The cannabis industry scored one of its biggest victories ever earlier this week.
Canada’s largest cannabis company announced a groundbreaking $191 million deal with the 3rd largest US beer company. Bottom line – this looks like a game changer. More on that below.
The good news sent shares of this young cannabis company soaring more than 30% in two days, delivering huge returns to shareholders.
Even better – the big jump sets the stage for more gains and a new all-time high by the end of the year.
Canopy Growth Corp (TWMJF), the largest cannabis company in Canada, delivered a grand slam for shareholders and the cannabis industry on Monday, announcing a groundbreaking deal that looks like a game changer for Canopy and the cannabis industry.
Canopy revealed that Constellation Brands (STZ), the third largest beer company in the US and distributor of Corona, bought a 10% stake in Canopy for $191 million. The plan is to synergize the two brands to develop and distribute cannabis drinks.
This Deal is Great News for 4 Reasons
This deal is groundbreaking and a major win for Canopy and the cannabis industry.
#1 It’s the first time a major alcohol company has invested directly in the cannabis industry. That is a game changer right there.
The synergy between cannabis and alcohol could be massive.
Getting big alcohol involved in cannabis is basically like pouring rocket fuel on the cannabis industry.
It introduces billions of potential new capital into the sector. Global alcohol companies are flush with cash and looking for new sources of revenue. Cannabis acquisitions make so much sense.
Large global alcohol companies also have amazing distribution networks reaching into almost every country in the world. If Canopy and other cannabis companies can piggyback off that infrastructure – it sets the stage for explosive growth that might actually be better than some of the most optimistic projections.
#2 It puts the pressure on every other global alcohol brand to start thinking about cannabis to keep up with the competition. This could open the floodgates for a flurry of new deals in the Canadian cannabis industry.
#3 The deal gives Canopy a huge injection of capital that it can us to fuel growth and expand operations.
#4 It gives the cannabis industry even more credibility as a major economic force.
Here’s a link to a story from Bloomberg with some more details: Alcohol Industry Targets Cannabis with Constellation, Canopy Deal
For the time being Constellation has no plans to sell cannabis in the US until it is fully legal at all government levels.
However, it’s obvious Constellation sees a major opportunity and is going for first mover advantage.
Shares of Canopy Jump 30% in Just Two Days
The good news sent shares of Canopy soaring, up about 30% in the last two days and hitting a new 52-week high.
Take a look below.
Canopy and Cannabis Stock Trades Members
Cannabis Stock Trades added Canopy Growth Corp to our buy list on January 3.
Canopy was also my personal #1 cannabis stock pick for 2017. Here’s a link to the video.
Those recommendations have been profitable for Cannabis Stock Trades members.
Shares of Canopy have risen 81% in 2017 and are up more than 150% from the 52-week low.
If you’re looking to profit from cannabis stocks, a CST membership is the easiest way. See Member Features to learn more.
What Can We Expect from Cannabis Stocks Moving Forward?
The cannabis sector is hot. The Canadian cannabis index is up more than 40% in the last three months. Many individual cannabis stocks, including Canopy and Aphria, are up more than 100% in the last three months.
Despite the strong performance, I am expecting more gains.
The Canopy news sets the stage for Canopy and the broader cannabis sector to finish an already strong 2017 on a high note.