Perhaps it's apropos that the cannabis industry is known as the "green rush," because it's expected to make investors a lot of money over the long run. Between 2018 and the end of the next decade, annual legal weed sales could grow from $10.9 billion worldwide to perhaps as high as $200 billion globally.

Although there are some early stage kinks to be worked out in North America, it's pretty evident that worldwide demand should be robust, once the industry finds its footing. This is what's coerced aggressive acquisition and merger activity within the industry over the past two years.

But don't think for a moment that this acquisition activity is going to slow anytime soon. Right now, there are three major producers that look far too inexpensive in my opinion, relative to the production they could bring to the table, not to be acquired at some point in the future.

Two men in suits shaking hands, as if in agreement.

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Aphria

First up is Aphria (NYSE:APHA), whose recently checkered past has pushed its market cap down to $1.6 billion, despite the fact that the company anticipates 255,000 kilos of peak annual output once fully operational, and has operations in nearly one dozen countries, including Canada.

The biggest issue for Aphria has been the company's acquisition history. In December, short-side firm Quintessential Capital Management, along with Hindenburg Research, released a scathing report alleging that Aphria grossly overpaid for the purchase of Latin American assets. While an independent committee reviewed these allegations and found no truth to this statement, Aphria did wind up taking a 50 million Canadian dollar write down on its Latin American assets in a subsequent quarter, and longtime CEO Vic Neufeld wound up stepping down after conflicts of interest regarding this deal were noted by the committee.

Furthermore, Aphria's March 2018 purchase of Nuuvera came into question after it was divulged just a day before closing that a handful of Aphria execs held a position in Nuuvera's stock.

In other words, Aphria has a serious crisis of confidence problem, and the company's best path forward might be through a merger or being acquired. Aphria would offer a suitor immediate access to a number of overseas markets, as well as run-rate annual production of 115,000 kilos. This figure will push higher once its flagship Aphria Diamond facility, capable of 140,000 kilos of output per year at full capacity, receives its cultivation license from Health Canada.

An up-close view of a premium-quality flowering cannabis plant.

Image source: Getty Images.

Flowr Corp.

Another (newly) major grower that's ridiculously cheap relative to what sort of production it can bring to the table is Flowr Corp. (OTC:FLWPF).

Flowr certainly raised some eyebrows when it was approved for listing on the Nasdaq, then declined to make the move (at least for the time being). The over-the-counter exchange is far more volatile and generates less Wall Street coverage and trading volume than a major U.S. exchange. Suffice to say that between this decision, and the desire to raise capital by selling stock, Flowr's share price has hammered recently. The company ended last week with a market cap of just $269 million.

Yet, Flowr can bring a whole lot of production – some of which is very unique – to a potential suitor. First, there's the company's at least 50,000 kilos of peak output at its Kelowna campus in British Columbia. The company's Kelowna campus is focused specifically on premium and ultra-premium dried cannabis flower and derivatives. There simply isn't much supply or competition in the premium space, meaning Flowr should have excellent pricing power and margins from its highly efficient Kelowna campus.

Additionally, Flowr recently completed the acquisition of Holigen in a cash-and-stock deal. Holigen's flagship outdoor growing facility in Portugal, Aljustrel, spans 7 million square feet and is capable of approximately 500,000 kilos of annual output when operating at full capacity. Though this output won't match Kelowna's quality, its sheer size makes it perfect to be a supplier to Europe's burgeoning medical cannabis industry.

A businessman in a suit holding a stack of cash behind his back with his fingers crossed.

Image source: Getty Images.

CannTrust Holdings

While undoubtedly a bit of a gamble, troubled marijuana grower CannTrust Holdings (NYSE:CTST) may also be too enticing for a larger grower with access to capital to pass up.

Once a billion-dollar pot stock, CannTrust has had an ugly fall from grace. In early July, the company announced that it had been growing unlicensed cannabis in five rooms for a period of six months at its flagship Niagara campus. Subsequent findings would show that some top-level executives knew of this deception, but allowed it to continue, resulting in the termination of now-former CEO Peter Aceto. Deficiencies were also discovered with its much smaller production facility known as Vaughan. Currently, sales are suspended until regulatory agency Health Canada divvies out its punishment, which is taking longer than expected.

The clear risk here for an acquirer is that CannTrust could wind up having its cultivation and/or sales licensed revoked. An acquirer may be able to persuade Health Canada that a new management team can rectify any regulatory concerns at CannTrust, but this is nothing more than speculation on my part.

What CannTrust would offer, assuming it can get its operations in order, is one of the few growers to have a supply deal with every Canadian province, as well as up to 300,000 kilos of peak annual output. Roughly 100,000 kilos of this production would come from hydroponic grow methods, which should prove just as efficient, if not less costly, than traditional soil-grown cannabis. For a $247 million market cap, this type of output simply can't be beat.