People walk by the New York Stock Exchange on November 16, 2017 in New York City. Spencer Platt/Getty Images

The marijuana industry has been absolutely kicking butt and taking names since the beginning of 2016. Many of the best-known growers have delivered triple- or quadruple-digit percentage gains for investors on the heels of the legalization of recreational weed in Canada. Although it's going to take the legal cannabis industry time to expand its production capacity, we could be looking at an industry capable of $5 billion or more in added annual sales by early next decade.

This article originally appeared in the Motley Fool.

With the cannabis industry maturing and proving to be a viable and investable industry, the companies themselves are moving on to the next phase of their development. In many instances, we're seeing spending that focuses on brand building, marketing, international expansion, and acquisitions.

Uplisting to major exchanges is all the rage among pot stocks

Another trend that's picked up in recent months is that of pot stocks uplisting from the over-the-counter (OTC) exchange to more reputable exchanges, such as the New York Stock Exchange (NYSE) or Nasdaq (NASDAQ:NDAQ) .

There are a number of incentives for marijuana stocks to uplist to more reputable exchanges. To begin with, there's the added validity of being listed side by side with time-tested businesses on a major exchange. Secondly, not all financial institutions are allowed to invest in, or offer coverage on, companies that list on the OTC exchange. By moving to the NYSE or Nasdaq, pot stocks hope to draw more coverage, interest, and/or investment from institutions on Wall Street. And lastly, the listing standards on the NYSE and Nasdaq are more stringent than they are on the OTC exchange. This, like the first point, adds validity and can even improve liquidity.

Thus far in 2018, seven marijuana stocks have listed their shares on a major U.S. exchange, or announced their intention to do so. In July, Tilray became the first Canadian-based pot stock to IPO on a major U.S. exchange. The others to have made the move already include Cronos Group, Canopy Growth, Aurora Cannabis, and Aphria. Two others, HEXO and CannTrust Holdings, have announced their intention to make the move to the NYSE before the end of this year.

Why don't more marijuana stocks uplist?

You might be asking yourself: "With so many apparent advantages to uplisting, why haven't more marijuana stocks done so?"

For starters, as noted, the requirements to list on the Nasdaq or NYSE are considerably tougher than listing on the OTC exchange. If headed to the NYSE, uplisting companies will need to meet a minimum number of public shareholders, a minimum market cap of $100 million, a minimum share price of $4, and at least 100,000 shares traded on a monthly basis.

There are also financial standards that uplisting companies have to meet, which may include a certain amount of cash flow, earnings, or simply a company's length of operating history. Not all marijuana stocks meet these qualifications, which removes many from uplisting, even if they wanted to. And, it should be mentioned, even if a company were to meet these initial listing standards, there are other qualitative standards, such as corporate governance requirements, that could exclude marijuana stocks from being listed on the NYSE.

The second reason is sort of quirky. Since the U.S. federal government has held firm on its stance of marijuana as a Schedule I substance (i.e., entirely illegal, prone to abuse, and having no recognized medical benefits), the NYSE and Nasdaq have stood their ground on not allowing any marijuana stocks to list on their exchanges that do business in the United States.

Essentially, it's required pot stocks to make a choice: Either uplist to the NYSE or Nasdaq and reap the rewards of improved visibility, validity, and liquidity, but kiss the U.S. market goodbye until the federal government changes its tune, or forget about uplisting and attempt to infiltrate the burgeoning U.S. cannabis market. As a reminder, the U.S. market would probably dwarf Canada as the largest in the world, if it were legalized. Even so, with 32 states having given the green light to medical cannabis in some capacity, and 10 giving the OK to adult-use pot, there's ample opportunity for pot stocks willing to take the risk. This major market opportunity may simply not be worth passing up for some companies.

Don't look for these stocks to uplist anytime soon

One large marijuana stock that won't be looking for any near-term visibility on major U.S. exchanges is upscale retailer and grower MedMen Enterprises (NASDAQOTH:MMNFF) . MedMen was a logical choice to list its shares in Canada and on the U.S. OTC exchange given that it's currently operating 14 dispensaries in the U.S., along with a handful of grow facilities. The company is also in the midst of acquiring PharmaCann in a $682 million deal that'll add 18 retail locations, double the number of states it'll be operating in to a clean dozen, and increase the number of cultivation facilities to 13. Since the basis of MedMen's operations is within the U.S., neither major exchange would have allowed the company to list its shares.

Another company with no shot of near-term uplisting is KushCo Holdings (NASDAQOTH:KSHB) . KushCo would be a very logical candidate to uplist if it weren't so intricately tied to the U.S. cannabis market. The company is best known for providing packaging solutions to the global cannabis industry, including growers in the United States. With laws differing from state to state, and possibly even with municipalities, KushCo ensures that growers remain compliant with all applicable laws. It has a major opportunity in the U.S. to offer its packaging, branding, and marketing solutions to help businesses and their products stand out in a very crowded market.

In other words, uplisting probably isn't as cut-and-dried a topic as you'd think.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends CannTrust Holdings Inc, Hexo., KushCo Holdings, and Nasdaq. The Motley Fool has a disclosure policy.