Though there are thousands of stocks for investors to choose from, and seemingly dozens of industries, few have shone brighter in recent years than the marijuana industry. Over the trailing year, a majority of the largest pot stocks by market cap have doubled or tripled in value.

A big reason marijuana stocks have been almost unstoppable is the industry's sales growth. Cannabis research firm ArcView is estimating that legal weed sales could grow at a blistering 26% a year through 2021. If this proves accurate, we could see legal pot sales in North America triple to almost $22 billion between 2016 and 2021.

Potted cannabis plants growing under special lights in an indoor grow farm.

Image source: Getty Images.

But the North American market is far from created equally. Rather than seeing the U.S. lead the way, it's Canada that's been a blueprint for success. Canada legalized medicinal pot back in 2001 and is currently working on legislation that would allow adults to purchase marijuana beginning in July. If recreational weed is legalized, the industry could be looking at billions of dollars in added annual sales.

This budding pot stock just delivered a solid quarter 

Just as important are the expansionary plans and operating results of the handful of marijuana stocks that'll play a big role in the Canadian cannabis industry. Just last week, OrganiGram Holdings (NASDAQOTH:OGRMF), the pot stock with the lowest forward P/E ratio, reported its first-quarter operating results. Let's have a look at five things you're bound to love about this Q1 report, as well as one reason you should be a bit worried. 

1. Triple-digit percentage patient growth

The first thing investors should be pleased with is the continued growth in medical patients. Although recreational weed is bound to be a much larger market, these medical marijuana patients are what generate the sales needed to reduce OrganiGram's losses and cash burn at the moment. As of the end of the first quarter, which for OrganiGram was Nov. 30, the company had approximately 10,700 registered patients. Comparatively, that's a 169% increase from the first quarter of 2017.

A bottle of cannabis oil next to a cannabis leaf on a table.

Image source: Getty Images.

2. More in the way of high-margin product sales

Interestingly enough, OrganiGram actually reported a year-on-year decline in dried cannabis sales, despite the increase in registered patients. It wound up selling 195,000 grams of dried flowers in Q1 2018, which was up modestly from the sequential fourth quarter, but down noticeably from the 260,000 grams sold in Q1 2017.

What's important to note is that sales of cannabis oils took off, more than making up for the reduction in dried flower sales. The company sold 419,000 ml of cannabis in the first quarter, up from 178,000 ml in the sequential quarter, and just 77,000 ml in the year-ago quarter. Cannabis oil is a much pricier and higher margin product, so it's good news to see OrganiGram focusing on product diversification.

3. A clear path to 65,000 kilograms of cannabis a year

Wall Street and investors should also like the company's clearly laid out path to producing 65,000 kilograms of cannabis a year.

The press release notes that the second phase of the four-phase expansion was to be complete by the end of January, pushing total run-rate production to 16,000 kilograms of cannabis a year. By May, the third phase of construction should be complete, boosting run-rate output to 25,000 kilograms annually. Lastly, the fourth phase is expected to more than double output to 65,000 kilograms a year.

Keep in mind that OrganiGram has just a single grow facility at Moncton, New Brunswick. Expanding capacity at a single site helps internalize and lower its costs, which, when coupled with a push into higher margin cannabis oils, should allow it to be profitable ahead of many of its peers.

A jar of dried cannabis buds lying on a messy pile of cash.

Image source: Getty Images.

4. Two recreational supply agreements in its back pocket

Though there are no sure things in the stock market, Canada's march to become the first developed country to legalize recreational pot appears to be on track. With that being said, OrganiGram reaffirmed in its operating report that it has two memorandums of understanding (MOU) already in place.

The first MOU was signed on Sept. 15 with the New Brunswick provincial authority. The agreement is for OrganiGram to supply a minimum of 5 million grams a year to meet recreational cannabis demand, and it has an implied value of between $31 million and $47 million a year in sales. 

The second MOU was signed just three weeks ago with Prince Edward Island, and it'll result in a minimum supply of 1 million grams a year. This should work out to $6.5 million to $9.8 million in annual sales.  Though OrganiGram isn't the only supplier in these regions, it's comforting to see these agreements being locked in.

5. Well capitalized

Lastly, investors should be pleased with how well capitalized OrganiGram is following a handful of bought-deal offerings. OrganiGram ended November with $22.5 million in cash and cash equivalents, and around $2.5 million in long-term debt. It did, however, generate about $44 million from a bought-deal offering in December, and just this past week closed on a $93.5 million convertible debenture bought-deal financing. In other words, OrganiGram has more than enough capital to fund its four-phase expansion. 

A person reaching for a neat stack of hundred dollar bills in a mouse trap.

Image source: Getty Images.

One reason to be concerned

By all accounts, OrganiGram looks to be on its way. The company has the funding to expand its Moncton facility, has a handful of supply agreements in place if Canada moves forward with recreational legalization, and has been pushing into higher-margin cannabis oils.

However, the company's timeline could still present a problem. I don't fault OrganiGram one bit for wanting to continue expanding its Moncton facility to internalize its costs and produce more cannabis. However, it's probably going to be well into 2019 before OrganiGram has a 65,000 kilogram run-rate. Meanwhile, Aphria, Canopy Growth Corp., Aurora Cannabis, and marijuana royalty company Cannabis Wheaton Income Corp., are capable of delivering between 130,000 kilograms and 230,000 kilograms annually by early 2019. 

In other words, there are clear-cut advantages to being among the first to market if recreational marijuana sales kick off in July 2018. This would allow the bigger players to gobble up market share and forge supply agreements, leaving OrganiGram to fend for scraps in mid-2019 when its production is fully ramped up. It is possible this makes OrganiGram an attractive buyout target for one of these larger players, but betting on a buyout isn't a wise investment strategy.

I do favor OrganiGram relative to most pot stocks, but that might not be saying much these bigger players leave it in the dust.

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.