Forget the crypto counters or China concept stocks like Nio or Pinduoduo. The red-hot names in the US market right now are cannabis plays.

Take a look at Tilray, the Canada-based marijuana producer that went public two months ago.

On Wednesday, the pot firm saw its shares surge as much as 90 percent on the Nasdaq before settling at US$214, finishing with a gain of 38 percent for the day.

Investors who bet on the pure-play weed entity are laughing all the way to the bank as they have reaped more than 1000 percent return.

Given where it stands now, it is hard to believe that Tilray, which is headquartered in Nanaimo in British Columbia, offered its shares at just US$17 in its IPO in July.

The bitcoin-like surge in Tilray, as well as impressive gains in other cannabis-related stocks, has prompted analysts to warn of a new bubble, but for the moment the party is still very much on.

Marijuana legalization has emerged as a major theme in the market, and quite a few Canadian pot firms and entities associated with them have benefited from the new craze. 

Returning to Tilray, its latest rally came after news that the firm has won approval from the US Drug Enforcement Administration to bring in marijuana into the United States for medical research purposes.

Expectations that authorities in the developed world will ease their laws and allow cannabis for recreational or medical use have prompted investors to flock to the so-called pot stocks in recent months.

Tilray’s Nasdaq float came after other Canadian marijuana names such as Cronos Group and Canopy Growth began trading on US exchanges earlier this year by way of secondary listings.

Canada became the second country in the world, after Uruguay, to formally legalize marijuana after the parliament in June passed a historic bill to permit recreational use of weed nationwide.

In the US, a few states and the District of Columbia currently permit recreational marijuana use, while several allow its use for medical purposes.

Observers believe many more jurisdictions will turn lenient on pot in the near future.  

Given the expected rise in consumption, marijuana firms have become red-hot investment targets.

With some big alcohol and beverage firms announcing investments or partnerships with cannabis producers, and due to speculation about potential M&A deals, pot stocks gained further momentum.

But the dizzying spurt in the share prices is prompting some analysts and traders to warn that it could be another bubble that will burst sooner or later.

Sean Stiefel, founder of Navy Capital, a New York-based hedge fund focused on the cannabis sector, said Canadian marijuana companies are “essentially just commodity producers”, pointing to lack of intellectual property from branding.

“We think things have gotten a little bit silly,” Stiefel told CNBC on Wednesday. “Valuations now have truly gotten ahead of themselves, and the retail investor here is now buying air, effectively.”

He may be right, but no one is betting yet that investors will come off their highs anytime soon. 

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