Cannabis stocks are rebounding following Canopy Growth's $4 billion investment from Constellation Brands and plans for a closer partnership with the US alcohol distributor.
The largest cannabis ETF, the Horizons Marijuana Life Sciences Index) is up 10% this morning paring decline in the industry so far this year, which previously dropped from a high of $20.52 in January to just $11.16 earlier this week. The ETMG Alternative Harvest ETF has risen nearly 4% on Wednesday, reflecting a broader investor confidence in the cannabis market.
"This deal will undoubtedly lift the state of, and further investment in, the global cannabis sector," Asher Troppe, chief executive officer of Tress Capital LLC, told Real Money. "At some point we mature and growth slows of course, but right now mass mainstream penetration is only beginning and the initial global legal cannabis infrastructure is being laid down. These are the pioneers."
Canada's cannabis names rebounded even more on Wednesday, after Ontario province announced a change in recreational marijuana sales policy implementation earlier this week. The new legislation sets online-only sales for October 17, the original legalization date, and pushes retail sales to April 1, 2019.
The news dropped the Canadian Cannabis LP Index to below $725 on Tuesday, less than half of its 52-week high. The rebound, which can credit Canopy as a catalyst, has brought the index rising again back up to $777.69 this morning.
Other notable movers in the Canadian market included Aurora Cannabis, which jumped over 15% today, Aphria Inc. which has risen over 10%, and Hydropothecary Corp. which rose over 6%.
Each of these companies have pursued partnerships with beverage distributors in Canada.
Constellation's interest in growing its cannabis operation that has given investors confidence in the industry in Canada as it stands, with the possibility of extension to the larger US market making investment very attractive.
"Currently, 30 states as well as Washington, D.C., have laws broadly legalizing marijuana in some form," says RBC Capital Markets's senior associate Steven Shemesh in a research note on Wednesday. "Given rising public support (or indifference) we expect more states to follow suit throughout 2018 and beyond."
- Kevin Curran co-wrote this article.