Like any other cannabis producer based in the U.S., Curaleaf Holdings Inc. operates illegally, but that didn’t stop the company from listing its shares on a Canadian stock exchange Monday with a $4 billion valuation.

The company’s 28 pot shops and 12 production sites spread across 12 states all violate U.S. federal law, which is why the company started trading Monday on the Canadian Securities Exchange — other major exchanges in Canada and the U.S. will not accept listings from companies that are openly breaking laws.

Even though Curaleaf runs afoul of federal laws in the U.S., the CSE allows it and other U.S.-based cannabis producers to list shares on the exchange. A CSE listing does not receive as much oversight as stocks traded on major U.S. exchanges or the Toronto Stock Exchange, or TSX, which requires more disclosures.

“Many U.S. companies have gone to the CSE to raise capital, it’s the most logical place to go at this point, it’s becoming sort of the index of choice for U.S. cannabis operators that are ‘touching the plant,’” Curaleaf Chief Executive Joe Lusardi told MarketWatch in a telephone interview Monday. “We cannot list in the U.S. at the moment, or the TSX, so it was the most logical place to go.”

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“Touching the plant” is marijuana industry jargon for companies that grow, distribute or sell actual pot, and Curaleaf appears to do plenty of that. The company currently has operations in states like Florida, New York and Oregon, where it grows weed, processes it and sells pot in Curaleaf-branded stores. At the moment it’s operating in several states that have passed medical cannabis laws, and is trying to expand into states such as California, where pot for adult recreational use has been legalized. Currently, Curaleaf can produce 63,000 pounds of dried cannabis flower at its 12 facilities, according to documents filed with the CSE.

In many ways Curaleaf is similar to Canopy Growth Corp. CGC, -0.70% , one of Canada’s largest licensed cannabis producers: Both companies aim to dominate private retail sales where possible and are vertically integrated. Other potential rivals such as Aurora Cannabis Inc. ACB, -2.88% and Cronos Group Inc. CRON, -0.97% have taken a different approach to retailing their weed.

When asked about the difficulty of operating a business that is illegal under U.S. federal law, Lusardi said, “There is certainly a conflict between federal and state law. In all of our operations, we operate fully in compliant with state law. In each market that we are in, cannabis doesn’t cross state lines, we operate under the rules. It’s a state-by-state operation.”

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Monday’s listing was completed via a reverse takeover in which Curaleaf merged with Lead Ventures Inc., and the company also raised $400 million in a private placement. Curaleaf plans to spend a portion of that money on acquisitions. In a document filed with the CSE, the company outlined that it plans to make acquisitions in Maryland, Massachusetts, Nevada and Arizona for a total of roughly $83.5 million. It further plans to spend $80 million on expanding its cultivation facilities.

“If you look at our offering today, we issued a full prospectus which was IPO-like in its quality, even though we did a [reverse takeover],” Lusardi said. “We made a tremendous amount of disclosure and we got an overwhelming reception from the investing community — we took institutional money from over 100 firms, we feel that we did a high-quality offering and we’ll be able to create a lot of value for shareholders on the CSE.”

GMP Securities analysts Robert Fagan wrote in a note to clients Monday that he expects potential total sales from Curaleaf’s existing facilities to be roughly $491 million. In the fiscal second quarter, Curaleaf banked sales of $14.6 million with adjusted losses of $10.4 million. One of the keys to Curaleaf’s success thus far is that it grows all of the cannabis that it sells in its various stores.

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In a note to clients Monday, Fagan wrote that Curaleaf has “emerged as a new industry leader” and is the largest public cannabis company in the U.S. Fagan rates the name a buy with a $20 target price.

Curaleaf sold shares at C$11.45 in its private placement. The stock began trading Monday at C$10 and closed the day down 27% at C$7.30, according to CSE data.