Despite the legal marijuana industry growing at a blistering pace the past few years, cannabis stocks have generally been a downer for investors. Cannabis equities have floundered over the prior three years for a laundry list of reasons.

Some of the common threads running through this disappointing period in the industry's life cycle include: overzealous management teams, a sea of never-ending capital raises at shareholders' expense, governmental red tape, banking/financing problems, the slow march toward federal legalization in the U.S., and of course, competition from both legal and illegal growers. As a result of this vortex of hurricane-force headwinds, the industry's bellwether ETF -- Horizons Marijuana Life Sciences Index ETF -- has lost over 56% of its value over the prior 36-month period.  

HMMJ Chart

HMMJ data by YCharts

There is no doubting the industry's overall growth potential, however. The global legal cannabis market is forecast to rake in $70.6 billion in sales by 2028, according to a report by Grand View Research. Legal marijuana sales, in effect, are expected to rise at a compound annual growth rate of 26.7% over the next seven years. If this forecast rings true, marijuana would easily be one of the fastest-growing industries in the world over this period. 

How can marijuana investors capitalize on this parabolic growth trend? There are two emerging trends that investors should consider when buying marijuana stocks right now. Within the top end of the field from a market cap perspective, investors should arguably prize a company's ability to simply stay in the game until the U.S. permits countrywide THC sales. Second, customers are reportedly shifting their tastes toward higher-quality dried flowers produced by elite craft growers. Armed with these insights, Canopy Growth (NYSEMKT:CGC), OrganiGram (NASDAQ:OGI), and Sundial Growers (NASDAQ:SNDL) are three names that could be big winners for patient investors. Here's why. 

Marijuana bud with  U.S. currency fanned out.

Image source: Getty Images.

Canopy, OrganiGram, and Sundial stand out from the crowd

Canopy Growth is Canada's top seller of premium dried flower, according to data from the cannabis research firm Hifyre. What's more, Canopy recently announced that its vape and edible products are also performing well in the marketplace. Even so, Canopy's stock has dropped by over 44% so far this year. Investors have exited this pot stock this year in response to the company's inability to turn a profit, as well as its hefty cash burn rate. The shift toward ultra-high-quality craft products and the company's decision to place a heavy emphasis on the largely forbidden U.S. market have hurt its top line in 2021.

Canopy's saving grace, though, is undoubtedly its partnership with U.S. liquor titan Constellation Brands. This partnership should give the company the runway necessary to wait out most of its would-be competitors, and potentially grab an outsize portion of the U.S. market upon federal permissibility. The big picture is that Canopy is one of the few pot companies with a realistic shot at owning a double-digit slice of the massive global cannabis space by the end of the decade. All it has to do is hang on while U.S. federal law slowly but surely evolves. 

Craft grower OrganiGram has been one of the few bright spots among licensed Canadian producers this year. The New Brunswick-based cannabis company has seen its share price rise by almost 67% year to date. Investors have rewarded the company for slashing expenses through improved automation and higher yields, reducing its debt to near zero, and significantly growing its share of the market in 2021. OrganiGram's laser-like focus on efficiency and quality is clearly starting to pay dividends for the company. OrganiGram's outstanding performance -- in an otherwise dismal year for licensed Canadian producers in general -- probably means that it will ultimately be bought out at a hefty premium by one of the industry's revenue-needy titans. 

OGI Chart

OGI data by YCharts

Canada's Sundial Growers is also an interesting long-term buy and hold right now. The company has built a highly diversified business that consists of a retail cannabis segment, a cannabis investing wing, and now a liquor element. Sundial's shares truly come across as a stellar long-term buy for two completely different reasons, however.

First, it sports an unusually healthy balance sheet, with 1.2 billion Canadian dollars in the bank and no outstanding debt at last count. Second, Sundial recently committed to a CA$100 million share repurchase program. This key operational move ought to boost earnings per share in upcoming quarters and spell the end to the company's penchant for diluting shareholders. What this all means is that Sundial should be able to remain a viable independent entity. So, like Canopy, Sundial's share price should benefit in a big way by the company simply being able to stick around while the industry matures. 

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.