The incredible buzz around the potential for U.S. federal cannabis legalization for recreational use has resulted in a surge in demand for pot stocks — the likes of which we haven’t seen since the last legalization round in Canada.
Indeed, if the Biden administration does move forward with such legislation, the total addressable market for cannabis companies will become massive — absolutely massive.
The U.S. market is expected to be the largest legalized market for cannabis in the world. That is, assuming legalization takes hold in short order.
Accordingly, investors are getting their hands on as much U.S. pot exposure as possible today. Some Canadian-listed stocks are actually great plays in this regard. Indeed, Curaleaf Holdings (TSXV:CURA) has been one of my top cannabis picks for a while now for precisely this reason.
Here’s more on why Curaleaf should be atop all cannabis investors’ lists right now.
U.S. legalization seems like a sure thing
Nothing’s a sure thing in this world. Nothing.
That said, it’s looking like cannabis legalization in the U.S. will take hold.
Large states such as New York have recently announced plans to legalize cannabis for recreational use. Indeed, marijuana is legal in many states now, either for medicinal or recreational use. Federal legalization seems like the next logical step the federal government will make. A Democratic White House and Senate seem to make the likelihood great over the next few years.
Given this backdrop, companies like Curaleaf should outperform. Curaleaf is the largest U.S. cultivator and vertically integrated seller of cannabis in the United States. Indeed, its business model is one which appears sustainable, and its growth rate has been incredible.
As of Curaleaf’s most recent earnings report, this company generated revenue of $230 million. This amounted to a staggering year-over-year increase of 205%.
European acquisitions prompt further growth
If the U.S. market weren’t large enough, Curaleaf is tackling Europe now.
Indeed, the company’s $286 million deal to acquire Europe-based Emmac Life Sciences could indeed turn out to be a key stepping stone for Curaleaf in the giant European cannabis market. Post-acquisition, stakeholders can expect this company to expand its footprint into Germany, Italy, Spain, and other big markets. Other operations in Eastern Europe will extend Curaleaf’s reach further.
I think the upcoming acquisition indicates that Curaleaf has got its eyes on a bigger prize. This top player in the U.S. cannabis market aims to become one of the world’s biggest players.
In fact, I believe once legalization legislation is pushed through in the U.S., more E.U. countries may be quick to jump on the bandwagon to decriminalize recreational pot. More legalization means more profit for a company looking to be a top global player.
Want to play the cannabis space? Here's another top pick to consider right now:
Before you consider Aurora Cannabis, you may want to hear this.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Chris MacDonald has no position in any of the stocks mentioned.