Daily Management Review

New Highs Being Reached By Cannabis Shares


New Highs Being Reached By Cannabis Shares
Since the announcement of an investment of $4 billion by Corona beer maker in the Canadian cannabis company Canopy Growth, stocks dealing with marijuana have been soaring.
The shares of Canopy Growth - Rival Cronos Group, saw prices increase by over 40 per cent last week which includes a 11 per cent increase in a single day on Tuesday. Another company dealing in cannabis which went public just last month at the Nasdaq exchange - Tilray, saw its shares increase astronomically by 60 per cent with a period of just five days. There was a 10 per cent increase in the shares of the company on Tuesday alone.
Both the companies are Canada based and have clearly been able to draw the attention of investors result in both getting more interest after the news of the investment for increased by Constellation in Canopy Growth. The shares of Canopy rise by 30 per cent following the announcement of the investment.
The investors that are now backing Canopy Growth are putting their money behind their expectations that Constellation, a company that owns and runs a number of spirits and wine brands, would most probably eventually develop and launch beverages and other products that would be based on cannabis.
Such cannabis infused drinks would most probably not be allowed to be sold in the United States because cannabis is still a prohibited material under federal laws.
But such beverages and products can be launched in some other countries such as Canada where the government has legalized recreational cannabis usage since October of 2017 and this is also another potential reason that the sticks of the cannabis companies have been rising.
The legalization of cannabis in Canada is an attribute that companies like Cronos and Tilray, as well as Canopy, are looking out to take advantage of. This has led to a number of announcements by the companies about their future plans.
For example, announcement of supplying of marijuana for the Ontario Cannabis Retail Corporation through its High Park Holdings affiliate was recently announced by Tilray. The Marley Natural, Irisa and CANACA brands are being planned to be used by Tilray to sell products.
the Ontario Cannabis Retail Corporation would be the front for the sale of the products by Cronos, the company said Tuesday. The company is also in possession of agreements of selling recreational cannabis in the Canadian states of British Columbia, Nova Scotia and Prince Edward Island.
In another announcement by Canopy Growth subsidiary - Tweed, the company said on Monday that since October 2017, it also has with it an agreement for selling pre-rolled joints, dried flower, oils, and softgel capsules in Ontario.
There is an expectation among investors that there would be demands for legalization of recreational marijuana in other countries including in the United States following the legalization in Canada.
However, it appears that some investors are convinced to invest in cannabis dealing companies by the investment announcement by Constellation in Canopy.