Last year, there was no shortage of marijuana milestones . We watched Canada become the first industrialized country in the world to legalize recreational marijuana, had the U.S. Food and Drug Administration (FDA) approve the very first cannabis-derived drug, and saw support for legalization among the U.S. public push to a record high (pun fully intended).

All eyes are on derivatives

However, the history just keeps on coming for cannabis. The big event that everyone is waiting for in 2019 is the expected launch of derivative products in Canada by mid-December . Derivatives are non-dried-flower marijuana products, such as edibles, nonalcoholic infused beverages, vapes, topicals, and concentrates, to name a few.

According to the timeline from regulatory agency Health Canada, derivative laws will officially go into effect on the one-year anniversary of recreational legalization, Oct. 17. However, it's going to take some time before these products begin hitting dispensary shelves, which is why mid-December is the earliest expected time at which these products will make their appearance.

Of course, derivatives products are already available in the United States, which is why we've witnessed so many Canadian pot stocks pushing into the U.S. hemp market . While tetrahydrocannabinol (THC)-containing products might be off-limits for most of these Canadian stocks, cannabidiol (CBD)-containing derivatives in the U.S. could be a major source of revenue in the years to come. And don't forget, the U.S. should run circles around Canada in terms of peak annual pot sales.

The excitement surrounding derivatives cannabis products is twofold.

First, a younger generation of marijuana users has noted in polling that they prefer to consume cannabis through alternative consumption options, rather than smoking dried flower. This younger generation is going to be critical to the long-term success of the pot industry, especially considering that support for legalization is always strongest with the 18-to-34-year-old crowd.

The second reason derivative products are such a big deal is that they offer considerably better margins than dried flower. Whereas dried flower has shown a penchant for oversupply and commoditization in more established U.S. markets that have legalized adult-use weed, such as Colorado, Washington, and Oregon, derivatives, such as oils, edibles, and infused beverages aren't facing oversupply or pricing pressures. That makes portfolio diversification into derivatives a must for any cannabis stock looking to stand out.

The "411" on where every U.S. cannabis dollar spent could wind up

The big question is: What will the U.S. sales breakdown look like once the industry matures?

For that answer we'll turn to Cowen Group 's research, which Canadian grower OrganiGram Holdings (NASDAQ: OGI) has been nice enough to make public in its own investor presentation. In descending order, here's where Cowen projects every cannabis dollar spent in the U.S. will wind up.

Dried flower: 43% of sales

Even though a younger generation of users prefers alternative consumption options, dried cannabis flower projects as the leading source of sales, by quite a bit. My suspicion is that this has to do with cost - dried flower will be cheaper than most derivative options - as well as older Americans using marijuana who still prefer dried flower. As much as marijuana stocks might prefer ditching dried flower altogether for higher margin products, that's not going to happen.

Vaporizer pens: 23% of sales

In terms of derivatives, vaporizer pens look to be the leading source of high-margin sales. This suggests that accessories companies and pot stocks focused on vapes should be in great shape to succeed.

On the accessories side of the equation, Greenlane Holdings(NASDAQ: GNLN) and KushCo Holdings (OTC: KSHB) are two names that come to mind . Greenlane has a network of 11,000 retail doors throughout North America that it supplies with vape products and other cannabis accessories. Greenlane was also early to partner with industry-leading vape brands, including Juul, PAX, and Storz & Bickel. Meanwhile, KushCo generates the bulk of its sales from vaporizers, while also providing packaging solutions and hydrocarbon gases to the cannabis industry. Both Greenlane and KushCo provide diversity in the ancillary derivatives market that should intrigue investors.

In terms of direct players, Cronos Group (NASDAQ: CRON) could eventually be a beneficiary. Cronos landed a $1.8 billion equity investment from tobacco giant Altria  that closed in March. And while the $1.8 billion Cronos netted from this deal is important to the company's long-term expansion plans, it's the ability to work hand-in-hand with Altria, a company that owns a 35% stake in vaporizer device maker Juul, which could prove most valuable.

Edibles and beverages: 13% of sales

Another important source of high-margin revenue should be edibles and infused beverage containing CBD and/or THC. Of course, this is also an area of great debate at the moment.

You see, despite the FDA approving the first-ever CBD-based drug in 2018, it still views cannabis and CBD as having virtually no medical benefits. That means adding CBD to food and beverages remains a no-no for the time being. The FDA iscurrently reviewing CBD to establish guidelines on possibly adding the substance to food, beverages, and dietary supplements (legally) in the not so distant future, but there's no telling what the FDA could ultimately decide to do.

What we do know is that edibles and infused beverages should play a key role in the Canadian derivatives market, beginning by the end of this year. The aforementioned OrganiGram invested 15 million Canadian dollars in fully automated production line equipment that can yield up to 4 million kilos of chocolate cannabis edibles per year. OrganiGram has also developed a proprietary nano-emulsification technology that'll be introduced first as a powder, and then eventually in beverages, presumably with an established partner.

Concentrates: 9% of sales

Working our way down the list, cannabis concentrates are expected to make up about 9% of total U.S. weed sales. This is a category that should be especially popular with younger consumers, considering the quicker onset and potency often associated with concentrates. It should also be noted that concentrates can be used with vaporizers, meaning two of the three top-selling derivatives pretty much go hand-in-hand.

Perhaps the best way to take advantage of the rise of concentrates would be to focus on extraction-service providers like Neptune Wellness Solutions (NASDAQ: NEPT) . Although there are a number of extraction providers to choose from, I specifically chose Neptune for its recent acquisition of SugarLeaf, giving it a U.S. presence. Once SugarLeaf's 24,000-square-foot processing facility in North Carolina is operating at full capacity, Neptune will be capable of processing 1.5 million kilos of hemp biomass per year , on a run-rate basis. This is in addition to Neptune's 200,000 kilos of annual run-rate capacity in Canada.

Pre-rolls: 7% of sales

Perhaps it's no surprise that cannabis pre-rolls should remain somewhat popular in the United States. After all, marijuana use for baby boomers and older Americans is on the rise, and cannabis joints are probably the most recognizable pot product for these generations.

Rather than having consumers take the time to prepare their own cannabis cigarette, pot companies have gone through the trouble of rolling dried flower into ready-to-enjoy joints for consumers. Because of this extra step, pre-rolls come with a premium price relative to purchasing dried cannabis flower -- a premium price that marijuana companies are happy to collect.

Tinctures, sublingual sprays, topicals, and capsules: 5% of sales

Last, but not least, the combination of tinctures, sublingual sprays, topicals, and extract-containing capsules are on track to make up the remaining 5% of U.S. cannabis sales.

Topicals have been an especially interesting way for cannabis companies to get CBD products in front of U.S. customers, withGreen Growth Brands (OTC: GGBXF) being one of the companies leading the charge . Green Growth Brands has landed deals with Designer Brands , American Eagle Outfitters , and Abercrombie & Fitch  that'll see all three well-known retailers carry various Seventh Sense topical products containing CBD. Green Growth is also opening well over 100 stores in Simon Property Group malls that'll carry various CBD products, including topicals.

Although the U.S. marijuana and derivatives market still has a long way to go before it's mature, this Cowen analysis gives investors some idea of what to expect in terms of spending breakdown in the years to come.