When the page finally turns on 2018 in less than two months, it's likely that this'll go down as the year of the cannabis leaf.

In October, Canada made history by becoming the first industrialized country in the world to legalize recreational marijuana. By opening the floodgates on October 17, Canada tore down roughly nine decades of prohibition, removing restrictions in the process, which should allow this industry to thrive. Rough estimates from Wall Street call for upwards of $5 billion in added annual sales, once the industry is fully up to speed.

The legalization of adult-use weed is far from the only historic event we've witnessed in 2018. The U.S. Food and Drug Administration approved its very first cannabis-derived drug on June 25, and in the U.S., voters chose to legalize medical cannabis in Utah and Missouri, while giving the green light to recreational weed in Michigan.

The facade of the New York Stock Exchange draped in a giant American flag, with the Wall Street street sign in the foreground.

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Marijuana stocks are uplisting in increasing numbers

Arguably the most front-and-center trend for investors has been the push by marijuana stocks to uplist to reputable exchanges, such as the New York Stock Exchange (NYSE) or Nasdaq, from the over-the-counter (OTC) exchange. While there's nothing inherently wrong with the OTC exchange, there's far more history and a considerably more lucrative proposition to being listed on the NYSE or Nasdaq in the U.S., rather than the OTC exchange.

For starters, listing standards on the OTC exchange aren't nearly as stringent as on the NYSE or Nasdaq. Listed companies on these exchanges are perceived to have time-tested business models. That, and there's added validity to being listed on a major exchange. As pot stocks move to uplist, it demonstrates to Wall Street and investors that this is a legitimate industry and not a flash-in-the-pan fad.

Uplisting also provides a larger audience of potential investors. Marijuana stocks would love to attract the attention of Wall Street investment firms, but quite a few won't cover or invest in OTC-listed companies. By moving to the NYSE or Nasdaq, pot stocks fall into Wall Street's comfort zone. Not to mention, it can help make these companies far more liquid (from a trading perspective) than they are on the OTC exchange.

It is worth noting that not every pot stock can uplist to a major U.S. exchange. Interestingly, cannabis companies that do business in the U.S. are barred from listing on a major exchange, because marijuana is still a Schedule I drug at the federal level. Thus, only companies with weed operations outside of the U.S. are given the green light to list on the NYSE and Nasdaq.

A large trimmed cannabis bud lying atop a messy pile of hundred dollar bills.

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Which pot stocks will uplist next?

So far this year, five cannabis companies have made the leap, with HEXO Corp. looking to be next in line by or before December.

Which marijuana stocks will be next to uplist? Here are three educated guesses.

OrganiGram Holdings

With a current market cap of just above $600 million, Atlantic-based OrganiGram Holdings (OGI -2.13%) would make a logical choice to uplist to the high-growth Nasdaq, or perhaps even the NYSE.

When up to scale, OrganiGram will likely slot in as a top-10 producer. Management significantly upped the company's peak production forecast in March, albeit it'll take until April 2020 until the company's existing facilities in Moncton, New Brunswick, are completed. When finished, OrganiGram hopes to produce 113,000 kilograms per year, all from less than 500,000 square feet of capacity. That's up from a previous forecast of 65,000 kilograms at peak capacity, prior to March. OrganiGram's three-tiered growing system has been instrumental in keeping the company's costs down, as well as maximizing every inch of space in its greenhouses.

OrganiGram has also done something few other pot stocks have done before: turn a quarterly profit. Of course, this profit does come with an asterisk, as it was primarily due to fair-value adjustments on its biological assets (i.e., cannabis plants). Still, a profit is going to get the attention of investors, and moving to a more reputable exchange would put OrganiGram clearly on people's radars.

An indoor commercial hydroponic cannabis grow farm.

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CannTrust Holdings

With a market cap of three-quarters of a billion dollars, grower CannTrust Holdings (CNTTQ) is another reasonable choice to uplist to a more reputable U.S. exchange.

Like OrganiGram, CannTrust is unique. Aside from its 60,000-square-foot Vaughan facility, all eyes are on its approximately 1-million-square-foot Niagara Greenhouse, which is a gigantic hydroponic grow farm. Hydroponics involves growing plants in a nutrient-rich water solvent. Combined with the company's moving to containerize benches, which'll create a perpetual harvesting system at Niagara, CannTrust has what looks to be an inside track to consistent, low-cost, high-margin production.

Similarly, CannTrust has also been able to generate a handful of profitable quarters, primarily thanks to fair-value adjustments of biological assets. Notably, more than half of CannTrust's sales prior to the official legalization on Oct. 17 were derived from cannabis oil sales. Oils are a considerably higher-priced and beefier-margin product than dried flower, which could give CannTrust an attractive operating margin profile in the future.

Although nothing is certain, uplisting to a major U.S. exchange seems like a strong possibility for CannTrust.

Four vials of cannabidiol oil lined up on a countertop.

Image source: Getty Images.

Auxly Cannabis Group

If there's a dart-throw here, it would be royalty-investing/growing company Auxly Cannabis Group (CBWTF -12.90%), which currently sports a market cap of $510 million, despite its sub-$1 share price.

Auxly has evolved dramatically over the past year. Rather than simply being complacent as a royalty company in the industry, Auxly has created a three-tiered vertical business that addresses the upstream, midstream, and downstream aspects of the cannabis market. It has 16 growing partners via royalty investments and direct-grow projects, multiple value-added investments in the extraction and processing of cannabis products, and downstream distribution and sales channels (i.e., pharmacies and wholly owned retail outlets). All told, when all of its partners are running on all cylinders, Auxly could be selling 170,000 kilograms per year. That, too, would make it a top-10 retailer of cannabis.

Like its peers, Auxly Cannabis Group is angling to mitigate the potential commoditization of dried flower with alternative products. Its acquisition of Dosecann should do just that, with oils, pharmaceutical products, and processed alternatives such as sprays (once legal), providing much higher price points and substantially better margins than dried cannabis. 

The one caveat here is that U.S. listing would only fly if Auxly stays out of the U.S. market. As an aggressive investor, there's no guarantee that happens, which means there's a chance the company may not seek to uplist after all.