The head of the world’s biggest pot company expects other Canadian cannabis firms will follow Canopy Growth Corp.’s (WEED.TO) U.S. strategy after it acquired the right to purchase Acreage Holdings Inc. (ACRGu.CD) last week, and said they’ll be “doomed" if they only focus their efforts domestically.

Canopy Growth’s US$3.4 billion pending takeover of Acreage – a deal that Co-Chief Executive Officer Bruce Linton said has been in the works since November – is conditional until it is federally legal for a Canadian pot company to operate in the U.S. But, Linton said the agreement was needed in order to enter the U.S. without “going offside” restrictions.  

“There’s only 36 million of us. Canada is a policy environment where you get to innovate, we get to regulate and we get to run a great business, but if you only stay in Canada you’re doomed,” Linton said during an interview with BNN Bloomberg’s Jon Erlichman Tuesday. “The rest of the world has a lot more people and what we have to do is take everything we learn and transport it to other markets. That’s why we’re in Europe. That’s why we did this for America.”

Linton also noted that now that the structure on how a Canadian company can enter the U.S. without running afoul of stock exchange or regulatory restrictions has been introduced, he expects his Canadian rivals to borrow a page from his playbook to enter the world’s biggest cannabis market

TMX Group, the operator of the Toronto Stock Exchange and TSX Venture Exchange, mandates that every issuer listed on its exchanges must comply with all the laws and regulations in the jurisdictions in which they operate. That means that pot companies can’t own any U.S. cannabis assets since the drug remains federally illegal in that country. However, the potential passage of upcoming U.S. legislation, such as the STATES Act, could make it federally permissible for Canadian pot companies to legally operate and own assets in the U.S. Linton said he got the necessary approvals to go forward with the deal through the TSX and New York Stock Exchange, where Canopy is dual-listed, in January.

“I expect others will follow,” Linton said. “It’ll probably be more costly. It’ll bring different players other than cannabis players, but I like moving first.”  

Linton said he doesn’t expect the U.S. to federally legalize marijuana anytime soon, but that it would likely enable states to give the green light to regulating cannabis companies in the near future.  

“The feds won’t tell every state that they’re the same. I think they’re going to do that over the next couple, few years [and] could be sooner,” he said. “We will work with [Acreage] to create a way more dominant [multi-state operator] so when that's made federally permissible, we can move in.”

Until then, Canopy will be able to provide Acreage with its various intellectual property, brands and other “trade secrets” it’s able to deploy in Canada but it won’t be able to govern how Acreage operates once the deal is approved by shareholders, Linton added. Acreage CEO Kevin Murphy told Bloomberg News Monday that the deal means it adds US$1.4 billion of capital through a share issuance program that it can now use to acquire other companies in the U.S. and consolidate that market.

“There are Tweed stores in Canada, and I would expect there to be Tweed trademarked brands in the U.S.,” Linton said. “You just start peeling back what other virtues we’ve gained back in Canada and other parts of the world by sending a few billion dollars and doing things at scale.”