Pot Firms' Surge More After Constellation Remarks
Pot Companies Keep Momentum Intact as Rally Defies Short Calls
(Bloomberg) -- Constellation Brands Inc. just added fuel to a fire, pushing marijuana stocks to extend their gains on Wednesday.
Pot stocks from Canopy Growth Corp. to Tilray Inc. widened their gains in afternoon trading after Constellation Brands Chief Operating Officer Bill Newlands said the cannabis industry on its way to becoming a worldwide business.
“We think this is going to be a big business worldwide,” Newlands said at the Barclays Consumer Staples Conference in Boston. “This is not going to be limited to Canada. This will undoubtedly be a market that develops in the United States. It’s developing around the world in places like Germany and Australia and other markets.”
These comments sent cannabis stocks higher after a strong start to the session gave way to mixed trading. Canopy Growth, in which Constellation Brands made a $3.8 billion investment last month, rose 3.6 percent at 2:20 p.m. in New York, after swinging between a 8.2 percent gain and a 6.7 percent loss earlier in the day. Tilray Inc. widened its intraday advance to 26 percent, following Newlands’s comments. The stock traded as high as $97.36 and as low as $73.54 per share.
The global medical market is the real justification for the company’s sky-high valuation, Canopy Growth’s Chief Executive Officer Bruce Linton said in an interview at Bloomberg’s Toronto office. Cronos Group Inc. and Aphria Inc. also extended their gains.
The North American Marijuana Index, or NAMMAR, has gained 54 percent since mid-August, with much of the growth coming ahead of changing Canadian regulations that will allow for recreational pot purchases starting October 17. Yet the U.S. market, where marijuana is legal in some form in 31 states, could represent $21.8 billion in retail sales in 2022, up from $8.5 billion in 2017, Canaccord Genuity analyst Matt Bottomley wrote in a note published Tuesday.
The rally comes despite recent attacks on some marijuana companies by short-seller Citron Research. Last week, the short-seller said Cronos Group should trade at about a quarter of its price, sending the stock down 28 percent in one day. On Tuesday, the short-seller focused on Tilray, saying the stock should be trading lower. Both companies have defied the criticism, at least so far.
To contact the reporters on this story: Elena Popina in New York at epopina@bloomberg.net;Craig Giammona in New York at cgiammona@bloomberg.net
To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Morwenna Coniam
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