The marijuana industry is big business now. Depending on the estimate you prefer, the legal cannabis industry could be pushing $75 billion in annual sales by 2030. The big question that remains is where these revenue dollars will wind up, and what pot stocks will be clear industry leaders.

One marijuana stock that appears to have a pretty clear path to success is Canopy Growth (NASDAQ:CGC), the largest publicly traded weed stock by market cap. Although the company is pretty tight-lipped about its annual peak production, it has 10 grow sites that'll combine for about 5.6 million square feet of growing capacity, 4.3 million of which is already licensed. When at full capacity, Canopy Growth should be capable of yielding north of 500,000 kilograms of cannabis a year, likely slotting the company in as the second largest annual producer.

Canopy Growth is also flush with cash. Since October 2017, Corona and Modelo beer maker Constellation Brands has made three direct or indirect investments into Canopy, the latest of which totaled $4 billion. With more than 4.9 billion Canadian dollars in cash and securities at its disposal, Canopy Growth has the ability to make acquisition, market and build its brand, and expand its portfolio of products to reach new customers. This last strategy is perhaps the catalyst behind the company's latest collaboration, announced on Thursday, Feb. 28.

A happy family on a couch with their smiling golden retriever.

Image source: Getty Images.

Canopy Growth is betting big on your pets' health

Before the opening bell, Canopy Growth and Sequential Brands Group announced a collaboration that'll see the two companies working on hemp-derived cannabidiol (CBD) products for humans and animals. CBD is the nonpsychoactive cannabinoid best known for its perceived medical benefits.

As a refresher, President Trump's signing of the Farm Bill in December legalized hemp and hemp-derived CBD products, although some states have banned CBD as an additive to food and beverages. Nevertheless, demand for CBD is especially strong in the U.S. and Canada, with some estimates calling for global CBD sales to grow by a compound annual rate of 147% through 2022.

What makes the tie-up with Sequential Brands so intriguing is that television celebrity Martha Stewart will be working with Canopy Growth as an advisor. Martha Stewart has a history of effectively marketing her own and endorsed products, and she has been an active animal advocate. Having also partnered with rap artist Snoop Dogg (real name Calvin Broadus) back in 2016 to develop three lines of unique cannabis strains, Canopy Growth now has two very well-known celebrities to help increase engagement with its brands. 

Four vials of cannabidiol oil lined up on a counter.

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Focusing on animal well-being, particularly companion pets (e.g., cats and dogs) could be lucrative for Canopy Growth, even if it's simply an ancillary revenue channel. A 2012 Harris Interactive survey found that more than 9 out 10 respondents view their companion pets as a member of the family, suggesting that they'd do whatever is necessary to ensure the health of their pet. And, according to the American Pet Product Association, annual U.S. pet industry expenditures have grown in each of the past 18 years, with Americans estimated to have spent $18.3 billion on veterinary care and $15.5 billion on supplies and over-the-counter medicines in 2018. Long story short, the CBD-based animal health market appears ripe for growth.

Check out the latest earnings call transcript for Canopy Growth.

Be aware that there are other fish in the pond

However, investors should also understand that, despite Canopy Growth's size, cash pile, and superior sales channels, it won't be the only fish in the pond that's researching CBD products for the purpose of improving animal health.

For example, Medical Marijuana, Inc. (OTC:MJNA), the first-ever public-traded pot stock, introduced the world to its pet-focused subsidiary, Phyto Animal Health, a little over a year ago. Medical Marijuana, Inc.'s subsidiary launched a line of CBD oil products, hemp bedding, and litter, for dogs, cats, and horses last year. Although Medical Marijuana is predominantly focused on CBD and hemp-based CBD products for humans in the U.S. and Mexico, its CEO Stuart Titus sees significant opportunity for expansion in animal supplements, which are believed to improve cardiovascular health and target pain management for pets. 

A veterinarian with a stethoscope around her neck examining a small dog.

Image source: Getty Images.

In April 2018, CannTrust Holdings (OTC:CNTTQ), which recently made the move to the New York Stock Exchange, also entered the veterinary cannabis market. CannTrust announced a partnership with Grey Wolf Animal Health to create a subsidiary to Grey Wolf that'll focus on cannabis products capable of improving the health and well-being of companion pets. Grey Wolf offers its expertise in veterinary science, while CannTrust brings its knowledge of the marijuana industry, and an expected 100,000-plus kilos of peak annual production, to the table. 

Given that the pet CBD industry is relatively nascent, and not much is concretely known about the long-term effect of using cannabis products on pets, any of these companies could establish themselves as a premier producer. It's even possible that traditional animal medicine drug developers, such as Zoetis, could choose to throw their hats in the arena.

In sum, this is a niche space that could offer substantial growth given the acceptance of companion pets into our families, but it's far too early to proclaim any companies as clear leaders.

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.