The listing of Aurora Cannabis (TSX:ACB)(NYSE:ACB) on Wall Street last October was merely preparation for something grand. The company wasn’t expecting share prices to astronomically rise, as it wasn’t a typical IPO roadshow. However, it gives institutional investors the option of investing in the Canadian or American stock exchanges.

Aurora is after a bigger slice of the legal cannabis pie whose estimated value is about USD $5 billion. However, recent events showed a different story versus the original script envisioned by marijuana companies. Instead of soaring after October 17, the market sell-off drove the cannabis stocks lower. Fortunately, November is exhibiting hope.

The news for marijuana penny stocks can't get much better.

Over the last two weeks, national and state governments in North America have dealt a wave of final blows to marijuana prohibition, paving the way for full legalization – and tremendous profits.

On Oct. 31, Mexico's Supreme Court struck down the nation's marijuana prohibition law. Shortly afterwards, Mexico's incoming government announced plans to pursue full legalization.

Less than a week later, three American states took huge leaps toward full legalization during the midterm elections. Both Missouri and Utah voted to allow medical marijuana use, while Michigan voted for full recreational legalization.

That's not even mentioning Canada's nationwide legalization on Oct. 17.

Pot stocks have been trading at very high multiples to sales for a long time and even a lack of profitability has done little to curb excitement in the industry. However, we’re starting to see signs of that changing.

This week, many marijuana companies are reporting their earnings, and the results have been very telling, as investors have not been buying up stocks that have simply achieved strong sales growth.

On Tuesday, Cronos Group (TSX:CRON)(NASDAQ:CRON) released its quarterly results, which showed sales rising by 186% year over year. However, the company reported a net loss of over US$7 million, which was a big drop off from the profit it achieved a year ago.

Sproutly Canada, Inc.’s move to establish a joint venture with Global Canna Labs Limited, the Caribbean’s largest medical cannabis producer, allows the Vancouver-based company to advance its vision and expand its business outside Canada.

The companies have signed a letter of intent (LOI) to establish a joint venture that will focus on developing, producing, distributing, marketing and selling cannabis-infused beverages, edibles and topical products derived from Sproutly’s fully licensed APP Technology.

“The signing of the definitive agreement and establishment of the joint venture is expected to occur in January 2019,” notes a statement from Sproutly.

You’ve heard of Big Pharma and Big Tobacco. How about Big Marijuana?

The drug’s growing legalization is raising concerns among small-scale marijuana farmers and retailers that the corporatization of weed may be right around the corner.

For example, earlier this year NASDAQ became the first major U.S. stock exchange to list shares of a marijuana production company. And in August, Corona-maker Constellation Brands shocked Wall Street by making a US$3.8 billion investment in a Canadian marijuana producer, sparking a bull market in marijuana stocks industry-wide. Even Coca-Cola is exploring opportunities to get involved.

There is no doubt that marijuana stocks are from a highly speculative segment of the market, where it’s tough to come up with a credible valuation model based on the companies’ fundamentals.

Built into the prices of top marijuana stocks is hope and speculation that someday these companies will be highly profitable as more and more countries legalize the recreational use of pot, following the Canadian example.

But that doesn’t mean that there isn’t a long-term investment case for some top marijuana stocks. With this theme in mind, I have shortlisted two cannabis producers that fit the bill.

FSD Pharma Inc.(CSE:HUGE), via its wholly-owned subsidiary FV Pharma, is a licensed producer of cannabis after receipt of its cultivation license under the Access to Cannabis for Medical Purposes Regulations (ACMPR) on October 13, 2017. The Company places emphasis on the development of the highest-quality indoor grown, pharmaceutical-grade cannabis as well as the research and development of cannabinoid-based treatments for several central nervous system disorders, including chronic pain, fibromyalgia and irritable bowel syndrome (IBS).

Province Brands ofCanada — the Canadian company developing the world's first beers brewed from the cannabis plant, including nonalcoholic beers which intoxicate using THC and other phytocannabinoids (to be released only when and where the sale of marijuana beverages are permitted by law) and Cambridge Bay Imperial Pilsner , a first-of-its-kind, 7% ABV imperial pilsner brewed from hemp in place of barley (which does not contain marijuana) — announces a co-packing and

There’s a shakeout coming to the Canadian cannabis industry and mid-sized companies may find it hardest to survive, according to the new president of Aphria Inc.

“There will be a group of companies at the top, the big producers, and some smaller producers at the bottom, like craft beer,” Jakob Ripshtein said in an interview at Bloomberg’s Toronto office. “I suspect there will be some in the middle who will be very challenged to stay around.”

The roll-out of legal cannabis is a prime example of how Canada can get things right. Energy shows how the country sometimes gets it wrong.

That’s the view of GMP Capital Inc.’s Harris Fricker, who is seeing deal-making in marijuana and blockchain eclipsing the traditional industries of energy and mining that were once bread-and-butter businesses for the Toronto-based financial services firm.