Investing in marijuana stocks seems practically stuffy in comparison with buying bitcoin. But at least with some marijuana stocks, your investment buys part of a business that is growing, both plants and sales, and isn't at serious risk of losing half of its value overnight.

Which marijuana stocks are the best on the market? I'd rule out the tiny penny stocks. And with uncertainty about what might happen with federal enforcement of U.S. marijuana laws, my inclination is to stay clear of stocks focused on the U.S. market for now. Even with these stocks thrown out, several options remain. In my view, Canopy Growth (CGC -0.66%)MedReleaf (NASDAQOTH: MEDFF), and Aurora Cannabis (ACB -2.96%) look like the best marijuana stocks to buy in 2018. Here's why these three rank at the top of the list.

Marijuana leaf on top of $100 bills

Image source: Getty Images.

1. Canopy Growth

I view Canopy Growth as the top marijuana stock to buy in 2018 for two primary reasons. First, it's currently the biggest marijuana grower in Canada in terms of production capacity and sales. By my estimation, Canopy Growth currently has a market share of around 20% of the Canadian medical-marijuana market. (Disclaimer: The rapid growth of the Canadian market makes it tricky to accurately pin down market share for any company, so this estimate is a rough one.)  

What would a 20% market share of the recreational-marijuana market mean for Canopy Growth? The Canadian Parliamentary Budget Officer (PBO) projects a market size between $4.2 billion and $6.2 billion annually. Professional services firm Deloitte estimates the market will be between $4.9 billion and $8.7 billion annually. If we use the average of the midpoints of these two ranges, Canada would have a market size of $6 billion. Canopy Growth's slice of that market, assuming it wins a 20% market share, is $1.2 billion. Should Canopy Growth come even close to that level of sales, the stock should soar more than it already has. And, by the way, at least one estimate predicts a much bigger market than the PBO and Deloitte expect.

What's the second reason I like Canopy Growth? The company's partnership with big alcoholic-beverage maker Constellation Brands (STZ -0.04%). It's not just that Constellation's $245 million stake in Canopy gave the marijuana grower an endorsement like no other marijuana stock has received so far. Constellation wants to develop a cannabis-infused beer. While that's not my cup of tea (or beer), I suspect such a product would be a huge hit -- and even anticipation of the beer could drive Canopy stock even higher. 

2. MedReleaf

MedReleaf ranks behind Canopy Growth in current sales. I view the marijuana stock as a good pick for 2018 largely for the same reasons that I think Canopy will go higher next year.

Production capacity is likely to be paramount in 2018, assuming legalization of recreational marijuana goes as planned. I suspect that every marijuana grower in Canada will be able to sell as much as they can produce. Since April, MedReleaf has boosted its capacity by 80%. MedReleaf's production costs are also quite low, which means a nice chunk of increased revenue will flow right to the bottom line.

MedReleaf recently raised more cash through a stock offering. Acquisitions of smaller marijuana growers seem likely, in my opinion. I also think that MedReleaf could catch the eye of some of Constellation Brands' peers. The company has already identified beer and other beverages as part of its growth strategy. I wouldn't be surprised at all if MedReleaf snags a big deal in 2018 along the lines of the Constellation-Canopy partnership.

3. Aurora Cannabis

Aurora Cannabis takes the third spot on the list, but it has a good shot at becoming the second-largest marijuana grower in Canada. Right now, that's not the case. Aurora's sales lag well behind those of Canopy Growth and MedReleaf. That could change, though. 

Last month, Aurora launched a takeover attempt of CanniMed Therapeutics. CanniMed is smaller than Aurora but still generates roughly 60% of the sales that Aurora does. A combination of the two companies would jump ahead of MedReleaf in production capacity and sales, trailing only Canopy Growth. 

Closing the deal with CanniMed isn't a certainty yet. CanniMed is fighting tooth and nail to hold Aurora at bay, including adopting a "poison pill" as well as calling for government intervention to prevent a takeover. Still, Aurora has locked up support of shareholders holding around 38% of CanniMed's outstanding shares. It's also unlikely that the province of Saskatchewan will take any action. If the acquisition goes through, Aurora Cannabis will be in even better shape to profit from the coming recreational-marijuana boom in Canada. 

Marijuana buds on tiny Canadian maple leaf flags

Image source: Getty Images.

What about others?

Quite frankly, I expect most Canadian marijuana stocks to surge in 2018. That includes Aphria, even though the company is scrambling to leave the U.S. medical-marijuana market under threat of potential delisting from the Toronto Stock Exchange.

What about marijuana-focused biotech stocks? I think GW Pharmaceuticals (GWPH) could have a big year as well. My bet is that the company's cannabidiol product, Epidiolex, wins FDA approval in 2018. I also think Insys Pharmaceuticals could enjoy a nice rebound next year. But the prospects in Canada are simply too great for either of these biotechs to take a spot in the top three marijuana stocks for next year.

There are risks for the stocks mentioned, of course. Should Canada's efforts to legalize recreational marijuana be delayed or derailed, it's a totally different ballgame. Investors could also begin to be wary of some of these stocks' valuations. 

However, I think Canada will move along as planned with its legalization efforts. And if the premium prices for Canopy Growth, MedReleaf, and Aurora Cannabis haven't scared away investors yet, I don't see it happening in 2018. Should the Canadian marijuana market explode like some think it will, some of these marijuana stocks' current prices might even be viewed as bargains at some point. We'll see.