The cannabis sector just went from being ice cold to red hot in one day.
On Tuesday morning, Canopy Growth Corp (CGC), the largest cannabis company in the world, announced that Constellation Brands (STZ), the third largest US brewer has invested $3.8 billion in Canopy.
This is a game changing deal.
Its the largest deal in the history of the cannabis industry.
It gives Canopy a direct link to Constellation global distribution network into more than 100 countries.
It gives Canopy $1 billion in cash that it will use for international acquisitions.
And it clearly demonstrates that cannabis has become more than credible – the growth opportunity is so huge that the biggest consumer brands in the world can no longer ignore it.
To me its pretty clear whats going on here – I expect to see a huge wave of buyouts in the cannabis industry in the next 12 months as Canada goes legal.
This is an awesome environment for cannabis investors. It should provide some very strong tail winds on the chart.
Here’s a link to a story from Bloomberg with some more details.
Canopy is looking bullish on the chart.
In the short run – Canopy jumped 47% on the news.
In the long run Canopy’s sharp jump sets the stage for a strong second half of the year. I am expecting Canopy and the broader cannabis stocks to make a deep run into a new all-time high because of two profit triggers.
I see Two Big Profit Triggers on the Horizon
Canada Goes Legal on October 17: Canada is set to make history on October 17 when it will become the first developed nation in the world to legalize recreational cannabis. This is set to unleash a multi-billion dollar market virtually overnight. Not only will that unleash a multi-billion dollar market virtually overnight, I also expect it to generate a huge amount of interest in cannabis stocks and trigger billions in new capital inflows.
5 US States Voting on Cannabis in Midterms: The US also has big legal news on the horizon. Five US states are set to vote on cannabis programs in the midterm elections in early November. This should provide another jolt to cannabis stocks and also be very good for industry revenue growth.
Beyond Canada and the US, cannabis legalization is sweeping across the entire planet.
According to a new report, the global cannabis market could grow to $63.5 billion by 2024 from $14.3 billion in 2016.
That works out to a 21% compound annual growth rate. That is on par with the technology boom of the late 1990s.
I See a Bullish Formation on the Chart
With a huge jolt from Canopy the North American cannabis index is rebounding from a key level of support near the 18-month low. Take a look below.
This is a great time to be buying more cannabis shares – while many early industry leaders are trading well below the 52-week high ahead of some huge industry events.
What Can We Expect Moving Forward?
All signals are telling me that we should see a very big second half of the year.
My plan is to stay aggressive.
That means holding all existing shares. And buying more shares on dips and pullbacks.
If anyone has questions or wants to buy more shares – send me an email.
Your Investment Partner,
This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading. Michael owns shares of Canopy Growth Corp (CGC).