Marijuana News Today
In what is probably the most exciting edition of “Marijuana News Today,” we have Canopy Growth Corp (NYSE:CGC) up by as much as 30% after a massive investment from Constellation Brands, Inc. (NYSE:STZ).
The alcohol company Constellation Brands is putting another $3.8 billion into Canopy Growth after the two companies already joined together in a venture to produce cannabis-infused beverages.
“Over the past year, we’ve come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy’s market-leading capabilities in this space,” said Constellation CEO Rob Sands. (Source: “‘This is rocket fuel’: Constellation Brands spending $5 billion to boost stake in Canopy Growth,” Financial Post, August 15, 2018.)
Constellation will now have a 38% stake in Canopy in what is being described as the biggest investment in the marijuana industry to date.
“This is rocket fuel,” said Canopy CEO Bruce Linton said of the infusion of capital. “We’re going to be way more global.”
While Canopy Growth is already a global player in the marijuana market, with forays into locales from Columbia to Germany, the company has yet to enter the U.S. market—and refuses to do so until marijuana is fully legalized under federal law.
Linton said, however, that he believes that the U.S. may federally legalize marijuana “sooner than people think.” He also said that Canopy Growth is preparing to act when the ball gets rolling in that area.
While CGC stock was bolstered by about 30% following the news of the massive investment from Constellation Brands, STZ stock did not fare as well. Constellation stock declined by about eight percent following the deal’s announcement.
Aside from making our readers very happy (after all, I’ve been spouting my love of CGC stock for the past six months now), this deal is a massive win for the marijuana industry as a whole.
One thing that the pot sector has been pining for is more institutional investors. This is a global, growing, gain-filled industry that needs the appropriate amount of capital to fuel the rush.
Due to various marijuana laws across the globe, it has been difficult to secure capital because institutional investors don’t want to run afoul of the law. It’s a perfectly reasonable response to a product whose legal status is murky at best in many countries.
On top of that, there’s a stigma surrounding marijuana that influences investors on a more unconscious level.
In any case, large institutional capital is going to be needed at some point in order to grow the legal marijuana industry to its full potential.
The Constellation/Canopy deal is another great example of a big company putting its faith—and its dollars—into the marijuana sector.
Alcohol and marijuana companies working together is something we’re seeing more and more of, and it almost always results in stock price growth for the marijuana company.
Be on the lookout for more alcohol producers joining the marijuana industry through investments like the one that Constellation Brands just made.
Canopy Growth Stock
We couldn’t start the “Marijuana News Today” roundup of pot stocks any other way than looking at Canopy Growth stock’s huge breakout.
The CGC stock price was up about 25% as of this writing, dropping from the 30% high in gains it made earlier this morning. I believe that when all is said and done, we’re going to see gains from the stock to the tune of 15%–20% today.
The company, long-term, is still one of the gems of the industry.
The reason that Constellation Brands is putting billions of dollars into Canopy Growth is the same reason I’ve been very bullish on Canopy: the international focus. Canopy Growth knows that the future of the legal marijuana industry is global, and the company is doing everything it can to position itself as the premier global player.
As such, the potential for growth from CGC stock is far beyond what we’re seeing now. The massive investment from Constellation Brands is just more proof that Canopy Growth is gaining the attention of the big players on the stock market and will continue to do so as the company expands.
While it was hard to compete with CGC stock this morning, Cronos Group Inc. (NASDAQ:CRON) had a fine start to trading as well, up about seven percent.
While CRON stock does not have any earth-shattering news to share, the company was able to register very solid gains this morning.
Cronos stock is usually the beneficiary of bull rushes anywhere in the marijuana stock market due to its presence on the Nasdaq. When U.S. investors, for instance, get all giddy seeing Canopy Growth stock soar, they naturally look for other places to invest in the marijuana market. CRON stock is naturally one of the most alluring options.
As they say, a rising tide lifts all boats, and we’re seeing that across the marijuana industry today. Hydropothecary Corp (OTCMKTS:HYYDF, TSE:HEXO) was up by over eight percent this morning.
HYYDF stock is likely the beneficiary—similar to CRON stock—of a massive amount of goodwill hitting the cannabis industry following the Constellation Brands deal.
Another thing in Hydropothecary stock’s favor is that the company is also among the few marijuana stocks to have landed a massive alcohol deal.
HYYDF stock was bolstered immensely by a deal it signed with Molson Coors Brewing Co (NYSE:TAP) earlier this year.
As I mentioned earlier, alcohol/marijuana deals have so far been extremely lucrative for the pot stocks on the receiving ends of those deals.
With the buzz surrounding CGC stock, investors are going to be on the lookout for other marijuana companies that could see big investment deals from alcohol company partners. That leaves them with one viable option: Hydropothecary stock.
CGC, CRON, & HYYDF Stock Performances
Check out the chart below of the recent performances of Canopy Growth stock (black line), Cronos stock (blue line), and Hydropothecary stock (red line).
Chart courtesy of StockCharts.com
The marijuana news today is about as exciting as it gets, with billion-dollar investments and double-digit gains coming in hard and fast.
The true value of the Canopy Growth/Constellation Brands deal is what it means for the cannabis industry long-term.
Massive institutional investment is going to come…eventually. What we need to see are laws being rewritten to allow the marijuana industry to thrive as it most certainly can.
Today marks an important step on the path toward more capital being infused into the cannabis sector. It also marks another big win for the future of cannabis-infused beverages, another subsector of the marijuana market with huge potential.