GrowGeneration (GRWG -2.86%) ranked as the best-performing cannabis stock of the first half of this year. With its continuing momentum, GrowGeneration just might become the top pot stock of all of 2020.

Early investors have made a fortune, with GrowGeneration's shares multiplying sixfold since the company's initial public offering (IPO) in late 2016. But could the cannabis-focused hydroponic and organic gardening stock be a millionaire-maker for investors who buy now?

Cannabis plants growing in an indoor facility

Image source: Getty Images.

What it would take

There's no question in my mind that GrowGeneration could be a millionaire-maker stock -- if you invest a huge amount of money. After all, an initial investment of $800,000 would only require the shares to appreciate by 25% to get you to the magic $1 million mark. That shouldn't be a problem for GrowGeneration.

Of course, few investors have that kind of money. Even if you did have such a large amount, it wouldn't be a good idea to put it all into one stock.

Let's instead use a more reasonable initial investment of $10,000. For GrowGeneration to turn that amount into $1 million, it would need to become a 100-bagger over time. While that might seem next-to-impossible, other stocks have done it.

GrowGeneration's market cap currently stands at close to $665 million. To make you a millionaire with a $10,000 investment, the company will need to grow to a $66.5 billion market cap.

How it could happen

If we assume a price-to-sales ratio of five, GrowGeneration would need to make $13.3 billion annually to hit the market cap required to turn an initial $10,000 investment into $1 million. The company expects sales of around $170 million in 2020. How could GrowGeneration possibly ramp up its revenue so much?

Let's start with the company's addressable market. The global hydroponics system market is projected to reach around $16 billion by 2025. GrowGeneration would need to capture 83% of this market to rake in the amount of annual sales needed to rake in $13.3 billion per year.

That's admittedly a tall order, although it's theoretically possible. GrowGeneration would have to dramatically consolidate the currently fragmented hydroponics retail market. 

However, there's one wild card that could significantly expand the company's addressable market -- U.S. legalization of marijuana. The U.S. claims the largest cannabis market in the world. This market isn't nearly as big as it could be because cannabis remains illegal at the federal level.

What are the chances of U.S. marijuana legalization in the not-too-distant future? They're actually pretty good. It could even happen as soon as next year depending on the November election results. 

GrowGeneration would still need to expand massively, of course. But that's exactly what the company hopes to do. It currently operates 28 retail stores in 10 states. GrowGeneration's goal, though, is to own stores throughout all the major U.S. states and in Canada.

A good bet?

To be sure, the odds that GrowGeneration won't be a millionaire-maker stock are much greater than the odds that it will. The company already faces plenty of rivals. If cannabis is legalized at the federal level in the U.S., that competition would almost certainly increase.

GrowGeneration could achieve tremendous success yet still not grow enough to turn a $10,000 investment into $1 million. It's also important to note that there's a lot of growth already baked into the company's share price. 

On the other hand, GrowGeneration seems to have what it takes to deliver excellent returns over the long run. The hydroponics market is growing. The company already ranks as the largest retail chain in the industry. It enjoys plenty of momentum. And, as we've discussed, U.S. marijuana legalization would open up a much greater opportunity for GrowGeneration.

GrowGeneration could be a millionaire-maker stock, although it probably won't. But it still appears to be a pretty good bet to make investors a lot of money over the long run.