If you were one of the lucky investors to get in on the ground floor of the cannabis industry, you're potentially sitting on a quadruple-digit gain right now. But make no mistake about it: We're still in the early innings of what could be a long-term growth story.

According to various Wall Street estimates, the legal pot industry could see sales catapult from around $11 billion in 2018 to as high as $200 billion in a decade. Even though growth estimates vary, one variable that remains constant is that the United States is expected to be the industry's most lucrative market.

Investment bank Stifel, which is responsible for the most aggressive growth forecast on Wall Street, believes the U.S. could be generating $100 billion in annual sales a decade from now. That makes the U.S. marijuana industry a potentially intriguing investment opportunity. Keeping in mind that the industry is far from mature and there are plenty of risks inherent with investing in an industry still labeled as illegal by the federal government, here are two U.S. marijuana stocks to consider buying, as well as one you'd be best off avoiding.

Two miniature shopping carts, with one containing a cannabis flower and the other holding vials of cannabis oil.

Image source: Getty Images.

Buy: Planet 13 Holdings

Store count isn't necessarily an indication of success in the U.S. cannabis landscape. Just ask vertically integrated dispensary operator Planet 13 Holdings (OTC:PLNH.F). Whereas rivals like Acreage Holdings and Curaleaf Holdings have around 90 and 130 respective retail store licenses on a pro forma basis, Planet 13 only recently announced its intention to open a second location.

However, Planet 13 is aiming to develop a culture that other dispensary providers simply can't bring to the table. Its SuperStore off the Strip in Las Vegas, Nevada will span 112,000 square feet when it's fully built out. (For reference, this is a little bigger than the average Walmart.) Planet 13's store will have a pizzeria, coffee shop, events center, and a consumer-facing processing center, making it something of a go-to destination for local cannabis enthusiasts and tourists.

As someone who's visited the SuperStore, I can tell you Planet 13 has done a great job of incorporating technology to improve the consumer experience. Its layout is also relatively flawless, with higher-margin derivative products placed closest to the doors and registers. Based on Planet 13's June traffic data, the number of visitors it's seeing in its SuperStore per day has nearly doubled since it opened in November, with average paying customer tickets rising by about $10, to $88. This validates the thesis that Planet 13 is growing in popularity.

The test will be to see if it can make lightning strike twice. Recently, Planet 13 announced plans to lease and open a 40,000-square-foot dispensary in Santa Ana, Calif., just 10 minutes from Disneyland. If Planet 13 can deliver the same unique experience as it has in Vegas, the sky could be the limit for this niche dispensary operator. 

A large dispensary sign with a cannabis leaf and the word dispensary written underneath it.

Image source: Getty Images.

Buy: Trulieve Cannabis

Another U.S. pot stock you can consider buying is Florida-based dispensary operator Trulieve Cannabis (OTC:TCNNF).

Similar to Planet 13, Trulieve isn't necessarily about expanding into as many states as it possibly can. Though it does have a presence in California, Massachusetts, and Connecticut -- California projects to be the largest market by sales in the U.S. -- the bulk of the company's operations are located in the Sunshine State, where Trulieve recently announced the opening of its 30th location.

Although only medical marijuana is legal in Florida for the time being, Trulieve's laser-focus on its home market has resulted in superior market share and successful branding. How do we know this? Just take a look at Trulieve's 2018 operating results, which featured the second-highest full-year sales total in the industry at $102.8 million, as well as positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). In fact, Trulieve is one of a very select few marijuana stocks that's been profitable on a recurring basis for quite some time.

According to forecasts provided by the company, sales and adjusted EBITDA are both expected to nearly quadruple between 2018 and 2020. The company has called for sales to hit as much as $400 million by 2020, with adjusted EBITDA of $140 million to $160 million. On the basis of forward price-to-earnings, Trulieve is often one of the cheapest pot stocks in the industry.

While it's likely that Trulieve will face higher costs as it pushes into new states, as well as defends its turf if and when Florida legalizes recreational marijuana, the company has soundly proven that it has a successful business model, albeit focused on one major market. That makes Trulieve Cannabis a U.S. pot stock worth buying.

A businessman in a suit putting his hands up as if to say, no thanks.

Image source: Getty Images.

Avoid: MedMen Enterprises

However, not every U.S. pot stock is necessarily going to be a winner. One company that I'd suggest investors avoid in the U.S. space is vertically integrated dispensary operator MedMen Enterprises (OTC:MMNFF).

On paper, MedMen looks like it should be doing great. It's in the process of acquiring privately held PharmaCann in an all-stock deal that was valued at $682 million when it was first announced last October. The deal will double the number of states MedMen is operating in to 12, as well as add 11 operational stores once complete, pushing its combined pro forma total to 37 operating locations. It also has 15 open locations in California, the aforementioned largest legal weed market by annual sales.

But MedMen has simply not delivered like many of its peers. Sequential sales growth in the third quarter for its established California stores was a meager 5%. The problem, it appears, is that MedMen aligned itself with high-sale markets but didn't anticipate just how much of a turnoff the Golden State's high aggregate tax rates would be for legal cannabis.

The State of the Legal Cannabis Markets report from Arcview Market Research and BDS Analytics finds that California's sales actually declined last year from the prior-year period, despite recreational marijuana sales commencing in 2018. Legal operators can't compete with aggregate tax rates that can hit as high as 45%, and there's no clear fix for MedMen's Golden State woes.

MedMen has also been losing money at an alarming rate. Even with 22% sequential sales growth in its most recent quarter (a good chunk of which was acquisition-based), MedMen's net loss decreased by a meager $1.5 million, to $63.1 million. Over the trailing nine-month period, MedMen has racked up a not-so-impressive operating loss of $178.4 million. 

MedMen might be a well-known name in the dispensary space, but that doesn't necessarily make it a good investment.

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.