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The global medical marijuana market is projected to expand by a compound annual growth rate (CAGR) of more than 20% through 2027, according to Data Bridge Market Research. Much of this growth will be in the U.S., where 35 states have already legalized medical cannabis, and more are on the way. Medical cannabis products sold in the U.S. But which stocks are most likely to profit from the industry's growth and are smart picks for investors? Here's what you need to know about investing in medical marijuana. Image source: Getty Images. Canopy Growth serves the Canadian medical and recreational marijuana markets and distributes medical cannabis to international markets, including Germany. The biggest knock against Canopy Growth is that it can't yet compete in the huge U.S. However, the company hopes that will change in the not-too-distant future with federal cannabis reform in the U.S. The company isn't consistently profitable. Constellation Brands, as well as strong global distribution channels with subsidiaries, joint ventures, and partners that market its products around the world. Its ties to Constellation, along with the cash the deal generated, gives Canopy a big advantage in cementing its leadership position within the cannabis industry.

Valens is a Canadian cannabis extraction services provider that has multiyear extraction agreements with Canadian growers, including Canopy Growth, HEXO, OrganiGram, and Tilray. The company is profitable and enjoys solid revenue growth. Medical cannabis extraction in Europe, Australia, and Latin America presents great growth opportunities. Its top opportunity now, though, is the second phase of Canada's recreational marijuana market, which allows the sale of cannabis derivatives such as vapes and edibles. Valens' contracts with top growers and its claims to have the largest extraction capacity give it a competitive edge over rivals. GW Pharmaceuticals is the largest cannabis-focused drug developer. U.S. for treating spasticity associated with multiple sclerosis. GW's most successful product, the CBD drug Epidiolex, is approved in both the U.S. GW remains unprofitable, but that could soon change. The drugmaker's revenue continues to soar, thanks to strong demand for Epidiolex and its improving bottom line. Epidiolex is the company's primary growth driver and should pick up tremendous momentum with a new approved indication in the U.S. GW also hopes to win regulatory approvals in the U.S. Europe for additional cannabis-based products.

Trulieve Cannabis is a vertically integrated U.S.-based cannabis company that grows medical cannabis and distributes products to its retail dispensaries. The company's primary operations are in Florida, where it runs 70 medical cannabis dispensaries. Trulieve also has operations in California, Connecticut, Massachusetts, and Pennsylvania. Unlike most of its peers, Trulieve regularly delivers quarterly profits. The company's earnings growth remains strong, and Trulieve boasts a solid financial position with a growing cash pile. Florida's medical marijuana market is in its early stages and presents a major growth opportunity. The company also hopes to expand in the U.S. As a real estate investment trust, or REIT, Innovative Industrial Properties is the leading real estate provider for the U.S. REITs present an attractive option because their risk is spread across multiple tenants. Even better, the government mandates that REITs must distribute at least 90% of their taxable income to investors in the form of dividends.

Innovative Industrial Properties has plenty of taxable income, thanks to its consistent profitability. Innovative Industrial Properties currently owns properties that are leased to tenants in 17 states. The company's growth prospects include opportunities to build its customer base in the states where it already operates and to expand into additional states. One way to gain exposure to medical marijuana stocks is to buy a cannabis-focused exchange-traded fund (ETF), which is bought and sold like an individual stock but holds multiple stocks like a mutual fund. The primary advantage is that your money is spread across a basket of stocks, providing downside protection to your investment if one stock plunges. The negatives to investing in cannabis ETFs include annual expense fees that eat into your returns and the possibility that your money will be invested in stocks you don't like. Investors who opt to buy individual medical marijuana stocks can choose Canadian or U.S.