The medical and recreational cannabis industry is still very much on the rise, with Canada’s recent nation-wide legalization of recreational cannabis. Already established companies have struck huge production and distribution deals with businesses all throughout, including Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON) recent supply agreement encompassing 50% of the Canadian population.
Today the bulls are on the street and the weed stocks are rallying as one of the largest alcohol production companies, Diageo, sets out to acquire a Canadian cannabis company. Bloomberg has reported that Diageo has spoken “with at least three growers about a possible deal” but they “didn’t name the companies” so much of the price action is speculative.
It’s obvious that Diageo will want to acquire or partner with a high capacity producer to grab the largest market share. Some of the largest producers in the game right now are Aphria Inc (OTC:APHQF), Tilray Inc (NASDAQ:TLRY), Canopy Growth Corp (NASDAQ:CGC), and Cronos Group Inc (NASDAQ:CRON) which are up 19%, 23%, 7%, 30% respectively.
Of those companies, Canopy Growth Corporation has already received investment from one of the largest companies in the alcohol industry, the Corona-maker Constellation Brands. Recently, Constellation Brands upped their stake in Canopy Growth Corp from 9.9% to 38% to a total of $4 billion.
Cronos Group has also secured valuable partnerships and agreements allowing them to really hit the ground running with Canada’s recent nation-wide legalization. On August 21st, 2018, Cronos Group announced a new supply agreement with two companies based in Ontario and British Columbia.” By partnering with BC Liquor Distribution Branch and Nova Scotia Liquor Corporation, Cronos Group’s new market “encompass over 50% of the Canadian population.” When this news was announced, CRON closed at $8.29 for the day. Today CRON is up to highs of $12.89.
It is obvious that growth in the Canadian pot stock space is still explosive and holds a lot of potential. As Investors.com cleverly put it, these Canadian cannabis companies seem to have caught the “merger munchies.”