries. It is slowly expanding its roots into other major cannabis markets, operating 159 dispensaries nationwide. The acquisition of Harvest Health (completed in October 2021) gives it access to the cannabis markets in Arizona, Coin and Maryland.

While profitability remains a challenge for some marijuana companies, Trulieve has been profitable for 15 consecutive quarters, and that's only from medical marijuana companies. The company is now slowly dipping its toe into the recreational market as well.

In the most recent third quarter, net income was $19 million, up 7 percent year-over-year. Revenue for the quarter was up 64% year-over-year to $224 million. Trulieve expects full year revenue to be in the range of $815 million to $850 million and adjusted EBITDA to be in the range of $355 million to $375 million. Please note that this does not include Harvest's revenue. Trulieve could easily generate nearly $1 billion in revenue this year.

Massachusetts-based Curaleaf Holdings (OTC: CURLF) is also expanding aggressively to become one of the country's largest cannabis producers. Its timely and smart acquisitions over the past two years are driving its revenue growth. In the third quarter, revenues grew 74% year-over-year to $317 million. Adjusted EBITDA for the quarter was also $71 million, compared to $42 million in the same quarter last year.

The company recently acquired Bloom Dispensaries, increasing its number of stores in Arizona to 16 and nationwide to 128. Expanding Curaleaf into the Arizona market, which recently legalized recreational marijuana, is a smart move. Curaleaf is also fully prepared for three dispensaries in the New Jersey market, where recreational sales are expected to begin in the first quarter of this year.

Adding to its revenue growth is the booming European market, which is expected to grow at a CAGR of 29.6% to $37 billion by 2027.

The company expects full-year revenue to exceed $1 billion, which is at the low end of the $1.2 billion to $1.3 billion range. It is not yet profitable, but with this dramatic growth in revenue, profitability is not far behind.

Illinois-based Cresco Labs (OTC:CRLBF) and New York-based Columbia Care (OTC:CCHWF) may be small, but they have some smart strategies that are helping them grow quickly. Both companies are targeting limited-license markets that limit how many licenses they can offer to each cannabis grower. This strategy has helped both companies build a loyal customer base while also increasing their revenues. In the third quarter, Columbia Care's revenue grew 144 percent year-over-year to $132 million and EBITDA jumped 634 percent year-over-year to $31 million.

Columbia Care operates 131 facilities, 99 of which are retail stores. It has a broad presence in a number of major cannabis markets that are growing at an impressive rate. It has also expanded into Colorado and the Mid-Atlantic through the smart acquisitions of Green Leaf Medical and Colorado-based Medicine Man.

Meanwhile, Cresco, which has only 47 stores nationwide, is playing catch-up with the bigger players. In the third quarter, total revenue grew 41 percent year-over-year to $215 million, with adjusted EBITDA of $56 million compared to $40 million in the same quarter last year. Cresco expects to end the year strong, with revenues in the range of $235 million to $245 million, with an adjusted EBITDA margin of 30 percent in 2021 and a gross margin of more than 50 percent for the remainder of 2021.

Note that even in limited legal markets, these companies can grow to this extent. Industry experts predict that nearly seven states will legalize marijuana this year, including Maryland, Missouri, Oklahoma, Ohio, Arkansas, Coin and Florida.

Even before federal legalization occurs, the opening of new markets provides ample opportunity for these companies to consolidate their footprint. If this happens, they will then be able to dominate the market and fight fiercely against their Canadian counterparts who are very keen to enter the U.S. market.

These cannabis stocks are expected to rise 150% to 200%

All four stocks are down more than 45 percent over the past 12 months. However, if state legalization continues to accelerate, these marijuana stocks could soar again. Regardless of federal legalization, analysts see shares of Cresco, Trulieve, Curaleaf and Columbia Care rising 160%, 226%, 161% and 220% over the next 12 months.

TCNNF PS Ratio Chart

TCNNF PS ratio data from YCharts

That said, since cannabis is a high-risk industry, risk-averse investors should decentralize their portfolios with a few safe stocks from different sectors while starting to make small investments in these great cannabis stocks.

Trading at a price-to-sales (P/S) ratio of between 2 and 4, these stocks are cheap right now. However, if more states start legalizing marijuana this year, marijuana stocks won't be so cheap. Therefore, you may want to take advantage of the opportunity to buy on the cheap.