NEW YORK (MainStreet) - The amount of pot purchased annually by Americans is an estimated $50 billion, but and only $2 to $2.5 billion of it is purchased legally, according to a Wall Street report. That's because although legalization of marijuana is sweeping the nation, sales of the plant-based drug will continue to be sold on the black market for some time.

"There are conservative states that are not putting this on the ballot in the near future," said Scott Greiper, founder and president of Viridian Capital & Research. "They are far away from legalizing despite the allure of revenues of marijuana sales."

Some $10 to $15 billion is expected to comprise legal sales in the next three to five years.

"States that are currently legalizing are slow rolling it in order to regulate the use and ensure a chain of custody, compliance and tracking," Greiper told MainStreet. The Viridian Cannabis Industry Report and Stock Index revealed that publicly traded marijuana stocks increased 848% in the first quarter of 2014 when Colorado legalized recreational use, but the sector has since dropped, ending the  first nine months of 2014 with a 147% gain.

"We see a shake-out coming as lofty valuations come down to reality, questionable operators are forced from the industry and the real winners in the sector become apparent," Greiper said. "This will accelerate the movement of more traditional capital sources into cannabis stocks."

About 60 marijuana related companies have gone public since 2012 when only 13 were listed on the exchange compared to 70 currently listed on the pink sheets.

"There's a lot of disbelief in the prospect of the management capability of public companies," said Michael Swartz, analyst with Viridian Capital & Research. "To bridge the gap and bring credibility, we've issued this research report that landscapes the industry so that institutional investors have an understanding of how marijuana companies are being valued to access the capital markets."

The top performing sectors of the Viridian Cannabis Stock Index include consulting services with returns of 665.5%, biotech at 339% and 135% for infused products.

"With broker, banker and analyst licenses with the SEC and FINRA, we transact all of our investment banking transactions through Pickwick Capital Partners, which allows us to act as an investment banker to these public companies," said Greiper.

Leading publicly traded consulting companies include Medbox (MDBX) and United Cannabis Corp. (CNAB).

"Entrepreneurs wanting to launch a marijuana business need consulting services to apply for a license and once they get a license, they need help identifying real estate buildings that are compliant with zoning requirements and state regulation," Swartz told MainStreet.

The highest performing biotech publicly traded marijuana companies include Abattis (ATTBF) and Cannabix Pharmaceutical (CNBX).

"There are biotech companies and scientists who are creating formulations of different strains of cannabis that are relevant to medical marijuana patients that investors find interesting," said Swartz.

Among the top performing infused products and extracts companies are Cannabis Sativa (CBDS) and Green Cures and Botanicals (GRCU).

"We expect that as more recreational states open up, this sector will grow more," Swartz said. "In Colorado, we're seeing a lot of tourism. People are coming from out of town to try legal marijuana but they don't want to smoke. They use vaporizers, edibles or candy and there's a lot of demand for that."

Although Viridian itself doesn't invest principally, the company engages with smaller private equity firms, sector focused funds, hedge funds and family offices.

"They are our base of investors that we have been raising money from to invest in marijuana publicly traded companies," said Greiper.

--Written by Juliette Fairley for MainStreet