As we barrel toward the end of the year, investors will likely look back on 2018 as the most impressive year yet for the cannabis industry.

The big event, of course, was the legalization of recreational marijuana in Canada on Oct. 17. After years of promises by Prime Minister Justin Trudeau to legalize adult-use pot, and months of debate in the Senate, the Cannabis Act finally made Trudeau's vision a reality. Once the industry has had ample time to expand its growing capacity and build out its sales channels, it could be looking at adding $5 billion (or more) in annual sales.

There was also quite a bit of history made in the United States, despite the federal government standing firm on its scheduling of pot. During the midterm elections, residents in two more states passed medical cannabis initiatives, bringing the total number of states to have legalized weed in some capacity to 32. Michigan also became the 10th state to OK adult-use cannabis. And, how can we forget the very first cannabis-derived drug being approved by the U.S. Food and Drug Administration on June 25.

An indoor commercial cannabis greenhouse.

Image source: Getty Images.

Cronos Group's most defining moments this year

History has been made at seemingly every turn on a broad scale -- and for many individual marijuana stocks. One such company, Canadian-based Cronos Group (NASDAQ:CRON), has offered three defining events in 2018 that have investors very excited about its future.

1. An expected doubling of peak capacity via Cronos GrowCo

The first half of the year was primarily marked by capacity expansion escalation through the industry. Although it was a little late to the game in terms of announcing an organic expansion of its production capacity, Cronos nevertheless made waves in July when it announced a joint venture with a group of investors. This partnership, which is known as Cronos GrowCo, involves the construction of an 850,000-square-foot greenhouse facility that'll be capable of producing 70,000 kilograms of dried flower annually once fully operational. According to Cronos Group's most recent quarterly update, the facility is expected to be complete by the midpoint of next year.

In terms of true peak production, Cronos Group is a bit of a mystery, mainly because it's unclear how much it'll aim to produce at its wholly owned subsidiaries and licensed producer Whistler Medical. Prior to announcing the Cronos GrowCo project, peak production looked to be in the 50,000 kilograms to perhaps 70,000 kilogram range. With the addition of GrowCo, it's essentially doubled, if not more. This should allow Cronos Group to be a top-10 producer when all is said and done. 

Four vials of cannabidiol oil lined up on a counter.

Image source: Getty Images.

2. A groundbreaking deal with Ginkgo Bioworks

A second big win for Cronos was its push into cannabis alternatives.

Beyond just producing a lot of weed, growers like Cronos Group have to worry about margins. Though there's little global precedence to recreational legalization, there are instances in the U.S. of states giving the OK to adult-use pot and witnessing a subsequent steep decline in per-gram marijuana prices. The commoditization and oversupply of dried cannabis flower is a big threat in 2020 and beyond, which is why Cronos Group is taking the steps now to diversify its product portfolio and buoy its margins.

In September, the company announced a deal with Ginkgo Bioworks that gives it exclusive, royalty-free access to Ginkgo's platform to create custom microorganisms for biosynthesizing cannabinoids at commercial scale. The yeast strains Cronos will receive will be targeted at eight specific cannabinoids, including a handful of rare ones, and should allow this production to occur at a fraction of the traditional costs to obtain these cannabinoids. Translation: This is a high-margin venture for Cronos Group.

A Nasdaq television studio with the digital quote board in the background.

Image source: Nasdaq.

3. A first-of-its-kind move to the Nasdaq

Lastly, Cronos made history in February by becoming the first marijuana stock to uplist from the over-the-counter (OTC) exchange to the Nasdaq.

Why uplist, you ask? By moving to a more reputable exchange, Cronos Group is able to accomplish a number of goals. First, it demonstrates the viability of the legal cannabis industry by placing itself side by side with time-tested businesses. Secondly, and perhaps most importantly, since not all financial institutions are able to purchase or cover OTC-listed stocks, the move to the Nasdaq opens the door for institutional investment and/or coverage. Third and finally, it should help boost liquidity, which further adds to the validity of cannabis stocks as a potential long-term investment.

Cronos' move has paved the way for four additional pot stocks to follow suit to either the Nasdaq or New York Stock Exchange in 2018.

The big question

Of course, the big question is this: Can Cronos Group be one of the winners in the marijuana space?

To that end I'm not certain. Its push into alternative cannabis products, as well as its desire to boost production and enter international markets, is commendable. But falling behind its larger peers in terms of production ramp-up could cause Cronos to miss out on lucrative long-term supply deals, ultimately making the company work harder to find a buyer for its product.

At this point, operating losses, or at best very nominal profits, seem likely. That makes Cronos Group a pot stock that fundamentally focused investors can probably ignore for now.

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