Expansion into the U.S. pot market is a key area of focus for Canadian marijuana producer Canopy Growth (NASDAQ:CGC). The company was working on deals to enter the U.S. well before its peers explored this opportunity. In 2019, it inked a still-pending deal with multi-state operator Acreage Holdings to accelerate its growth into the market, but that deal will only happen if and when the U.S. opens for business through federal legalization.

This month, Canopy Growth announced yet another move into America. But this deal doesn't need to wait for marijuana legalization.

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Canopy Growth launches CBD vapes in the U.S.

On Sept. 14, Canopy Growth announced that it would be launching its first-ever cannabidiol (CBD) vape product, the whisl. The product has options that allow users to control their desired effect, whether it's to focus, relax, or wind down.

How can Canopy Growth do this, since marijuana is federally illegal in the U.S.? These products do not contain any tetrahydrocannabinol (THC), the psychoactive component of cannabis. While CBD isn't entirely legal, it is allowed as long as it is derived from a hemp plant -- which it is for these vape products. In 2018, the U.S. legalized hemp-based products under the Farm Bill.

Included in the news release was even more promising news: Canopy Growth will sell these products in more than 3,000 U.S. Circle K stores in a partnership with global convenience store giant Alimentation Couche-Tard (OTC:ANCU.F). This chain is no stranger to cannabis, as Couche-Tard owns a near-20% stake in marijuana retailer Fire & Flower, which has stores all across Canada. 

Paving the way for bigger gains 

The hemp-based CBD market is legal, but it isn't a significant growth opportunity, nor is it a new business unit for the company. Canopy Growth currently includes sales from any revenue it earns from the segment (including any sales it makes within the U.S.) in its "international and other" line item.

In its most recent results, for the period ending June 30, that line totaled just 19.4 million Canadian dollars and was down 8% year over year. It accounted for a little over 14% of its net revenue of CA$136.2 million. However, that also includes sales from medical marijuana in international markets. If hemp-based CBD products represented a significant chunk of revenue, Canopy Growth would likely have separated it out. The launch of the whisl product probably won't change the CBD story.

The bigger picture for Canopy investors is the growth in distribution channels. Canopy is positioning itself to be able to quickly profit from the U.S. market upon federal legalization. First, with its strategic relationship with beer maker Constellation Brands, which owns nearly 40% of Canopy. Secondly, with its Acreage deal waiting in the wings, contingent on the policy change. And most recently, by creating a presence in Circle K stores.

Is Canopy Growth a buy today?

From an investment standpoint, Canopy Growth isn't a great Canadian marijuana stock. Its revenue growth has been inconsistent and its high growth days are in the rearview mirror, at least until it can fully enter the U.S. market. And that's where the potential is with this stock. If you're OK with waiting, possibly multiple years, for the U.S. to federally legalize marijuana, then Canopy Growth could certainly be a pot stock worth buying today.

Shares of the company have fallen more than 45% this year (the Horizons Marijuana Life Sciences ETF is flat) as it has long been overvalued and arguably, it still is. That being said, at a price-to-sales multiple of less than 12, its valuation metric is moving closer to other Canadian pot stocks.

CGC PS Ratio Chart

CGC PS Ratio data by YCharts

Given the relationships and partnerships, it has in place, it's arguably worth a higher premium than its peers, anyway. For long-term investors, now may be a good time to consider buying shares of Canopy Growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. 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.