The legal weed industry is budding before our eyes, and soon enough it could grow into a $200-billion-a-year global market. These pie-in-the-sky projections are a big reason behind the more-than-three-year rally in cannabis stocks.

But we've begun to enter a new era for the marijuana industry. Gone are the days when promises yielded profits for investors. Following the legalization of recreational pot in Canada, as well as ongoing state-level approvals in 33 U.S. states since 1996, Wall Street and investors have turned their attention to cannabis stock income statements and balance sheets. Yes, folks, earnings reports and balance sheets actually matter now, and they've been a big reason behind the abysmal performance of brand-name pot stocks over the past six months.

An up-close view of a flowering cannabis plant in an indoor grow facility.

Image source: Getty Images.

Popular cannabis stocks haven't been profitable

Since marijuana stocks became the hottest thing on Wall Street, Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NASDAQ:ACB) have led the pack. Aside from being the two largest pot stocks by market cap, this duo is also forecast to lead the country in annual output. When fully operational, Canopy's 5.6 million square feet of capacity should yield in excess of 500,000 kilos per year, with Aurora's 15 separate production facilities likely capable of between 675,000 kilos and 700,000 kilos annually.

No cannabis stocks have a more impressive international reach than Canopy Growth or Aurora Cannabis, either. Just a few marijuana companies are currently on track to reach a dozen or more markets, including Canada. Both Aurora Cannabis and Canopy Growth make the list, with production, export, partnerships, or research ongoing in 25 and 17 countries, respectively. If dried flower oversupply strikes Canada, much in the same way states like Oregon have been impacted, these foreign markets will provide critical external sales channels for both companies.

As you can imagine, their size and well-known portfolio brands have also allowed Canopy and Aurora to snag impressive partnership opportunities. Canopy Growth wound up closing a whopping $4 billion equity investment from beer, wine, and spirits producer Constellation Brands in November, while Aurora Cannabis was one of four companies chosen to be an exclusive supplier for the PAX Labs Era vape device in June.

Despite everything seemingly going Canopy Growth's and Aurora Cannabis' way, both companies are still very much in the red when it comes to their income statements (Canopy much more so than Aurora). The fact that neither company is anywhere near operating profitability is a big reason their share prices are pushing toward year-to-date lows.

However, losing money isn't something all Canadian pot growers are contending with.

A cannabis leaf laid atop a neat stack of one hundred dollar bills.

Image source: Getty Images.

Surprise! This minuscule pot stock expects to be profitable

This past Tuesday, Sept. 24, the roughly $200 million market cap Aleafia Health (OTC:ALEAF) provided preliminary guidance for its third-quarter operating results. One of the projections made by Aleafia is that the company "will achieve positive net income for the three month period ended September 30, 2019." The press release notes that many of the company's capital projects are nearing completion, resulting in a nice drop in expenses as sales are beginning to ramp up.

Although any figures offered by the company remain estimates, largely given that the third quarter is still ongoing, Aleafia also highlights that it ended the most recent quarter with 51 million Canadian dollars in cash on hand, and that its active registered patient count has grown by 42% since July to more than 10,000. 

Even for those who follow the burgeoning cannabis industry, Aleafia Health is probably not a name most folks know. In March, it completed the all-stock acquisition of Emblem, thereby combining two of the largest companies focused on the medical-clinic model. In other words, the duo operates a combined 40 medical clinics capable of prescribing medical marijuana, then aims to sell branded/in-house cannabis products to these patients. And remember, medical pot patients generate significantly juicier margins than traditional adult-use consumers.

According to Aleafia, harvesting at its 1.1-million-square-foot Port Perry outdoor grow facility will commence in about two weeks, with a 2.6-million-square-foot adjacent outdoor grow expansion projected to be ready in November. At full production capacity, Aleafia Health should be capable of at least 138,000 kilos of annual output, making it one of about a dozen major growers in our neighbor to the north -- and according to its Q3 guidance, perhaps the first operationally profitable major grower.

An investor holding a magnifying glass over a company's balance sheet.

Image source: Getty Images.

Before you get too excited...

Now, before you break out the champagne, understand that there's a lot we still don't know about this quarter.

For example, Cronos Group (NASDAQ:CRON) has been incredibly profitable over the past two quarters. But the only reason Cronos Group wound up generating substantial profits in both quarters was because it revalued derivative liabilities (i.e., warrants) held by Altria. On an operating basis, Cronos Group continues to lose a substantial amount of money.

Why bring up Cronos' situation? Well, most Canadian growers have a number of one-time costs and benefits that crop up on their income statements, including fair-value adjustments to biological assets. Aleafia Health does state that it'll be profitable in its guidance, but it doesn't suggest whether this means profitable on an operating basis or simply profitable because of fair-value changes or other one-time benefits. A profit based on the latter factors wouldn't have nearly as much weight as the former.

Additionally, it's unclear if Aleafia Health's CA$51 million in cash on hand is going to be sufficient to compete against the big boys. There's no doubt this cash pile has shrunk a bit since Aleafia Health and Emblem combined their operations. More important, Aleafia is probably going to need to spend aggressively to make a name for its cannabis brands. While it does have a 175,000-kilo-in-aggregate wholesale supply deal in place with Aphria over a five-year period, it's unclear how receptive the marketplace will be to the as-of-now unspoken portion of Aleafia's annual output. 

Nevertheless, Aleafia's guidance for now looks to be a pleasant surprise among a sea of ongoing losses in the cannabis space.

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.