When it comes to the world's fastest-growing industries, legal marijuana is absolutely in the discussion, if not perched at the top of the list. Cannabis research firm ArcView has suggested that legal weed sales in North America could grow by an average of 28% per year through 2021, leading to $24.5 billion in annual sales, while investment firm Cowen & Co. has implied that U.S. sales alone could hit $50 billion by 2026. Such a scenario would probably imply full legalization in the United States.

However, when it comes to cannabis progressivism, it's Canada that's leading the charge. Canada wound up legalizing medicinal marijuana back in 2001, and it now stands on the verge of green-lighting the sale of adult-use cannabis by this coming summer. Should Canada OK recreational weed, it'd become only the second country in the world, and the first developed country, to have done so. Legal recreational marijuana is expected to add $5 billion or more in annual sales.

A rolled cannabis joint lying atop a cannabis leaf.

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The world's largest pot stock ramps up its production

In anticipation of this legalization -- sales are expected to kick off in August or September -- Canada's biggest cannabis growers have been expanding their capacity as quickly as their wallets will allow.

Canopy Growth Corp. (NASDAQ:CGC), the largest pot stock in the world by market cap, has been operating in overdrive as it attempts to corner as much recreational and medicinal market share as it possibly can. Already working with seven growing facilities spanning 665,000 square feet, the company announced during its third-quarter operating results press release that it's constructing or developing growing facilities on another 3.7 million square feet of land in British Columbia. Though Canopy is relatively tight-lipped on its yearly production targets, it's not out of the question that it generates 300,000 kilograms to 400,000 kilograms per year of dried cannabis, when ramped up.

In addition to organically expanding its growing capacity, Canopy has been a busy bee with regard to forming supply and retail partnerships, as well as through acquisitions. During the fourth quarter, the maker of Corona and a host of other beers and spirits, Constellation Brands, announced that it was acquiring a 9.9% stake in Canopy for what amounted to about $190 million. The cash infusion helps to spark Canopy's capacity expansion, while aligning Canopy Growth with a knowledgeable and time-tested distribution partner.

Canopy Growth also acquired Mettrum Health in January 2017 in one of the largest marijuana acquisitions of all-time, adding new growing facilities and medical cannabis consumers in the process.

However, it's the rumors about Canopy Growth's newest acquisition target that are turning heads.

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Canopy's latest acquisition target is a bit peculiar

According to a recent report from Bloomberg, Canopy Growth is one of the final three suitors -- along with U.K. healthcare investor GHO Capital and Spanish investment company Alantra Partners -- to acquire Spain's Alcaliber, a 45-year-old pharmaceutical company that manufactures and sells morphine and thebaine. Analysts have estimated that the final purchase price for Alcaliber could range from 200 million euros ($248 million) to 275 million euros ($341 million). It is worth noting that French drug giant Sanofi owns a 40% stake in Alcaliber, so it's unclear if the final purchase of the company might be for a controlling 60% stake, or the full 100% stake, including the sale of Sanofi's investment in the company.

Think about this for a moment: Canopy Growth, the biggest cannabis producer in the world, is giving serious thought to acquiring the biggest manufacturer and distributor of morphine the world. Some 93% of Alcaliber's morphine business involves exporting its product outside of Spain, according to TheStreet.com.

What on Earth would Canopy Growth want with a producer of morphine? While the answers vary, and might include a means to diversify its revenue stream a bit, as well as broaden its geographic revenue uptake, the main reason revolves around cannabis. You see, Alcaliber has a supply purchase agreement for select strains of cannabis with Spectrum Cannabis GmbH, Canopy's international (i.e., outside North America) medical cannabis brand. Purchasing Alcaliber would essentially give Canopy access to the international markets Alcaliber operates in, creating new revenue streams for its Spectrum Cannabis brand. 

Why is this important? With no developed country having legalized recreational weed before, growers and analysts aren't entirely sure what to expect on the demand front in Canada. Considering how quickly cannabis growers are expanding their capacity, it's not out of the question that Canada faces a marijuana glut by 2019 or 2020. With more pot than they might be able to sell domestically, Canadian growers will be looking to international markets that've legalized medicinal marijuana to offload their excess supply. The more markets they can reach, the less likely oversupply will constrain margins. Acquiring Alcaliber would be another major step in Canopy's burgeoning distribution channel and reach. 

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What's next?

The next step in the process, according to the March 6 Bloomberg article, is for all the suitors involved to enter their final bids, which are due any day now. A decision from Alcaliber is expected to come by sometime in early April, though Canopy is expected to have the inside track to the acquisition.

Though no one from GHO Capital or Alantra Partners provided a comment, Jordan Sinclair, a spokesman for Canopy Growth, said: "We have an excellent working relationship with Alcaliber to pursue cannabis cultivation in Spain. That relationship can and will thrive under any ownership structure."

Let's not also forget that Canopy Growth is well funded. Following bought-deal offerings after its fiscal third quarter ended, the company pushed its cash and cash equivalents to north of $320 million. Though it's unclear exactly how Canopy would pay for Alcaliber (I suspect it'd probably be a cash-and-stock deal), it certainly has the financing to make a deal happen. 

For the time being, the next step for investors is to watch and wait to see if Canopy goes all-in on Alcaliber.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.