Marijuana stocks have become increasingly popular in the last few months, in part, due to the upcoming October legalization of cannabis in Canada, becoming the first G7 country to fully legalize the drug. Many U.S. cannabis businesses who are not eligible for American markets are racing to list themselves in Canada before October legalization takes place.
This action has had a major impact on the industry worldwide, as many new players look to capitalize on this emerging billion dollar market, and see it on the horizon here in the United States.
Another reason that pot stocks have done so well recently, has to do with the major partnerships that are being formed. Early last month, Constellation brands took a $4 billion dollar stake in Canopy Growth Corp, one of the largest manufacturers of cannabis in the Canadian market.
Constellation brands is a beverage maker with a portfolio that includes both the Modelo and Corona beer brands. With an option to purchase a controlling interest in Canopy Growth, Constellation brands will be developing cannabis infused drinks to be sold all over Canada.
Wednesday saw new highs for many cannabis businesses like Tilray, Cronos and Canopy Growth, and can be attributed to comments made by Constellation Brands Chief Operating Officer, Bill Newlands.
While speaking at an industry conference in Boston, Newlands was quoted as saying:
"We think this is going to be a big business worldwide. This is not going to be limited to Canada. This will undoubtedly be a market that develops in the United States. It's developing around the world in places like Germany and Australia and other markets." (bloomberg.com)
These gains come at a time where marijuana businesses are under increased scrutiny by investors. One of its most outspoken critics, Citron Research, has made several claims that Tilray is overvalued. Tilray soared over $95 by midday Wednesday. Since its IPO in mid July, Tilray's stock has risen 250% and is the most expensive offering in the space.