After a major 2016 push to legalize marijuana in several states, voters approved recreational use in California, Massachusetts, Maine and Nevada. Nevada already has begun legal sales, and California is set to begin on January 1. Legal sales in Massachusetts are expected to begin in July, and the situation in Maine was complicated when the governor vetoed a bill that would have made pot sales legal.

North of the U.S. border, legal sales are set to begin nationwide in Canada in July, making it only the second country to legalize recreational marijuana sales throughout the nation.

The dog that didn’t bark may be the other big story of the year. When Attorney General Jeff Sessions took office in February, he suggested that the federal government would enforce federal laws against the sale, possession and use of marijuana. If that is happening, it is taking place either on a small scale or in ways no one can see — yet.

Rob Meagher wrote earlier this week in the Cannabis Business Executive:

An administration that has been embroiled in controversy since day one has failed to take advantage of an easy win and the support of the majority of Americans to end prohibition and right the wrongs of the War on Drugs, while creating hundreds of thousands of jobs, more federal tax revenues and providing relief to those suffering from PTSD, cancer, multiple sclerosis, muscular dystrophy, seizures and a myriad of other ailments as well as chronic pain – which in many cases contribute to the nation’s opioid crisis.

Investment bank Ackrell Capital earlier this week released an investment report for the coming year that discusses investing in both the publicly traded and private markets “for sophisticated investors who are willing to take significant risk.”

Ackrell estimates that the legal U.S. cannabis market (both medical and recreational) had totals sales of $8 billion from more than 4 million customers. In that $8 billion market, California’s medical marijuana sales totaled $2.3 billion, the largest piece of the overall revenue pie. Once California kicks off its legal recreational sales, the total from medical and recreational sales could nearly double to around $6.5 billion, about 70% of the total U.S. market, according to a report at Fortune.

The analysts at Ackrell say that the single variable that will have the largest impact on the future size of the U.S. legal cannabis market is federal regulation:

How and when federal legalization occurs will impact other primary drivers of the market, including the number of eligible consumers, penetration rates and consumer spending. We predict six developments relating to federal legalization: (1) the U.S. Food and Drug Administration (FDA) will begin approving individual pharmaceutical-grade drugs derived from cannabis; (2) more states will adopt medical cannabis laws; (3) more states will adopt recreational laws; (4) the FDA will adopt routine approval procedures for drugs with extracts of low-THC/ high-CBD cannabis varieties; (5) the FDA will adopt routine approval procedures for drugs with extracts of high-THC cannabis varieties; and (6) cannabis parts and derivatives will be removed from the CSA [Controlled Substances Act] schedules (either incrementally, starting with CBD, or all at once) and will be fully legal for medical and recreational purposes.

If the first three of these developments proceeds in a timely fashion, by 2022 the legal marijuana market in the United States could grow to nearly $40 billion with about 20 million consumers. If developments 4 and 5 from the list happen over the next two years, the U.S. market size would more than double to about $81 billion with 40 million consumers.

Over the next four years, as cannabis is removed from the federal roster of controlled substances, the market could grow to around $120 billion and serve 60 million consumers.

For 2018, Ackrell offers these six things to watch in the legal cannabis industry:

Increasing recreational legislation. 

Mainstreaming of the cannabis consumer experience. Cannabis users will have a wider range of products to choose from than ever before. Pot is not just for smoking anymore.

FDA approval of cannabis-derived pharmaceuticals. We noted in our coverage of the 10 largest marijuana companies that GW Pharmaceuticals PLC (NASDAQ: GWPH) has submitted a new drug application to the FDA for an epilepsy treatment. The company’s Sativex product has been approved for use to treat spasticity caused by multiple sclerosis in at least 30 countries.

Commoditization of cannabis flower. Wholesale and retail prices have come under pressure as more states sell more marijuana. State-legal pricing is nearing parity with illegal sales and that is expected to drive state-legal sales higher.

Access to banking services. This has been a problem for the cannabis industry because state-legal businesses remain in violation of federal law. As such, most U.S. financial institutions either cannot or will not provide banking services to the cannabis industry. This situation is improving slowly, but is still a drag on growth.

Increasing investor activity. Our list of the 10 largest publicly traded marijuana companies includes six with market caps over $1 billion. Privately held cannabis industry firms raised $2 billion in capital last year, and if the industry is to thrive, that investment needs to rise. The best way to do that is for the industry to attract institutional investors with large stacks of money. That remains difficult, again due to federal law, although some publicly traded firms (Scotts Miracle-Gro and beverage giant Constellation are two notable examples) have made sizable investments in the industry.

Ackrell Capital’s full 186-page 2018 Cannabis Investment Report is available at the firm’s website.

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