Sure, 2018 isn't quite over yet. But it's not too soon to start looking back at what has been the most pivotal year for the Canadian cannabis industry ever. And 2018 was a topsy-turvy one for Canadian marijuana stocks.

However, three Canadian marijuana stocks clearly set the bar this year. While most of their peers are likely to finish 2018 with lower share prices than they had at the beginning of the year, these three stocks have delivered impressive returns.

What are the three best Canadian marijuana stocks of 2018? None other than Tilray (TLRY), Cronos Group (CRON), and Canopy Growth (CGC -1.80%). Here's why these stocks sizzled this year and if they're smart picks to buy now.

Marijuana leaf next to 3D bar chart

Image source: Getty Images.

1. Tilray

In China, 2018 was the year of the dog. For the Canadian cannabis industry, 2018 was the year of Tilray. The marijuana producer conducted its initial public offering (IPO) on the Nasdaq stock exchange in July. By late September, the stock had skyrocketed more than 850%. Tilray won't finish the year up that much, but its shares are still on pace to more than triple this year.

The company had its fair share of good news in 2018. Tilray became the first marijuana producer to secure approval for selling both cannabis flower and cannabis oil products in Germany, one of the most important international medical marijuana markets. CalPERS, the largest pension fund in the U.S., bought a stake in Tilray -- the first pure-play marijuana stock purchased by the fund.

But perhaps the biggest reason why Tilray's share price soared so much this year was that there weren't very many shares available to buy. Tilray's stock float is very low, with only around 10 million shares available to outside investors. Because of this low float, any good news for the company created significant upward pressure for its share price. That was especially the case when short-sellers scrambled to cover their positions.

2. Cronos Group

Cronos Group spent most of 2018 in negative territory. The stock took off in August, racking up a year-to-date gain of more than 60% before plunging again, losing all of its gains and then some. Then came the news that changed everything for Cronos.

Reports surfaced in early December that big tobacco maker Altria (MO -0.57%) was in discussions with Cronos Group about a potential deal. Soon, Cronos Group confirmed that it was indeed in talks with Altria. Only a few days later, on Dec. 8, 2018, a deal was announced. Altria decided to buy a 45% stake in Cronos for a cool $1.8 billion.

It didn't take Cronos Group's executives long to figure out how they might use the huge influx of cash that would soon be on the way. CEO Mike Gorenstein promised to build Cronos Group's global operations as well as invest more in research and development. After a wild ride in 2018, the company appears to be ending the year in better shape than ever and with its share price around 30% higher.

3. Canopy Growth

Canopy Growth was up 140% year-to-date in October, fueled by continued momentum from the company's own major deal. In August, alcoholic beverage giant Constellation Brands (STZ 1.14%) announced that it was investing $4 billion in Canopy Growth.

An overall market pullback and a sell-off in marijuana stocks took a big toll on Canopy's share price over the last couple of months. But Canopy Growth is still up more than 10% for the year, enough to make it the third best-performing Canadian marijuana stock of 2018.

After going neck-and-neck with Tilray for a while, Canopy Growth again claims the largest market cap of any Canadian marijuana stock. The company appears to be poised for a flurry of acquisitions that will make it even larger with the Constellation deal closing in November. Canopy has already bought a Colorado-based hemp researcher and a German vaporizer manufacturer since it received the big cash influx from Constellation.

Are they buys?

I'd immediately mark one of these top-performing stocks of 2018 off the buy list. Tilray's IPO lockup period expires on Jan. 15, 2019. Insiders will then be able to sell some of their shares, likely at an enormous profit. The good news is that Tilray's float will increase. The bad news is that its share price is probably headed lower if there's a significant level of insider selling.

But my view is that Cronos Group and Canopy Growth should be in great shape heading into 2019. Both companies either already are or will soon be flush with cash. Both have strong partners with expertise in building consumer brands. 

Canada's recreational marijuana market should pick up momentum, as should medical marijuana markets in countries across the world. Even the U.S. could be open to Cronos and Canopy with the legalization of hemp (which is cannabis that contains low levels of psychoactive compound THC). 

It's possible that 2019 could have as much volatility in store for these two Canadian marijuana stocks as 2018 did. Over the long term, though, both Cronos Group and Canopy Growth should be winners for patient investors.