Canopy Jumps 47% in One Day – Sets Stage for Next Huge Cannabis Rally

The Cannabis sector just delivered its best day of the year after the third largest US beer brewer invested a record $3.8 billion in the largest cannabis company in the world.

Canopy Growth Corp (CGC), the largest cannabis company in the world, set the cannabis sector on fire last week after announcing a groundbreaking deal.

Constellation (STZ), the third largest US beer company and brewer of Corona, invested $3.8 billion into Canopy in the largest deal ever in the cannabis sector.

If my analysis is correct – the stage is now set for a huge rally in the second half of the year with two huge profit triggers directly on the horizon.

Here are some more details from Bloomberg.

Constellation Brands Inc., which for seven decades has made its money off beer, wine and whiskey, sees its future in a marijuana leaf.

In the biggest (legal) cannabis deal, the Victor, New York-based beverage company will spend about $3.8 billion to boost its stake in Canadian grower Canopy Growth Corp., betting legalization will gain traction around the world and especially in the U.S.

“This is rocket fuel,” Canopy Chief Executive Officer Bruce Linton said on the company’s earnings call Wednesday. “We’re going to be way more global.”

Corona Beer Giant Puts $3.8 Billion Bet on U.S. Love of Cannabis

Make no doubt about it – this is a game changer – and possibly the single biggest catalyst that the cannabis industry has ever seen.

This good news sent Canopy and the broader cannabis sector soaring.

Canopy jumped 47% in one day and propelled shares into a new all-time high.

Despite the huge jump and new all-time high, I see more gains ahead with two more huge profit triggers on the horizon.

Canada Goes Legal on October 17: Canada is set to make history on October 17 when it will become the first developed nation in the world to legalize recreational cannabis. This is set to unleash a multi-billion dollar market virtually overnight. I also expect it to generate a huge amount of interest in cannabis stocks and trigger billions in new capital inflows.

5 US States Voting on Cannabis in Midterms: Five US states are set to vote on cannabis programs in the midterm elections in early November. This should provide another jolt to cannabis stocks.

Beyond Canada and the US, cannabis legalization is sweeping across the entire planet.

According to a new report, the global cannabis market could grow to $63.5 billion by 2024 from $14.3 billion in 2016.

That works out to a 21% compound annual growth rate. That is on par with the technology boom of the late 1990s.

What Should We Expect Moving Forward?

Despite the huge rally and promising outlook, the North American cannabis index is still trading 25% below the all-time high from January.

Many early industry leaders such as Aurora Cannabis (ACBFF) and Aphria (APHQF) are trading more than 40% below the 52-week high from January.

It looks like a great time to buy future industry leaders on a huge dip, directly ahead of these two major catalysts.

Michael Vodicka owns shares of Canopy Growth Corp, Aurora Cannabis and Aphria and Canopy call options.

About the Author

Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.