Slowly but surely, the marijuana industry is coming of age. Last year, Canada became the first industrialized country to give recreational weed the green light, with our southern neighbor, Mexico, looking to do the same before this coming October. Within the U.S., two-thirds of all states have legalized medical cannabis, with 10 also allowing adult consumption. Throughout North America and Europe, the cannabis movement is gaining steam.

This expectation for strong sales growth is what's been behind the major surge in marijuana stock share prices over the past couple of years. After all, global pot sales are expected to surpass $50 billion annually by 2029, according to the most conservative Wall Street estimate. That would represent a quadrupling in sales from what the industry delivered in 2018.

But despite Wall Street's bullishness on the industry as a whole, analysts' share-price targets paint a completely different picture for a small handful of marijuana stocks. Three, in particular, could be construed as being "overvalued" in the eyes of Wall Street.

Dice that say buy or sell being rolled atop a digital screen containing stock charts.

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Cronos Group

Perhaps no surprise is that Wall Street sees Cronos Group (CRON 0.45%) as the most overvalued of any pot stock. Based on its current share price and the consensus price target, Wall Street thinks it could lose up to 30%.

The big catalyst for Cronos Group that's allowed it to defy the naysayers is the closing of a $1.8 billion equity investment from Altria in March, which gave Altria a 45% nondiluted stake in the company, as well as warrants that can be exercised at a later date to further boost its ownership in Cronos. Investors view this as a major step toward Altria either acquiring Cronos Group in the future, or the duo working closely on vape products.

The deal is far more transformative for Cronos Group, with the company receiving $1.8 billion in cash that it can now put to work. Cronos could consider making complementary acquisitions, boosting its production capacity, or use the capital to expand its overseas presence.

But even with a lot of cash, Cronos Group isn't a standout. With the exception of its up to $100 million deal with Ginkgo Bioworks that'll see the commercial development of eight cannabinoids (some rare) using nontraditional methods, there's nothing special about Cronos Group. It's not a top-10 producer or retailer of marijuana, and its overseas presence pales in comparison to its similarly sized peers.

What's more, even if Cronos Group manages to turn a profit in 2019 or 2020, the magnitude of this per-share profit will likely be small given the struggles it's had ramping up its operations.

In short, I stand by my conviction that Cronos Group is Wall Street's most overvalued marijuana stock, and I'm not the least bit surprised Wall Street expects it to fall 30%, based on its consensus price target.

An up-close view of a flowering cannabis plant being grown indoors.

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OrganiGram Holdings

Now, if you want to know what's really surprising, it's that Atlantic-based OrganiGram Holdings (OGI 2.02%), which uplisted to the Nasdaq last week, is another pot stock Wall Street believes could drop by a double-digit percentage. Based on its closing price this past Friday, Wall Street foresees 12.5% downside.

To be certain, OrganiGram has been on fire. Since hitting the low $3s in late December, OrganiGram's stock went on to surpass $8 the day before making the move to the Nasdaq. You know, just your standard 167% five-month return! It looks as if Wall Street's "pessimism" is more the result of not moving the bar on OrganiGram's price target for some time, rather than Wall Street actually believing the company is overvalued. This is further backed up by the fact that no analyst currently has an underperform or sell-equivalent rating on OrganiGram.

Personally, I think there's a lot to like about OrganiGram, although I wouldn't count on a 167% return every five months. This is a company with one of the highest yields per square foot in the industry, with management calling for 113,000 kilos of annual output across roughly 490,000 square feet of cultivation space. At more better than 230 grams per square foot, OrganiGram is producing at more than double the industry average yield.

OrganiGram is also bound to make noise with its push into derivatives, such as edibles and beverages. Derivatives boast considerably higher margins than traditional dried cannabis, making them perfect for companies looking to lift their gross and operating margins. OrganiGram, for its part, has blatantly said that it's looking for a beverage partner, and I'd be surprised if it didn't soon find one.

Though Wall Street's price target suggests selling, I wouldn't dare suggest giving up on this Mighty Mouse of the cannabis space.

An indoor cannabis grow farm.

Image source: Getty Images.

Innovative Industrial Properties

The final marijuana stock Wall Street isn't quite as bullish on as you might think is cannabis real estate investment trust (REIT) Innovative Industrial Properties (IIPR -0.37%). Based on analysts' consensus price target, the stock could fall about 2%.

Like OrganiGram, Innovative Industrial Properties' stock has been unstoppable of late, and there may be the expectation that its share-price appreciation might cool a bit. Over the trailing two years, IIP, as the company is also known, is up almost 400%. That's not unheard of growth for fast-growing companies, but is exceptionally rare for REITs of any kind.

As a cannabis REIT, IIP acquires land and facilities involved in the cultivation and processing of marijuana, then leases these assets out for an extended period of time. In turn, the company passes along a 3.25% annual rental increase, as well as a 1.5% property management fee, which is based on the prevailing rental rate. Thus, in addition to bolstering its financial performance by making acquisitions, IIP is able to add very modest organic growth each year.

Arguably the biggest knock against Innovative Industrial Properties is that its rental income isn't generating nearly enough operating cash flow to make additional purchases. Rather, IIP needs to issue shares of its common stock in order to raise capital for property acquisitions (this is a very common practice for REITs), which in turn can weigh on the value of existing shareholders.

Ultimately, there's no denying that Innovative Industrial Properties is extremely profitable, and that it's growing at an extraordinary rate for a REIT. But given its modest organic growth, a shallowing of its steep ascent is probably warranted.