There aren't too many industries that can hold a candle to the returns of cryptocurrencies these days, but the marijuana industry isn't going down without a fight. Marijuana stocks certainly have investors seeing green, with a majority of pot stocks in excess of $200 million in market cap at least doubling in value over the trailing year.

The reason for this strength in the legal weed industry is twofold. First, investors are excited about the consistent sales growth they're seeing. Cannabis research firm ArcView noted that legal weed sales grew by 34% in North America last year to $6.9 billion, and they're anticipated to jump to $21.6 billion by 2021. That suggests plenty of opportunity for investors to find winners in this rapidly growing industry.

A cannabis bud lying atop a messy pile of hundred dollar bills.

Image source: Getty Images.

Perhaps more important is the fact that there's been a discernible shift in the way the American public views marijuana. What was once a taboo topic that only a quarter of respondents believed should be legalized in Gallup's national survey in 1995 is now a substance that nearly two-thirds of adults believe should be legal, as of Gallup's October 2017 poll. The belief is that as support for pot intensifies, the pressure on Congress to alter their scheduling of the drug will be ramped up as well.

Nevertheless, recreational weed remains illegal in every country around the world, save for Uruguay, making life pretty difficult for cannabis companies. Within the U.S., disadvantageous tax laws that disallow pot businesses the ability to take normal deductions, coupled with little or no access to basic banking services, often means most weed companies struggle to find consistent funding. Yet with this being a battle for market share, funding is seemingly everything in the pot industry.

These pot stocks are really well funded

So, which marijuana stocks have the most cash on their balance sheets and are able to take advantage of expansion opportunities? Let's take a look.

Aurora Cannabis: in excess of $268 million

In recent years, few if any marijuana stocks have had an easier time raising capital than Aurora Cannabis (ACB -2.79%), a Canadian-based medical cannabis grower and retailer. On a pro forma basis, according to CEO Terry Booth as of Nov. 16, the company was on track to have more than $268 million ($340 million Canadian) in cash and cash equivalents. This beefed-up cash position was recently bolstered with a $91 million convertible debenture, and a separate $59 million convertible debenture. 

An indoor commercial cannabis grow farm.

Image source: Getty Images.

Why the need for so much cash, you wonder? Aurora is trying to keep pace with demand in three separate channels. First, the number of medical cannabis patients in Canada has been growing by approximately 10% a month, which has pushed up demand. Second, Canada's parliament is debating legislation that would legalize recreational weed for adults by July 1, 2018. Doing so would likely create a flood of demand from Canadian consumers and tourists. Finally, Aurora's push into overseas markets where medical cannabis is legal has created a burgeoning export sales channel for the company. All of these revenue pathways necessitate capacity expansion.

Aurora's key project at the moment is Aurora Sky, an 800,000-square-foot facility that it believes will be complete in mid-2018. This facility is touted as being the most technologically advanced in the world, which should help bring down growing costs, and could generate around 100,000 kilograms of dried cannabis each year. 

Aurora is also in the midst of a hostile, all-stock, takeover bid of CanniMed Therapeutics (NASDAQOTH: CMMDF). The combined companies would have around 40,000 eligible medical patients under their umbrella and be capable of around 130,000 kilograms of annual dried cannabis production once Aurora Sky is complete. It remains to be seen if CanniMed's shareholders would support the deal, but it's pretty clear that Aurora is trying hard to become a big player. 

Canopy Growth Corp.: approximately $278 million

Aurora's biggest competitor in Canada is Canopy Growth Corp. (CGC -2.08%), which sports perhaps the best-known pot brand in the country, Tweed. A majority of Canopy Growth's funding was derived from its recent deal to sell 9.9% of its common stock to spirits company Constellation Brands for about $190 million ($245 million Canadian). Following the deal's closure, Canopy Growth's cash and cash equivalents on hand was boosted to around $278 million. 

A person holding cannabis leaves in their cupped hands.

Image source: Getty Images.

This company is certainly going to need every cent, too, because of its two methods of expansion. First, the company is a major proponent of inorganic growth. This is a fancy way of saying that Canopy Growth likes to acquire new businesses to expand its product portfolio, as well as facilities to boost its production capacity. In early January, it completed its acquisition of Mettrum Health, which increased its access to about half of Canada's medical cannabis patients.

The company is also actively constructing new grow facilities on an organic basis. Its latest quarterly report cites more than 2.4 million square feet in capacity currently being developed or under construction, with at least 1.7 million square feet under consideration for future development. There's a reason Canopy Growth is the market share leader in this space, and there could be perks for shareholders given that it's the lead dog in the weed industry.

The one downside that investors have to be aware of with both Aurora and Canopy is that they rely on common-stock offerings via bought-deal financings and convertible debentures to raise capital. That's a fancy way of saying that existing shareholders are continually diluted to fund pot companies' coffers.

GW Pharmaceuticals: $370 million

But the cream of the crop in terms of cash on hand in the marijuana industry goes to cannabinoid-based drug developer GW Pharmaceuticals (GWPH), which ended the third quarter with about $370 million in cash and cash equivalents. 

Cannabis leaves next to test tubes and other biotech lab equipment.

Image source: GW Pharmaceuticals.

GW Pharmaceuticals has two primary uses for this mound of cash. First, it's to keep the lights on and fund additional research. Like most drug developers, GW Pharmaceuticals isn't profitable or even cash flow positive. Its lone approved drug, Sativex, an oral spray designed to treat spasticity associated with multiple sclerosis in more than a dozen countries in Europe, has been a major disappointment with only a few million dollars in revenue each quarter. This $370 million is designed to tide the company over until it can hopefully get its lead drug, Epidiolex, approved by the Food and Drug Administration.

The second reason for this cash hoard is to launch and market Epidiolex. In multiple pivotal-stage trials, Epidiolex wound up demonstrating a statistically significant reduction in seizure frequency in patients with Dravet syndrome or Lennox-Gastaut syndrome, relative to the placebo. That should open the door for a Food and Drug Administration approval and give Epidiolex a shot at perhaps $500 million in peak annual sales, if not a bit higher.

Really, it's all about patients with GW Pharmaceuticals. It's going to take a good two to three more years before we see recurring profits (as long as Epidiolex is approved), which means the company will lean on its healthy cash position in the interim.