Many marijuana stocks have soared in 2016, with one enjoying especially impressive gains of well over 2,000%. However, this speculative industry is fraught with risk. If you're considering investing in marijuana stocks in the new year, here are five numbers you should know before taking the plunge.

Marijuana

Image source: Getty Images

$50 billion

Ackrell Capital projects that the market for cannabinoid-based pharmaceuticals will top $50 billion annually. Before you get too excited, though, read the fine print. The investment firm notes that the market won't develop until after the end of "prohibition"  -- i.e. the lifting of federal laws against use of marijuana.

Assuming federal laws do indeed change, is this estimate realistic? Possibly. Cannabinoids have been found to have potential as treatments in over 40 medical indications, including cancer, chronic pain, epilepsy, and glaucoma.

One experimental drug for just one of those indications could reach peak annual sales of $3 billion if the most optimistic projections become reality. Elemer Piros with Roth Capital Partners thinks that GW Pharmaceuticals' (NASDAQ:GWPH) Epidiolex, which is in late-stage clinical studies targeting treatment of two rare forms of epilepsy, could ultimately generate annual sales in that vicinity if approved.  

28

Support for use of medical marijuana is growing quickly. After the U.S. elections in November, 28 states plus the District of Columbia now allow legal use of medical marijuana. A few also allow recreational use of the drug.

Infographic: The States Where It's Legal To Smoke Marijuana | Statista

Image source: Statista.

This increased acceptance should diminish the barriers for companies operating in the marijuana industry. And that presents opportunities for investors.

3

While the opportunities exist, the current realities are stark. The U.S. Food and Drug Administration has approved a grand total of three cannabinoid drugs.

Marinol, which is now marketed by AbbVie (NYSE:ABBV), was approved  way back in 1985 for treating nausea and vomiting associated with cancer chemotherapy. The drug's active ingredient is dronabinol, a man-made form of THC, which is considered the psychoactive component of marijuana. 

The FDA also approved another cannabinoid, Cesamet, in 1985. However, that drug was removed from the U.S. market in 1989 for "commercial reasons." Valeant Pharmaceuticals (NYSE:VRX) later bought Cesamet and brought the drug back to market in 2006.

It took quite a while for another cannabinoid to join Marinol and Cesamet. In July of this year, the FDA gave a thumbs-up for Insys Therapeutics' (NASDAQ:INSY) Syndros. As with Marinol, the active ingredient of Syndros is dronabinol. While Marinol is available as a capsule, Syndros is a liquid formulation. 

1

A very important number for investors considering investing in marijuana is how many attorney generals the U.S. federal government has: exactly one. And the person who appears to be getting the nomination to fill that role in 2017, Alabama Republican Sen. Jeff Sessions, is an adamant opponent of legalized marijuana.

Jeff

Sen. Jeff Sessions. Image source: Gage Skidmore on Wikimedia Commons.

Sessions publicly chastised the Obama administration for failing to enforce federal marijuana restrictions. He has also stated that marijuana reform was "a tragic mistake." Should Sessions win confirmation, he could choose to clamp down on the growing marijuana industry with the stroke of a pen.

Will he do so? No one knows. President-elect Trump has expressed support for the use of medical marijuana, and stated that the issue should be decided at the state level. 

0

It has been said that the best way to get rich during a gold rush is to sell shovels. With that in mind, perhaps the best figure for investors looking to make money from the "marijuana rush" is the number zero. Companies that have zero marijuana-related products, but that have the potential to benefit by serving those that do might be the smartest marijuana investing play of all.

One possibility is Scotts Miracle-Gro (NYSE:SMG). The company has acquired several leaders in hydroponics and has positioned itself as the premier supplier for indoor marijuana growers. Scotts generated revenue of over $2.8 billion last year, although less than 10% of that total stemmed from its hydroponics business. 

Let's suppose that Sessions becomes attorney general, but doesn't disrupt what the states are doing with regards to legalization of marijuana. Let's say the FDA approves more cannabinoid drugs. Let's assume that medical marijuana becomes a $50 billion industry as some project. AbbVie and Valeant won't be the biggest winners, for sure. What about GW Pharmaceuticals or Insys? Probably not, either.

If all that happens, a lot more marijuana will need to be grown. And plenty of hydroponics products will be needed. Scotts just might be the best marijuana investment around, even though the company doesn't have any marijuana products at all. Zero is a great number to know if you're looking to invest in marijuana in 2017.

Keith Speights has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Valeant Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.