I’ll cut to the chase: if you buy every single pot stock on the market, not all of them will shoot through the roof. In fact, given that the industry is still at a nascent stage, some companies probably won’t be around in a few years’ time.

But as we’ve seen in the past, buying the right pot stock at the right time can allow investors to achieve double-digit—and sometimes triple-digit—returns in a matter of months.

Obviously, not everyone feels comfortable about buying a pot stock after it has already shot through the roof. So the task is to identify companies before they make it big.

In my opinion, organic pot could be the next big opportunity in the legal cannabis industry.

Let me explain.

We know from grocery stores that organic vegetables and fruits tend to be more expensive than their non-organic counterparts. Not every consumer will buy organic produce, but the fact that these things command a premium means there is an opportunity to make more money at the top line.

Does the idea also apply to the pot industry?

Well, in a market where cannabis is illegal, most pot users will probably be glad just to be able to get any pot, and worry less about where it comes from and how it was produced. But in a market where people can purchase cannabis legally, more pot users will likely care about the quality of the products they buy.

According to a survey conducted by Hill+Knowlton Strategies, 57% of Canadian medical pot consumers and 47% of Canadian recreational pot consumers indicated that they prefer organic cannabis.

Therefore, it shouldn’t come as a surprise that there is an organic premium when it comes to pot products.

It has been calculated that, in Canada, the industry’s average price for non-organic pot is CA$9.52 per gram, while the average price for organic pot is CA$13.45. That translates to a 41% organic premium.

I’m talking about the Canadian market because pot has been legal for recreational use in the entire country for over a year. But it’s just an example, as I’m sure a sizable portion of American pot consumers also have a preference for the organic flower.

One company that focuses on growing organic pot is Green Organic Dutchman Holdings Ltd(OTCMKTS:TGODF, TSE:TGOD), which operates a 166,000-square-foot facility in Ancaster, Ontario, Canada and is building a 1.3-million-square-foot facility in Valleyfield, Quebec, Canada.

The Ancaster facility is expected to produce 17,500 kilograms (38,581 pounds) of organic pot annually. And once the facility receives EU good manufacturing practice (GMP) certification, it will be able to export globally.

Meanwhile, the Valleyfield location is awaiting license amendment approval from Health Canada. At full capacity, the Valleyfield campus is expected to produce 185,000 kilograms (407,855 pounds) of organic cannabis annually. (Source: Ibid.)

Of course, just like growing organic vegetables, growing organic pot is not the fastest or easiest thing to do. That means, in order for an organic pot producer to make oversized profits, it needs to be able to keep its production cost low.

On that front, check out Rubicon Organics Inc (OTCMKTS:ROMJF, CNSX:ROMJ), a Vancouver, British Columbia, Canada-based pot company that focuses on cultivating and branding certified organic, super-premium cannabis.

Rubicon has a 125,000-square-foot hybrid greenhouse located on a 20-acre property in Delta, British Columbia. This year, the company plans to ramp up its organic pot production capacity to 11,000 kilograms (24,251 pounds).

The most impressive part is that Rubicon Organics is on track to bring its production cost to less than CA$1.00 per gram. In the long run, it intends to achieve a production cost of just CA$0.50 per gram. Meanwhile, the company’s first recreational weed brand, “Simply Bare,” will retail for CA$13.00 to $15.00 per gram. That could lead to a very lucrative business.

Analyst Take

Keep in mind that this story is not about endorsing TGODF stock or ROMJF stock. Our analysts present their top stock picks in their paid-subscription newsletters.

My point here is that, since organic cannabis products command a premium—just like organic vegetables and fruits—companies that grow organic pot could capture that premium. And in the long run, the efficient organic pot producers (and their shareholders) will likely be rewarded.

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