By / October 20, 2018

Marijuana stocks increase after Canopy Growth’s recent acquisition

Marijuana stocks increased on Oct. 15 after Canopy Growth announced its agreement to acquire Ebbu, a cannabis research company based in Evergreen, Colorado.

How much did the cannabis stocks grow after the announcement

According to CNBC, the shares of Canopy Growth in the New York Stock Exchange (NYSE) increased by 9 percent after the announcement. Other cannabis stocks rallied as well including Tilray and Aurora Cannabis. Tilray stock increased by 7.1 percent on Nasdaq, while Aurora Cannabis gained 7.5 percent in Toronto Stock Exchange.

The acquisition that affected stocks

Canopy Growth announced to its shareholders that it will acquire Ebbu to “complement and accelerate” the company’s goal. That is to develop more products for its consumers. The company will pay CA$25 million in cash. In addition, will issue 6,221,210 common shares to Ebbu in exchange for the acquired assets.

The company also said, “intellectual property and research and development advancements achieved by Ebbu’s team apply directly to Canopy Growth’s hemp and THC-rich cannabis genetic breeding program and its cannabis-infused beverage capabilities.”

Ebbu specializes in lab-tested cannabinoid research. It has more than 40 cannabis-related patents filed, for over 1,500 inventions. It focuses on different scientific areas related to cannabis including pharmacology, genetics, delivery technology and chromatography.

Investment in stocks
Canopy Growth will pay CA$25 million in cash and will issue 6,221,210 common shares to Ebbu in exchange for the acquired assets. (Source)

Meanwhile, Ontario-based Canopy Growth is one of the pioneers in the cannabis industry. It is one of the first publicly-traded company within the industry since 2014. It is a perfect time for Canopy Growth to make such move given that Canada’s recreational marijuana legalization just became official.

Legalization of recreational use of marijuana in Canada

Effective on Oct. 17, Canada became the next country to legalize recreational marijuana on a national level, second to Uruguay. The medical use of marijuana in Canada has been legal since 2001, per The New York Times. This means that all use of marijuana is legal in the country.

Apart from Canopy Growth’s acquisition, a lot of big companies are joining the green rush, especially in Canada. Earlier this month, Molson Coors Canada just completed its joint venture agreement with The Hydropothecary Corporation (Hexo). They will produce cannabis-infused drinks, per FoodBev Media.

Last month, reports on Coca-Cola’s interest in Aurora Cannabis also affected the latter company’s stocks. According to Coca-Cola spokesman Kent Landers: “We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world. Space is evolving quickly. No decisions have been made at this time.” Landers declined to comment on Aurora,” per Bloomberg.

Coca Cola
Coca-Cola’s interest in Aurora Cannabis also affected the latter company’s stocks. (Source)

The use of marijuana in public spaces

Though marijuana is now legal for recreational use in the country, there are still several restrictions. For instance, only 19 years old and older can use and purchase marijuana—but for other provinces, per CBC News.

It is still illegal to share marijuana to minors. Possessing more than 30 grams of marijuana in public is also illegal. Though for some provinces, there is no limit of possession when it is in their private residence.

For consumption, some provinces only allow marijuana use within private residences. Other provinces allow public consumption as long as it is in the area where tobacco use is allowed. It is also illegal to use marijuana in the presence of children.

With the recent legalization, companies that are based in Canada like Canopy Growth could really benefit. And as cannabis continues to flourish in the country, so as consumer demand for the new cannabis-based product.

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