22 by '22.

That could be the slogan for the U.S. marijuana industry. Sales of medical and recreational marijuana could climb to around $22 billion by 2022, according to the 2018 edition of the Marijuana Business Factbook. Last year, total marijuana sales in the U.S. were estimated to be between $5.8 billion and $6.6 billion.

There aren't many industries that will more than triple in size in just five years. Investors looking to ride this wave don't have many alternatives right now. But there is one top stock to buy that should profit tremendously from growth in the U.S. marijuana market.

Tiny figures of people pushing wheelbarrows full of marijuana buds on top of $20 bills with dollar symbol money clasp

Image source: Getty Images.

Higher and higher

Can the marijuana market in the U.S. really grow that much that quickly? Probably so. 

Currently, 30 U.S. states plus the District of Columbia broadly allow legal use of medical marijuana. A few other states allow limited use of medical marijuana. Eight of these states plus D.C. also permit legal use of recreational marijuana.

For many of these states, though, legalization only recently went into effect. Arkansas, Florida, North Dakota, Ohio, Pennsylvania, and West Virginia passed legislation allowing medical marijuana in the past couple of years. California's recreational marijuana market opened earlier this year.  

There should be more growth on the way. Retail sales of recreational marijuana will begin in Massachusetts in July. Other states are seriously considering legalizing recreational weed, especially Michigan and New Jersey. More states could also legalize medical marijuana, with Oklahoma voting on a measure to do so later this month.

It's possible, though, that the projection of $22 billion in U.S. marijuana sales by 2022 could be overly optimistic. As a case in point, Colorado's recreational marijuana market opened in 2014. Total marijuana sales that year (including medical and recreational marijuana) were nearly $684 million. Based on year-to-date revenue figures in Colorado, the state's total marijuana sales in 2018 will probably be around $1.6 billion. That's 134% growth in five years -- impressive but well below the Marijuana Business Factbook's estimated level of U.S. marijuana sales growth.  

One top stock poised to profit

Whether the U.S. marijuana industry "only" doubles or more than triples in size over the next few years, there's one top stock that I think is especially poised to benefit from the growth: Scotts Miracle-Gro (NYSE:SMG). The reality is that there aren't many good choices for U.S. investors right now. Most U.S.-based marijuana stocks are penny stocks that come with risks including low liquidity levels.

Scotts Miracle-Gro, however, is an established company with a long history of success. The company's roots date back to the 19th century. Scotts ranks as a leader in the lawn and garden products business, with total revenue last year of more than $2.6 billion. 

Over the last few years, Scotts has moved aggressively to position itself as a key supplier to the rapidly expanding marijuana industry. The company's Hawthorne business segment completed multiple acquisitions in 2015, 2016, and 2017, picking up hydroponic gardening businesses and horticultural lighting systems companies. Most recently, Scotts acquired Sunlight Supply, a top U.S. distributor of hydroponics products, for $450 million. The deal is expected to roughly double Scotts Miracle-Gro's sales to the marijuana industry.

While supplying marijuana growers is likely to be the primary growth driver for Scotts Miracle-Gro in the future, the company's core business should also perform pretty well. Scotts currently derives over 90% of its total revenue from sales of consumer lawn and garden products. Extended periods of warmer weather could boost sales of these products over the long run.

As an added bonus, Scotts Miracle-Gro offers something that few other stocks associated with the marijuana industry do -- a dividend. The company's dividend yield currently stands north of 2.4%. Don't dismiss how important paying a dividend can be. Over the last 10 years, Scotts' total return was boosted by 93% over its stock return thanks to the dividend payments. 

Wild cards

There are two wild cards investors should keep in mind with respect to the potential of the U.S. marijuana industry's growth.

One is the possibility that the federal government could clamp down on states that have legalized marijuana. Federal laws prohibiting the use and sale of marijuana remain in effect. If the U.S. government chose to impose those laws in states like California and Colorado, there would be a major negative impact on Scotts Miracle-Gro and other stocks tied to the U.S. marijuana market.

The other wild card reflects a totally opposite scenario. It's possible that U.S. federal laws could be changed to allow states to make their own decisions regarding marijuana. In April, President Trump struck a deal with Sen. Cory Gardner (R-Colo.) to support "a federalism-based legislative solution" to permanently fix the conflicts between federal and state marijuana laws. If U.S. federal laws are changed, Scotts' growth prospects should increase significantly.

I think the second wild card is more likely than the first one, but there's no guarantee that anything will happen in the near future. Even if not, my prediction is that the U.S. marijuana industry will at least double over the next five years -- and Scotts Miracle-Gro will reap its fair share of the benefits of that growth.

Keith Speights 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.