Even though marijuana stocks haven't had investors seeing much green of late, it's an industry with nearly unparalleled growth opportunities over the next decade. After more than tripling worldwide sales between 2014 and 2018 to $10.9 billion, according to Arcview Market Research and BDS Analytics, the global pot industry looks to be on track for anywhere from $50 billion to $200 billion in annual sales in roughly a decade's time.

On Wall Street, one of the industry's biggest proponents has been Cowen Group (COWN) and covering analyst Vivien Azer. Initially calling for $50 billion in sales by 2026, Azer upped her firm's estimate in April 2018 to $75 billion in worldwide sales by 2030.

Of course, the big question remains: Which pot stocks to buy?

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Cannabis cheerleader Cowen Group thinks you should buy these pot stocks

Last week, Cowen Group and Vivien Azer initiated coverage on five new cannabis stocks (all focused on the United States), ultimately giving three of the five an outperform rating, which is her firm's equivalent of a buy.

Cresco Labs

Prior to the opening bell on Friday, Azer and her team anointed multistate dispensary operator Cresco Labs (CRLBF -2.70%) with a $14 price target. This represents 73% upside from where the company had closed on the previous day of trading. The research note put out that announced the coverage cited revenue opportunities and Azer's robust outlook for growth throughout North America as the reason for being so optimistic. 

What should truly prove transformative for Cresco Labs is the pending all-stock acquisition of Origin House (ORHOF). Even though shareholders have voted in favor of the combination, the U.S. Justice Department's antitrust division has yet to sign off on it.

Assuming the deal gets the green light from the Justice Department, Cresco Labs is going to gain access to more than 500 licensed dispensaries in California, the largest marijuana market in the U.S. (and world for that matter). You see, Origin House is one of a select few companies to hold a cannabis distribution license in the Golden State, which will allow Cresco to get its branded product into a boatload of California's dispensaries.

In addition to buying Origin House, Cresco possesses 56 retail licenses spanning 11 states. While that won't put Cresco among the top five multistate operators in terms of peak retail presence, it nevertheless should give the company a sizable brand presence in a number of key markets, including Illinois, which will commence recreational weed sales on Jan. 1, 2020.

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Green Thumb Industries

An even more robust investment opportunity might be found with Green Thumb Industries (GTBIF -0.92%). Not only did Green Thumb snag a coveted outperform rating from Azer, but Cowen's price target of $18.50 implies a whopping 96% upside from the company's previous close.

Whereas Cresco Labs isn't a top five license holder among dispensary operators, Green Thumb is, with 95 licenses and a pathway to open retail stores in a dozen states. Maybe the most exciting of those states is Nevada, despite the fact that it has a relatively small population. The popularity of Nevada's tourism industry is expected to boost its per-capita spending to the highest in the country by 2024, making it one of 13 billion-dollar marijuana markets. Green Thumb recently completed its acquisition of Integral Associates, giving it ownership of the Essence retail dispensaries within the Silver State.

Furthermore, although Green Thumb continues to lose money on an operating basis, it offered plenty of promise with its recently released second-quarter results. Sequential quarterly sales growth hit 27% for existing stores, with year-over-year comparable-store growth of more than 50%. Green Thumb already has 31 open locations, but aims to end the year between 35 and 40. Very few brand-name dispensary operators have that many open locations at the moment, demonstrating just how far ahead of the competition Green Thumb is in the early stages of U.S. expansion. 

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Curaleaf Holdings

The third and final company to get a glowing review from Viven Azer and her team at Cowen is Curaleaf Holdings (CURLF -1.41%), the largest U.S. dispensary operator by market cap. Cowen placed a $10.50 price target on Curaleaf, which represents potential upside of 41% from its close on Thursday, Sept. 12.

The allure of Curaleaf really boils down to its big-time acquisition strategy and its early stage operational dominance.

On the acquisition front, Curaleaf announced in late April that it would be acquiring Cura Partners. Cura owns the highly popular Select cannabis brand, which, on a pro forma basis, would have placed Curaleaf more than two times higher than the next-closest dispensary operator in 2018 in terms of full-year sales.

Then, in mid-July, Curaleaf announced the nearly $875 million cash-and-stock deal to buy privately held multistate operator Grassroots. Assuming the deal is completed, Curaleaf's presence will rise from 12 states to 19, with its retail license count nearly doubling to 131 from 70.

The second reason Azer and her team probably like Curaleaf has to do with its already operational stores. Recently, Curaleaf opened its 49th location in the U.S., which should rise to 69 if the Grassroots acquisition closes. By comparison, Green Thumb's 31 open locations are probably the next-closest, not counting pro forma figures. 

Curaleaf's management has also guided for $1 billion to $1.2 billion in 2020 sales, putting the company on track to become the first to hit this psychologically important level.

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The one cannabis stock Cowen Group believes investors should avoid

However, Cowen's coverage didn't wave a green flag on all five companies. In fact, one, MedMen Enterprises (MMNFF), was labeled with an underperform rating and a $1.50 price target. This represents potential downside in MedMen's share price of 24%.

In her research note, Azer pointed out that while MedMen is a market share leader in California with a "distinguished brand," the company's reliance on retail (as opposed to wholesale), recent management turnover, and excessive spending are serious flaws in its business model. 

The point that bears echoing here from Azer is MedMen's spending. This is a company that's lost $178.4 million from operations through the first nine months of fiscal 2019, which is nearly six times as much as it had lost on an operating basis through the first nine months of fiscal 2018. Even with substantial spending reductions on the general and administrative front, MedMen is nowhere near becoming profitable on an operating basis. 

Further, the company's pending acquisition of PharmaCann will only heighten cash burn by boosting existing store expenses and coercing more retail store openings.

Though I haven't always agreed with Cowen Group's takes on the cannabis industry in the past, I wholeheartedly agree that MedMen is a cannabis stock to avoid.