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These 2 Stocks Are Surging As Canada Finally Legalizes Marijuana

These 2 Stocks Are Surging As Canada Finally Legalizes Marijuana

Things are about to get really exciting in the Canadian cannabis market and these 2 stocks look like solid winners in an ever-growing field.

It finally happened.

This week, Canada’s senate approved a bill from Prime Minister Justin Trudeau’s government to legalize cannabis, with sales set to begin on October 17.

Canada is just the second country in the world to legalize the sale and use of recreational marijuana, and the news sent some cannabis stocks soaring.

The move “paves the way for legal sales to begin,” Bloomberg Intelligence analyst Kenneth Shea wrote Wednesday. “We expect investment flows into the nation’s legal cannabis sector to jump, deal activity and consolidation to rise.”

Canada’s legalization is likely to lift marijuana stocks and spur more investment in the industry as the bill’s passage may be the “catalyst the industry has been waiting for” for the past several years. Legalization will also increase the potential market for Canadian producers by 10 times the existing medical market, according GMP Securities analyst Martin Landry.

As trading closed on Wednesday, prominent marijuana companies traded on the TSX, NYSE, and the NASDAQ had popped anywhere from 2.4% to 6%.

Among those, these two stocks are the top ones to watch.

Aurora Cannabis (OTC: ACBFF)

Aurora Cannabis is up 15% just this week, and is one of the most exciting companies in the industry.

On Monday, the company announced that it had closed a strategic investment in Choom Holdings to expand its marijuana production.

The company has also agreed to buy Ontario-based MedReleaf (OTC: MEDFF) in an all-share deal valued at $2.5 billion. With MedReleaf’s peak annual production of 140,000 kilograms, Aurora’s annual yield will be pushed to an estimated 570,000 kilograms.

Currently, Aurora Cannabis—before MedReleaf is added to the total—is on track to produce roughly 430,000 kilograms at peak annual production, which includes its newly announced Aurora Sun facility in Medicine Hat, Alberta.

The massive 1.2-million square foot facility will be developed by Aurora’s wholly-owned greenhouse consulting and construction subsidiary, Larssen, and will yield approximately 150,000 kilograms per year.

Canopy Growth Corp. (NYSE: CGC)

Canopy—the marijuana stock with the largest market cap—is up nearly 22% for the week and just over 52% year-to-date, and is a major force in the Canadian medical marijuana market.

The company just announced a multi-year agreement with Neptune Technologies & Bioressources Inc. to supplement its production capacity. Canopy plans to leverage its current position at the top of the market to become the top retail distributor in the near future.

And it should be in a strong position to do so. So far this year, the company has tripled its licensed production capacity to 2.4 million square feet, with plans to expand its peak licensed capacity to 5.7 million square feet.

Canopy has been mum on its total production, but odds are in the neighborhood of 500,000 kilograms per year.

The company is already a key player in the global medical marijuana market, which has the potential to be far larger than the total Canadian market. In 2016, Canopy bought MedCann giving it a solid base for growth in Germany and other parts of Europe.

And with its recent acquisition of Daddy Cann Lesotho, Canopy now has operations on five continents. As regulations are finalized there, the deal will position the company to take on the medical marijuana market in South Africa.

But Canopy isn’t stopping there. It’s also taking on another market as well with its partnership with Constellation Brands (NYSE: STZ). Constellation bought a nearly 10% stake in Canopy in 2017, and the two companies are working together on cannabis-infused alcoholic beverages.

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