Steve's note: I'm not an expert on cannabis stocks... But I believe you should be prepared if you're going to dabble in this emerging industry. That's why we're sharing today's essay from Cannabis Capitalist editor Thomas Carroll. In it, he discusses this evolving market's massive potential, as well as one simple trait to look for when deciding where to invest...

9,000,000,000 chickens...

That's how many broilers our country's poultry industry produced in 2017, according to the latest numbers from the U.S. Department of Agriculture.

As you can guess, supplying all of America's Super Bowl parties and summer cookouts is big business. The industry stretches to every corner of the country... with at least 20 states producing 200 million pounds or more per year.

All told, feeding Americans' appetites for poultry and eggs generates more than $40 billion annually.

Now, imagine if this industry hadn't developed over roughly 200 years...

Suppose instead that the modern chicken industry developed essentially overnight, in just a few years.

Imagine the kind of investment opportunity you would have if you could get into that kind of growth early enough.

I believe that's exactly the kind of opportunity we have in the legal cannabis industry today... only bigger. Perhaps twice as big.

It's true that cannabis is already a massive, global market...

Around the world, the estimated total market for cannabis – both legal and illegal – is about $200 billion.

Here in the U.S., the market for cannabis is about $72 billion, according to analysts with Arcview Market Research and BDS Analytics. But again, this is the total market, which includes both legal and illegal sales.

Looking closer, we see that the legal cannabis market in the U.S. accounts for only about $10.5 billion – or less than 15% of the total market – as of 2018.

In other words, there's another $60 billion of illegal cannabis sales happening in the U.S. right now. That means there's still plenty of room for massive growth as legal cannabis steals market share in the years ahead.

But we also expect the total market to continue to grow rapidly as well...

Right now, most people who consume cannabis smoke it. That's what most of the additional $60 billion in the illegal market is.

But legalization will bring the creation of edibles, oils, lotions, beverages, food, supplements, and more. And this will likely open the door to more people as cannabis will be far easier to enjoy.

According to analysts at Grand View Research, the market just for legal cannabis in the U.S. could reach $50 billion to $100 billion by 2025. That's growth of roughly 400%-900% in around six years. And even those estimates may prove too timid.

This market is opening almost overnight. And it will change the lives of millions of Americans in ways we can't even imagine right now.

Our goal at Stansberry Research is to show you how to profit from this rapidly emerging market...

We're using institutional investment strategies to research and recommend what is going to be a growing list of stocks.

For example, one of the things we do is speak with company management. These are the people who ultimately make a company successful and increase the value of our investments.

In launching our research efforts, we spoke with many cannabis-industry experts and management teams. Among our most recent interviews were...

• The investor relations executive at a large cannabis company,

• A senior executive of a major adult beverage company,

• The chief financial officer for a small health and wellness beverage company,

• The founders of a high-tech agriculture company, and

• A large investor in a big cannabis company.

Every person we spoke with believes his company is at the forefront of a massive new market...

It's not surprising to hear this from the young, jeans-wearing entrepreneur looking to create a line of edibles. But it was more convincing to hear it consistently from the well-educated, white-collar executive types.

And across the board, these cannabis leaders believe as we do...

The size of this market and the disruption created may be the biggest of our lifetimes.

Of course, a market this big, growing this fast, will attract A LOT of attention...

These companies will all be looking to claim a share of the money flying around.

So we're sure to see plenty of false-starts and pretenders competing for investor attention.

To do well, we need to be able to separate the relatively few likely winners from the many probable losers.

Through our research, we've identified a handful of simple traits we'll be using to help guide our decisions. The first trait – which might be the most important – is what I want to focus on today...

Almost everyone looking to get involved in legal cannabis today follows a similar path...

Set up a company. Grow the plants. Harvest. And distribute.

But the special companies go further... They innovate.

Let me give you a couple of examples...

Legalization has been hell on the hemp crop...

If you're not familiar, hemp is a type of cannabis plant that, by law, contains less than 0.3% tetrahydrocannabinol ("THC") – or the compound that will get you high.

THC and other "cannabinoids" are simply the chemical compounds in cannabis plants that create the desired effects for the user. Scientists have identified more than 100 different cannabinoids to date.

Instead of a large amount of THC, hemp is rich in cannabidiol ("CBD"). That's another compound that can work as a natural remedy for pain and anxiety. The fibers of the hemp plant are also useful in countless industrial products.

Last December, the federal government legalized the farming of the hemp plant nationwide. This set off a race to get hemp plants. You might think this would be a boon to farmers who want to supply this incredibly useful commodity (and it will be one day)...

Unfortunately, in an effort to generate revenue, farmers have destroyed the quality of the hemp...

Growing hemp is tricky. There are both male and female hemp plants.

That isn't the case with most plants.

The most valuable cannabis crops are female plants. Why? The female plants make the flowers. And the flowers are processed into all the CBD-based products cannabis companies will sell.

If the female plants don't get fertilized by the male plants, they'll produce more robust flowers. The more male plants in a crop, the fewer flowers. A fertilized female will use its energy to create seeds, not flowers.

And that's bad for the economics of the crop.

What the industry really needs is predictable seeds...

I'm talking about seeds that consistently grow exactly the kind of plant you want and expect... so that the bulk of your crop can be focused on growing flowers.

Wouldn't it be great if a company could create seeds that grow only female plants?

Well, we have discovered a company that is doing just that. It is using techniques to alter the genetics of the plants so that the seeds produce only the desired characteristics.

For example, they'll only grow female plants that produce robust flowers, rich in a certain cannabinoid.

This innovation will allow hemp producers to grow exactly what they want with much less waste. This will reduce cost, increase consistency, and lead to better products... and better revenue and profits.

This is what we mean by uncovering the real innovators in the burgeoning cannabis industry...

Almost anyone can grow a few cannabis plants. Cultivating, harvesting, and distributing them isn't that complicated. It's just good old-fashioned farming.

But to find the real winners – the ones worth your investing capital – you must identify the special companies that go further.

Innovation can come from many places. But whatever it is, we consistently see this among the best companies. Here's another example...

Imagine if you could have cannabis products without the plant...

After all, cannabinoids – which again, include both THC and CBD – are the real value. The plant itself is just nature's packaging for the compounds. It doesn't represent the ultimate value to investors in cannabis.

We found another company that is developing a technology that can essentially create cannabinoids in the lab – and do it at scale.

This technology has the potential to save the industry an amazing amount of capital...

It will let cannabis companies develop products like oils, vapes, and cannabinoid beverages without having to grow the plants. This means much less spending on farming, greenhouses, and expensive indoor growing facilities.

This is why we believe seeking out innovation is critical to investing in the cannabis industry...

The companies that will thrive and dominate are the ones using these innovations to get an edge on the competition.

The companies that can consistently produce quality compounds will consistently produce quality earnings... and generate the biggest returns for shareholders.

Good investing,

Thomas Carroll

Editor's note: Cannabis Capitalist subscribers just learned the names and ticker symbols of four cannabis stocks that Thomas believes could soar hundreds of percent or more as this industry takes off in the years ahead. Right now, you can sign up for Cannabis Capitalist for nearly half off the regular retail price. Get started right here.