The Canadian government, which recently legalized medical marijuana, estimates $3.4 billion in taxable sales over the next decade. In the U.S., medical marijuana is now legal in 23 states, while recreational usage is legal in four (with seven others primed for legislation). As a result, more and more medical companies are forming—and investors should take notice.

Related: The Real Cost of Health Care

In the infographic below, multimillionaire Timothy Sykes explains why investing in small cap cannabis stocks may be a good idea, and provides tips for success.

As an emerging market, there is little known about many companies and there are no true leaders, so doing research is imperative. Look for outliers such as potential for growth and, as always, keep an eye out for scams. Many experts compare the legalization of marijuana to Prohibition, warning that similar “pump and dump” schemes may occur if federally legalized—which is likely to occur within the next decade.

Related: [Infographic] Billions Over Budget

There are three specific companies Sykes believes to be the “ones to watch” on the U.S. cannabis market:

GW Pharmaceuticals (GWPH) developed Sativex, a cannabinoid-based medicine that treats spasticity in multiple sclerosis. Sativex is currently approved in several other countries and is being tested for other uses.
Market Cap: $1.5 billion (as of Nov. 2014)
American Green Inc. (ERBB) aims to develop fledging companies and product ideas that, once successful and self-sustaining, will spin off into publically traded companies among stock owners.
Market Cap: $33 million (as of Nov. 2014)
Cannabis Science (CBIS) is focused on turning cannabinoids into prescription medications and works mainly on treatments for HIV/AIDS and cancer. The company is currently running two studies, both of which are in the pre-clinical stage.
Market Cap: $57 million (as of Nov. 2014)

Read the infographic below for more details about the (potential) multibillion-dollar market.

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