You've no doubt noticed that Canadian marijuana stocks are sizzling hot right now. Three stocks are performing especially well. Canopy Growth (NYSE:CGC) is up well over 80% so far in 2018. Cronos Group's (NASDAQ:CRON) share price has more than doubled this year. Tilray (NASDAQ:TLRY), which conducted its initial public offering (IPO) in July, has seen its stock skyrocket more than 170%.

Could these stocks move a lot higher? I think it's possible. In fact, I believe that Canopy, Cronos, and Tilray stocks could even double in value from current levels -- if one obstacle was removed.

Marijuana plants on top of five increasingly higher stacks of coins.

Image source: Getty Images.

One move would do the trick

All three of the companies currently sell medical cannabis in Canada. All three are in great shape to do well in the country's recreational marijuana market when it opens in October. Arcview Market Research and BDS Analytics have crunched the numbers and think that the total Canadian cannabis market should be in the ballpark of $5.4 billion by 2022. 

Canopy, Cronos, and Tilray are also going after global medical cannabis opportunities. Each company has especially targeted the German market, which represents the biggest international marijuana market outside of North America. Arcview and BDS Analytics think cannabis sales in Germany will approach $1.6 billion by 2022. 

In addition, the three marijuana companies are looking to other countries, such as the U.K. and Australia. However, if the projections from Arcview and BDS Analytics are accurate, none of these other countries will claim cannabis markets anywhere close to the $1 billion level within the next four years.

But there's one international market that neither Canopy, Cronos, nor Tilray has moved into yet. This one market is projected to total $22 billion or more by 2022. That's more than three times the estimated size of the Canadian and German markets combined. I'm referring, of course, to the U.S. market. If any of the three companies could aggressively expand into the U.S., my hunch is that we'd see its stock at least double.

The catch

If those kinds of enormous gains are that easy, why haven't any of the companies ventured into the U.S. market? It's complicated.

Canopy Growth stock is listed on the New York Stock Exchange, while Cronos Group stock is listed on the Nasdaq stock exchange. However, both companies also maintain their stock listings on the Toronto Stock Exchange (TSX). The TSX's listing requirements, though, prohibit members from having significant operations in the U.S. If Canopy or Cronos expanded into their southern neighbor, they'd likely lose their spots on the TSX.

Tilray, on the other hand, is listed only on the Nasdaq and not the TSX. So could Tilray jump into the U.S. marijuana market? Alternatively, could Canopy or Cronos give up their TSX listings and expand into the U.S.? Perhaps, but they'd also have to relinquish their U.S. stock listings.

There's a bizarre catch in place right now. A company like MedMen Enterprises, which is active in the marijuana retail business in the U.S., can't list on a U.S. stock exchange because it's violating federal laws by selling cannabis products. But MedMen has listed its stock on Canada's New Stock Exchange (CNQ), an alternative stock exchange for micro-cap and emerging companies in Canada. Meanwhile, Canopy Growth, Cronos Group, and Tilray had no problems listing on the major U.S. stock exchanges -- because they don't conduct business in the U.S. and aren't breaking any federal laws.

In theory, at least, Canopy, Cronos, and Tilray could list on the CNQ, forfeit their other listings, and jump headfirst into the U.S. market. I'm sure the CNQ would welcome them. However, it would be a big symbolic step down for the companies. Even worse, U.S. institutional investors that have poured money into the stocks would bail out. The bottom line is that the cure for the catch would be worse than the disease. 

Can the stocks double anyway?

My view is that the valuations of Canopy, Cronos, and Tilray stocks are already so high that we won't see any of them double from current levels. Canopy has already enjoyed its big catalyst with a $4 billion investment from Constellation Brands.

There's speculation that another big alcoholic beverage company, Diageo, could be in talks to find a cannabis partner. A deal with Diageo would almost certainly light a fire beneath Cronos or Tilray, but I doubt either stock would come close to doubling.

I don't think global cannabis markets outside of the U.S. will expand quickly enough to drive the stocks up 100% or more within the next few years. That leaves one option: a change to U.S. federal laws related to marijuana.

I wouldn't rule out the possibility that it happens. Public support for legalization has picked up momentum. More states allow legalized marijuana in some form than don't. President Trump has signaled his support for a change to current federal laws.

If the catch is removed, you can bet all of these stocks will skyrocket. In the meantime, I expect marijuana stocks, including Canopy, Cronos, and Tilray, will be quite volatile.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Diageo and Nasdaq. The Motley Fool has a disclosure policy.