While I analyze the entire legal marijuana industry—both U.S. and Canadian pot stocks—there’s a fundamental difference between the two. The simple fact is that what’s good for U.S.-based pot stocks may actually be bad for Canadian weed stocks, and vice versa. As a marijuana stock investor, it’s important to understand what those opposing forces are and how you can profit.
The most important future event for the global marijuana industry is the inevitable federal U.S. marijuana legalization.
And for the first time in modern history, it’s safe to say that American marijuana legalization is on the way. We’ve seen popular support surge (over two-thirds of Americans support legalization in some form), and that popular support is finally being reflected in the political sphere.
We’ve been seeing members of both major U.S. political parties express support for federal legalization. We’re not quite at critical mass yet, but we’re quickly approaching that point.
The only thing that remains to be determined is the exact date of legalization. And that date matters.
As it stands, U.S. federal law prohibits Canadian pot companies from entering the U.S. market. There are a few reasons for that, but the main one is that the borders are federally administered and, as far as the feds are concerned, marijuana remains illegal.
And there’s another issue at play. Ever notice that no major U.S. pot stock is listed on the Nasdaq or New York Stock Exchange? The reason is that U.S. federal law prohibits companies that trade in domestically illegal goods (which, again, marijuana remains in the eyes of the feds) from listing on the two major stock exchanges. (Source: “If You Want to Get Rich With Marijuana Stocks, You Need to Know the Crucial Difference Between U.S. and Canadian Companies,” MarketWatch, February 23, 2021.)
So, as long as marijuana is illegal in the U.S. at the federal level, Canadian pot companies will not be able to make concentrated inroads in the U.S. market.
Considering how well-capitalized Canadian marijuana companies are, they could easily acquire a number of smaller U.S.-based pot companies and leverage their production capacity in Canada to expedite what could easily become a global marijuana industry leader.
But the longer it takes for American legalization to be passed, the more time U.S. pot companies have to develop in their own right, unharried by Canadian competition.
U.S. companies like Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF) are already beginning to challenge heavy hitters like Canopy Growth Corp (NASDAQ:CGC) for marijuana industry dominance, and Curaleaf resides in a country where the drug is technically illegal.
Given more time, it’s easily imaginable that CURLF stock could become the world leader in the marijuana industry by revenue and profit, seeing as how the company has access to the largest marijuana market in the world (California alone is larger than the Canadian market).
Curaleaf stock has long been one of my favorite marijuana stocks, irrespective of country. But given the context I’ve laid out above—every day that American legalization is delayed is another day that younger U.S. pot stocks have to mature in the already robust American pot market—it looks like CURLF stock may soon be the dominant force in the industry.
Chart courtesy of StockCharts.com
Curaleaf stock is already up big-time in 2021, and it’s outpacing its Canadian competitors.
What’s more, CURLF stock has the ability to expand for many years to come as, state by state, marijuana legalization gets passed in the U.S. By capitalizing on each state’s market, Curaleaf Holdings Inc can grow in stages rather than in the rush that would necessarily follow federal American pot legalization.
What could end up happening is that, with each new state legalizing marijuana, Curaleaf stock will see a steady surge upward, continuing all the way until federal legalization arrives—at which point the dam will break and massive gains will flood in.
That scenario is very possible, and one in which exponential gains are practically assumed.
What’s more, CURLF stock cannot register on a major stock exchange yet, and until it does, it will be closed off to the general populace, as many retail investors refuse to trade on over-the-counter markets.
The new influx of capital (including increased institutional investment as legalization rolls around) could mean another huge opportunity for massive gains.
So I’m very bullish on Curaleaf stock, and that bullishness only grows with each passing day.
The last thing I want to clarify is that, while Canadian pot stocks would benefit from a more immediate federal U.S. marijuana legalization and would be impeded by prolonged prohibition, that doesn’t make them losers.
There will still be plenty of room for Canadian marijuana companies to acquire smaller U.S. pot companies, giving them quick access to the American market.
I’m simply stating that there’s more potential for gains from U.S. pot stocks the longer federal prohibition continues.
Conversely, if U.S. legalization were to come tomorrow, I’d anticipate Canadian pot stocks surging in value as Canadian marijuana companies go on a buying spree of U.S. marijuana companies.
Nevertheless, that doesn’t mean American pot stocks like CURLF stock would suddenly lose all their potential.
With so much regarding U.S. marijuana legalization still up in the air, it’s clear as day that there’s a lot of potential locked within the top pot stocks in Canada and the U.S.
While there’s enough room for pot stocks from both countries to thrive, the longer the U.S. remains a marijuana-prohibition nation at the federal level, the more time U.S.-based marijuana stocks will have to establish themselves as the dominant force in the market and be less susceptible to being dethroned by Canadian marijuana stocks.
Alternatively, if federal U.S. legalization arrives sooner than expected, we’ll likely see Canadian pot stocks explode in value as Canadian pot companies go on a buying spree of American pot companies.