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New Cannabis Deal Sends Prices Soaring

We’re all familiar with the Canadian cannabis legalization frenzy that has been going on for the last year or so.  Pretty much, Canada has voted in the legalization of recreational cannabis NATION-WIDE.  Canada is a nation of roughly 36 million people and already has medical cannabis in many providences.  Canada already has a flourishing medical cannabis sector that has seen continual growth in terms of patient sign-ups.

The cannabis industry at the given moment involves a lot of speculation, as recreational sales have not yet started in Canada.  Most of these companies are looking to strategically place themselves in the market through huge distribution and manufacturing deals with existing companies to further their outreach.

Companies such as Canopy Growth Corporation, Cronos Group, and Tilray already have a lot of skin in the game through these distribution and manufacturing deals.  Specifically, Canopy Growth Corp. was just pledged an investment of $4 billion (38% stake) from one of the largest alcohol players, Constellation Brands.  Essentially, Constellation Brands is making the deal in an effort to enter the cannabis industry, stating that the investment is a representation of their “exclusive global cannabis partner.”

In recent news, Cronos Group has struck up a rather unique deal with Ginkgo Bioworks Inc. for the sum of $122 million.  The deal is designed to have Cronos Group work to develop genetically engineered “active compounds in marijuana.”  This is pretty much saying Ginkgo wants Cronos to make them a synthetic THC or CBD to be used in consumer products.

Cronos Group recently had a bit of commotion when the infamous short-seller, Citron Reports, slapped a price target of $3.50 on it.  As mentioned before, the sector is still very speculative, so in reaction Cronos Group shares dropped a bit but did recover over the next few days.

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