The global medical marijuana market is projected to expand by a compound annual growth rate (CAGR) of 22.4% through 2024, according to estimates from ResearchandMarkets.com. That's a market of more than $44 billion that's ripe for the picking for companies that are ready for the challenge.

But what does it take to succeed in the medical marijuana industry? And 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.

Medical marijuana legalization

Several countries have legalized medical marijuana at the national level. Canada claims the biggest market among these countries, with estimated sales of medical cannabis in 2019 of around $1.7 billion. Germany, however, is likely to overtake Canada as the most important national medical marijuana market within the next few years because of its larger population and wide availability of access.

Marijuana has been illegal in the U.S. since the Marijuana Tax Act of 1937. It has been a Schedule I controlled substance in the U.S. since the passage of the Controlled Substances Act in 1970. Marijuana remains illegal at the federal level in the U.S. However, 33 states have legalized medical marijuana, with more potentially on the way.

California became the first state to legalize medical marijuana in 1996. But the passage of Senate Bill 420 in 2003, which established an ID card system for medical cannabis patients and allowed medical cannabis dispensaries, paved the way for California's thriving medical marijuana market.

Although California claims the largest marijuana market in the U.S., with Colorado ranking second, both states have much larger recreational marijuana markets. Florida is on track to have the largest medical cannabis market in the country with projected sales of $1.7 billion by 2022.

Medical cannabis products

Medical marijuana can be inhaled by smoking dried flower or vaping concentrates, taken orally through oils or edible products (including beverages), or applied topically using cannabis-based creams and lotions.

The two most important ingredients in cannabis used for medical purposes are cannabidiol (CBD) and delta-9 tetrahydrocannabinol (THC). While many patients use CBD products, currently only one CBD-based drug has received U.S. Food and Drug Administration (FDA) approval -- Epidiolex. GW Pharmaceuticals (NASDAQ:GWPH) obtained FDA approval in June 2018 for the CBD drug in treating Dravet syndrome and Lennox-Gastaut syndrome (LGS), both of which are rare forms of epilepsy.

Three drugs containing THC have also been approved by the FDA. Marinol, Cesamet, and Syndros won regulatory approval for treating chemotherapy-induced nausea and vomiting for cancer patients. Marinol and Syndros also received FDA approval for the treatment of AIDS-related anorexia. But while Epidiolex is made from the cannabis plant, all three of these drugs are made synthetically.

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