The ability for people to buy cannabis and cannabis-derived products is becoming easier by the day. Investing in cannabis has also become easier as legislation continues to pass, slowly but surely, state by state, for its recreational and medical use. Research put out by Cowen and Co. stated that if the federal government fully legalized the plant, cannabis sales could reach $80 billion by the year 2030. Fortune 500 companies, Institutions, and retail investors are looking at all the different types of ways to invest in the cannabis industry. Below are three cannabis companies with some big money behind them.
Altria Group Inc. (ticker symbol: MO), the maker of the United States top-selling cigarette brand, Marlboro, made an investment in the Canadian cannabis company Cronos Group Inc. (ticker symbol: CRON) The Altria Group made a $1.8 billion investment in exchange for 45% of the company. Cronos Group CEO Mike Gorenstein stated that “The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers.”
On December 07, 2018 Altria announced its 45% stake in Cronos. As you can see above, Cronos’ stock gapped up and closed up 21.24% on that day. After a slight post announcement pullback, the stock took off in the first quarter of 2019 and as of this writing, it is up over 100% currently trading above $22.00.
Constellation Brands (Ticker Symbol: STZ) is a leading alcoholic beverage company that produces some of the world’s most well-known beer, wine, and spirit brands. Constellation stepped into the cannabis space by acquiring Canadian cannabis company Canopy Growth Corporation. (Ticker Symbol: CGC) This was a strategic move for Constellation brands because most large alcohol companies have been worried about how cannabis legalization may hurt alcohol sales. By purchasing Canopy Growth Corporation, Constellation Brands is poised to be able to take advantage of the drinkable cannabis market.
On August 15th, 2018 Constellation Brands announced a $4 Billion, 38% stake in Canopy Growth Company. The stock was trading below $25.00 the day before Constellation became public with the news of the acquisition. After the announcement, CGC gapped up on the open and closed up 30.42% on its first day. It proceeded to trade up over 75% to a high of over $56.00 over the next two weeks. The stock market corrected late in the fourth quarter of 2018, which seemed to drag on the prices for CGC. As of 2019, the stock is up over 60% for the year and is currently trading as of this writing at 45.06.
Privateer Holdings Inc. is a private equity group that invests all of its capital solely in cannabis-based companies. They currently are in control of the Canadian cannabis company Tilray (Ticker Symbol: TLRY) and own an estimated 76% of Tilray’s outstanding shares. Privateer also owns Leafly, a cannabis information website. This would give Tilray access to consumer data that would give it vision into customer tastes and behavioral patterns. In December of 2018, Tilray and Anheuser-Busch announced that they are teaming up together to research drinkable cannabis. This is not a direct investment in the business and they will spend 50 million dollars each on the venture.
Tilray was the most talked about cannabis stock during the early hysteria of cannabis legalization and trading. On Tilray’s first day of trading, shares opened at $24.25 on July 20th, 2018. On September 19th, 2018, Tilray shares traded as high as $300.00 and had a range from low to high of nearly $150.00! Tilrays shares traded lower with the overall stock market at the end of the fourth quarter. So far in 2019, shares have been trading in a range between the $100 and $70 dollar price levels. Tilray shares are basically flat on the year and the stock is currently trading at $70.24.
As you can see, lots of opportunities abound! Clearly, an increasing amount of big and smart money keeps flowing into the cannabis industry. The cannabis market is laden with favorable circumstances for investment and the further that legalization progresses, the more opportunity will present itself!