Marijuana Stocks Extend Gains
Wednesday, Constellation Brands (NYSE:STZ) comments are driving marijuana stocks higher.
Marijuana stocks from Canopy Growth Corp. to Tilray Inc. widened their gains in afternoon trading Wednesday after Constellation Brands Chief Operating Officer Bill Newlands said the cannabis industry on its way to becoming a worldwide business.
“We think this is going to be a big business worldwide,” Newlands said at the Barclays Consumer Staples Conference in Boston. “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.”
These comments sent cannabis stocks higher after a strong start to the session gave way to mixed trading. Canopy Growth, in which Constellation Brands made a $3.8-B investment last month,
The global medical market is the real justification for the company’s sky-high valuation, Canopy Growth’s Chief Executive Officer Bruce Linton said in an interview at Bloomberg’s Toronto office. Cronos Group Inc. and Aphria Inc. also extended their gains.
The North American Marijuana Index, or NAMMAR, has gained 54% since mid-August, with much of the growth coming ahead of changing Canadian regulations that will allow for recreational marijuana purchases starting on 17 October.
Yet the US market, where marijuana is legal in some form in 31 states, could represent $21.8-B in retail sales in Y 2022, up from $8.5-B in Y 2017, a Canaccord Genuity sector analyst wrote in a note published Tuesday.
The rally comes despite recent attacks on some marijuana companies by short-seller Citron Research.
Last week, the short-seller said Cronos Group should trade at about a quarter of its price, sending the stock down 28% in one day. Tuesday, the short-seller focused on Tilray, saying the stock should be trading lower. Both companies have defied the criticism, at least so far.