Cannabis shares rally as Canopy seeks to accelerate U.S. market entry
Reuters
Published Oct 25, 2022 04:21PM ET
NEW YORK (Reuters) - Shares of marijuana producers jumped on Tuesday, led by a rally in Canada's Canopy Growth (NASDAQ:CGC) Corp, after it said it will create a holding company to fast track its entry into the United States.
U.S.-listed shares of Canopy ended up 27.1% at $2.91, and were among the biggest daily percentage gainers on Nasdaq. The stock also registered its biggest one-day percentage gain since Aug. 15, 2018.
Shares of Tilray (NASDAQ:TLRY) Brands were up 13.3%, U.S.-listed shares of Aurora Cannabis (NASDAQ:ACB) were up 19.2% and SNDL Inc was up 9.4%.
Canopy on Tuesday outlined a holding company structure to set up Canopy USA LLC. The new entity will take over Acreage Holdings (OTC:ACRGF) Inc in return for shares of Canopy Growth.
Gaining exposure to the U.S. market would be a plus for Canopy, but since public marijuana companies' stocks are low-priced, "any move is amplified because markets expect little from these names," Jessica Rabe, co-founder of DataTrek Research, said in an e-mail.
Federal legalization of marijuana in the United States could still be "a long way off, especially if Republicans take back Congress in the upcoming mid-term elections," she said, and cannabis companies need to navigate many U.S. state laws and regulations.
Canopy Growth's U.S.-listed shares are down about 67% for the year.
Cannabis stocks jumped earlier this month after U.S. President Joe Biden took steps to overhaul U.S. marijuana policy.
Among other cannabis stocks, U.S.-listed shares of Hexo Corp were up about 8% and OrganiGram Holdings (NASDAQ:OGI)' U.S.-listed shares were up 7.4%.
Meanwhile, beverage firm Constellation Brands (NYSE:STZ) announced a plan to convert its existing ownership in Canopy into new exchangeable shares. Constellation's stock ended up 3.9%.
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Written By: Reuters
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