California was the first state to legalize medical marijuana back in 1996. To date, a total of 29 states, as well as the District of Columbia, have laws legalizing weed in some form, or are in the process of implementing the relevant legislation. Infographic courtesy of Statista.

While the majority of the 29 states with marijuana liberalization laws restrict the use of the drug to medical purposes, the recreational use of weed is now legal for adults in DC and eight states: Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon and Washington.

The US legal marijuana market was worth an estimated $6.7 billion (£5.17bn) during 2016. Experts predict the legit weed industry will generate a staggering $50 billion (£39bn) a year by 2026 – this figure could go even higher if other US states follow suit and legalize the drug.

The legal marijuana industry employs 150,000 people in the US, and experts predict this figure could double or even triple in the next few years – as many as 450,000 new jobs could be created by 2026.

Analysts have likened the burgeoning legal cannabis industry to the dotcom boom, the cable TV bonanza of the 1990s, or the buoyant broadband internet market in the 2000s. Last year, the US weed market grew by 30%, and annual growth is predicted to balloon in the coming years.

Needless to say, investors, entrepreneurs and companies have been scrambling for a piece of the action. Serious money is being made from the growth and sale of medical and recreational marijuana, not to mention all the paraphernalia surrounding the drug, and even things like beauty products, cannabis gyms and weed social networks.

The rewards may be lucrative but starting up a legal marijuana business doesn't come without its unique challenges. Regulation is especially tight and weed businesses pay taxes on gross rather than net profit. On top of that, few banks will lend to marijuana-focused companies while the drug remains illegal federally.

Despite the business challenges, attractive investment opportunities are plentiful in the marijuana market right now. Many big mainstream companies are avoiding cannabis-related investments at present because of the drug's illegality under federal law, so a higher proportion of small-scale investors are reaping the rewards.

As well as directly investing in marijuana-related businesses, investors can buy shares in the leading cannabis companies. Indexes like the Viridian Cannabis Stock Index and the North American Marijuana Index track the principal stocks operating in the lawful cannabis industry in the US and Canada, which have been on the up in recent years.

Privateer Holdings, the world's first private equity company devoted exclusively to the legal marijuana industry, launched in 2011. Its acquisitions include: leading cannabis review website Leafly; Marley Natural, the official Bob Marley marijuana brand; and Tilray medical cannabis. A number of similar weed-friendly private equity firms have sprung up since, including Seventh Point and Tuatara Capital.

Online marijuana trading platforms such as Colorado's Cannabis Commodities Exchange and Amercanex, which operates in Colorado and California, already exist and it could only be a matter of time before a cannabis futures market is established.

Investors could reap bumper returns if they put their money in the right companies. Shares in firms involved in the marijuana industry grew by 175% last year and the forecasts are looking rosy for 2017 and beyond.

According to the Viridian Cannabis Stock Index of 75 companies, businesses involved in the production and distribution of medical marijuana are the most profitable. This lucrative sector experienced growth of 413% in 2016.

Last December, Viridian revealed the 10 largest companies in North America's marijuana industry. Unsurprisingly, a firm involved in the production of medical cannabinoids, GW Pharmaceuticals, topped the list. The market cap price of the company hit $2.87 billion (£2.21bn) in 2016.

Among the top 10 largest marijuana companies, nine focus on marijuana for medical or biotech purposes. Just a single company is involved in the production of recreational weed: Canada's Canopy Growth.

GW Pharmaceuticals makes the bestselling Sativex mouthspray, a cannabinoid-based product, which is used to treat pain. The drug is available on prescription in a number of countries worldwide, including the US, Canada, the UK and Spain.

Other best-selling medical marijuana products include Unimed Pharmaceuticals' anti-nausea, painkilling and appetite-stimulating drug Dronabinol/Marinol and Nabilone/Cesamet, a drug for chemotherapy-induced nausea, which is manufactured by Valeant Pharmaceuticals International.

Given marijuana is illegal to import or transport within US states, even between states that have legalized the drug for recreational use, all legal weed sold in a state must be grown there as well. This rule is unlikely to change unless cannabis is legalized on a federal level.

California's so-called Emerald Triangle in Northern California is America's largest cannabis-producing area. The region, which encompasses Mendocino, Humboldt and Trinity counties, is renowned for its high-quality organic marijuana.

Colorado boasts America's biggest open-air legal marijuana farm. Los Suenos in Pueblo Country, which is located in the south of the sun-kissed state, sprawls over 36 acres and features 34,000 square feet of greenhouses.

The Massachusetts Medical Cannabis Center, America's largest medical marijuana farm and processing facility, is set to open later this year in New England. Currently under construction, the one million square-foot production center is being built by Colorado medical marijuana firm AmeriCann.

Retail medical and recreational marijuana products are available from dedicated dispensaries in the states where their use is permitted. The largest dispensary in the US, Harborside in Oakland, California, is a sprawling superstore that has been dubbed 'the Wal-Mart of weed'.

Likewise, America's largest chain of dispensaries Native Roots, which is based in Colorado, has attracted the moniker the 'Starbucks of pot', thanks to its many branches scattered across the state, numbering nine in total.

Takeout marijuana is available in certain states too. Medical marijuana patients in California, for instance, can order the drug online from SpeedWeed, the state's largest medical cannabis delivery service, or from a similar online supplier, and have it delivered to their doorstep on demand.

Colorado's Dixie Edibles is the number one manufacturer of cannabis-infused edibles in the US. The Bhang Corporation, another leading edibles firm, is based in California and specializes in gourmet space chocolate.

