Few if any industries are growing as consistently quickly as the legal marijuana industry, and that's a big reason marijuana stocks have exploded higher in recent months.

According to leading cannabis research firm ArcView, the legal pot market in North America may be worth nearly $22 billion by 2021, up from just $6.9 billion at the end of 2016. If ArcView's growth forecast comes to fruition, the legal weed industry could deliver a compound annual growth rate of 26%.

However, this aggressive growth is dependent on two factors: expansion into new countries or states, as well as improving favorability toward pot. The latter is of little concern to the industry. Surveys from Gallup, CBS News, and the independent Quinnipiac University all show that a record number of respondents want to see marijuana legalized in the United States. The support for the weed industry is there.

A hemp farmer pruning his crop.

Image source: Getty Images.

Expansion, though, is a different story. With Attorney General Jeff Sessions recently announcing that he would rescind the Cole memo, which loosely protected states from federal intervention if they adhered to certain guidelines, the U.S. market is nowhere near as friendly to marijuana investors as its neighbor to the north. Canada has quickly risen to become the world's most budding example of a successful marijuana market.

Seemingly every company in Canada appears to be getting in on the act of late. Virtually any publicly traded company that is an approved grower via Health Canada's medical marijuana program (medicinal cannabis has been legal since 2001 in Canada) has been off to the races.

This small-cap marijuana stock is up more than 3,800% over the past two years

One such company that's mostly remained under the radar but has recently turned heads, following a better than 3,800% gain over the trailing two-year period, is Emerald Health Therapeutics (NASDAQOTH:EMHTF). Believe it or not, this relatively small operation has ambitions of expanding its production to 1 million square feet, perhaps by the end of 2018, and it may have the ability to claim as much as 5.8 million square feet of production capacity in the somewhat near future.

Everything for Emerald Health Therapeutics is dependent on two massive grow sites.

The first relies on its 50-50 partnership with Village Farms International (NASDAQOTH:VFFIF), which was announced this past September. The partnership is designed to retrofit an existing 25-acre, 1.1 million-square-foot facility, which Village Farms had been using to grow to tomatoes, to dried cannabis production. That facility is now known as Pure Sunfarms. With the existing infrastructure already in place, Emerald Health figured it has a pathway to exceptionally low costs, and a much quicker turnaround to production than many of its larger peers in Canada.

An indoor commercial cannabis grow farm.

Image source: Getty Images.

What's more, Pure Sunfarms also optioned an additional 3.7 million square feet of greenhouse space in the same Delta complex in B.C. The thinking here is that this space could be added to the existing greenhouse facilities relatively quickly if demand permits. Altogether, this partnership could control up to 4.8 million square feet of cannabis-growing capacity.

In addition, Emerald Health Therapeutics has its own facility it's building from the ground up. On Nov. 28, Health Canada's Office of Medical Cannabis gave the company a green light for the construction of its first 75,000 square feet at the Richmond, B.C., facility. The company has laid out a timeline of completing this first 75,000 square feet by March 2018, a second 75,000 square feet by the third quarter of 2018, and more than 350,000 added square feet of grow capacity by year's end. Though this amounts to a little over 500,000 square feet of capacity, the company claims the ability to grow to approximately 1 million square feet of capacity on the 32-acre site that'll also house its corporate headquarters. 

Investors would also be wise to note that Emerald's Richmond facility will place some emphasis on extract and cannabis oil production. Cannabis oils have a much higher price point than dried cannabis, and also substantially higher margins.

Can this small fry really compete with the big boys?

The big question, of course, is whether Emerald Health has a shot to really make a run at Canada's massive growers, all of which have a pretty big head start.

Piggy banks lined up next to one another, with progressively smaller cannabis plants growing out of them.

Image source: Getty Images.

Working in the company's favor is that bought-deal offerings are producing plenty of interested buyers in Canada. A bought-deal offering is a common-stock sale to an institution or investor before the release of a prospectus. Though bought-deal offerings have the potential to dilute existing shareholders, they're critical to providing Canadian marijuana growers with the capital needed to expand their operations. Emerald Health looks to have the funding and pathways necessary to complete its expansion.

Then again, it doesn't have the major partnerships, the established extract line of products, or the well-known brands of its larger peers. That means an uphill struggle from the get-go for Emerald Health Therapeutics.

Investors are probably best off sticking to the sidelines on this one and waiting to see if the company can meet to its ambitions expansion budget and timeline. That isn't to say Emerald Health won't meet its goals, so much as to suggest that it has no history of previously meeting production goals. Until we have that history, the watchlist is where this stock should stay.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.