The cannabis sector offers a $200 billion global opportunity in the next decade, up from the roughly $8 billion that was generated in 2018 in federal legal markets and U.S. state licensed sales, Stifel analysts wrote Tuesday in a new report. Market leader Canopy Growth Corp. CGC, -1.96% WEED, -1.52% disappointed investors with weaker-than-expected earnings last week and mixed outlook, as elevated costs during the current investment phase lowered gross margin forecasts, said the report. "While the near-term execution at Canopy is underwhelming likely driving a portion of the elevated expenses, we remain confident that Canopy is best positioned to tackle all avenues for growth in the $200 billion global category," the analysts led by Andrew Carter wrote in the report. In the same vein, Canada currently represents the most significant near-term opportunity, as the only G-7 country to have fully legalized cannabis last October. Stifel is expecting Canada to achieve C$10 billion in annual sales by 2023. "The market is quickly taking shape with the latest update from Stats Canada suggesting a C$ 900 million annualized market in April with sales in the month up 23% sequentially likely driven by the cannabis enthusiast holiday 4/20 and initial store openings in Ontario," said the report. But Canada sales will be eclipsed by the U.S. which offers a $100 billion opportunity over the next decade, the analysts wrote. That opportunity will change if federal rules are relaxed, which Stifel is expecting is at best a 2021 possibility. "While there has been a flurry of legislation in Congress with a number of items achieving success in the House of Representatives, we believe the political calculus of Senate majority leader Senator Mitch McConnell favors keeping any cannabis legislation from reaching the Senate floor for a vote," they wrote. "While cannabis enjoys bipartisan approval, we contend the issue of change at the federal level is not salient with American voters." The report noted the three companies that are expected to benefit from legalization in Illinois, which last week became the first state to legalize through the state legislature and not through the ballot box. Cresco Labs Inc. CL, +1.84% , Green Thumb Industries Inc. GTBIF, -1.93% and PharmaCann, the state's three medical operators, are expected to benefit. The ETFMG Alternative Harvest ETF MJ, -0.49% has gained 29% in 2019 to date, while the S&P 500 SPX, +0.63% has gained 18%.