A bewildering array of paraphernalia surrounds the use of marijuana, from bongs and pipes to rolling papers, and online headshops like Marijuana Packaging and Grasscity are cashing in on the legalization of medical and recreational weed as a result.

Vaping is the preferred mode of use for many cannabis consumers, both medical and recreational. O.penVAPE is the leading provider of cannabis vaporizer pens and cartridges, and produces the most advanced vaping products on the market.

Providing the necessary fertilizers and equipment for hydroponic marijuana growing for industrial and home growers is another potentially profitable endeavor. A total of 16 US states now permit home cultivation of marijuana with a limit of up to 12 plants per adult.

Though small-scale companies dominate the market, this is one of the few areas where big business is making inroads. Scotts Miracle-Gro recently invested $400 million (£309m) in pot-friendly hyrdroponics, and saw its share price surge to record levels.

Hemp is part of the cannabis family but, unlike marijuana, it has zero pyschoactive properties. Although trials are underway in several states, the cultivation of industrial hemp is not currently legal in the US. The country imports most of its industrial hemp from Canada.

Hemp has over 25,000 commercial uses, from clothes and rope to plastics and paper, but beauty products are the most profitable. The hemp industry in the US was worth $573 million (£442m) in 2015, with personal care products making a sizeable chunk of the market, and is poised to grow by at least 10% in 2017.

Mainstream beauty brands have embraced non-pyschoactive cold-pressed hemp oil. The oil, which has excellent moisturizing properties, is used in everything from The Body Shop products to supermarket own-brand haircare serums.

Cannabidiol (CBD) extracts, which are pyschoactive, are a different thing altogether. They are increasingly being used by specialized beauty companies such as Apothecanna in states that permit the recreational use of marijuana. The leading Denver-based firm makes and markets a selection of CBD body cremes, hydrating oils and moisturizing sprays.

Cannabis activist Steve DeAngelo has been described as 'the gatekeeper of the industry'. DeAngelo is the founder and CEO of California's Harborside dispensary and a co-founder of marijuana-based investor network the ArcView Group, which invested $45 million (£35m) in 66 companies during 2015.

ArcView's CEO Troy Dayton, venture capitalist Justin Hartfield and Brendan Kennedy of Privateer Holdings are the cannabis industry's investing superstars. Billionaire PayPal co-founder Peter Thiel (pictured) recently pledged millions of dollars in funding for Privateer.

Peter Thiel isn't the only pro-cannabis billionaire out there. George Soros and Sean Parker have bankrolled legalization campaigns in several states, Bill Gates's Microsoft is partnering with a company that sorts pot seeds and Virgin Group founder Richard Branson has expressed an interest in investing in the legal marijuana market.

Celebrities are also getting in on the act. Snoop Dogg has his own weed line called Leafs by Snoop, Bethany Frankel has launched her Skinnygirl line of marijuana products, which are designed to prevent the munchies, and Willie Nelson has Willie's Reserve pot products.

Tommy Chong has Chong's Choice range of cannabis products, Wiz Khalifa has put his face to several marijuana lines and former NFL star Ricky Williams recently opened the world's first cannabis gym in San Francisco called Power Plant.

Self-styled 'potrepreneur' Jane West has featured on several cannabis industry power lists. West has her own successful edibles company and co-founded Women Grow, America's leading business support organization for female potrepreneurs.

Another industry mover and shaker, business leader Wanda James is the queen of multitasking. The cannabis entrepreneur runs Denver's Simply Pure Dispensary, owns a restaurant, heads leading advocacy organization the Global Cannabis Initiative, and is poised to open a marijuana cookery school.

The marijuana media has gone from underfunded and underground to revenue-rich and relatively mainstream in the past few years. Leading the way is High Times, which experienced a surge in readership and ad revenues under the leadership of the late Michael Kennedy, who died last year.

The largest cannabis-related website and mobile app in the world, Leafly is the 'Yelp of weed'. The Privateer Holdings-owned website and app let users rate and review different strains of cannabis and dispensaries worldwide, and counts millions of users. The app was voted app of the year in 2014 by Geekwire.

California may have only recently legalized marijuana for recreational use, behind Colorado and Washington, which passed the relevant legislation in 2012, but it collects the most marijuana taxes – revenues are expected to top $1 billion (£770m) a year from 2018.

The tax money will be spent on a variety of good causes, from drug rehabilitation and educational projects to law enforcement, health resources and infrastructure, mitigating any social harm liberalization may cause.

The legal marijuana industry is already denting the profits of the illegal growers and cartels south of the border. In 2015, cannabis seizures, a reliable indicator of the volumes entering the country from Mexico, fell to their lowest level in a decade.

People in states like California are avoiding illegal weed and flocking to legal dispensaries, which offer better quality marijuana grown without the use of toxic fertilizers or the association with organized crime. Unlike the failed War on Drugs, the liberalization of cannabis is having a real impact on the illegal trade of the drug.

On top of that, wholesale marijuana prices have fallen significantly over past few years, down from around $75 (£58) per kilo in 2014 to just $35 (£27) in 2016. The fall in price is another blow for the illegal trade, which is increasingly turning to drugs such as heroin and meth to make up the shortfall.

Donald Trump is all about letting individual states control regulation of the drug and has promised to support the liberalization of medical marijuana “one hundred percent”. However, Jeff Sessions, Trump's choice for attorney general, is no fan of cannabis legalization. Exactly how much of an impact his views will have on policy remains to be seen.