If you are looking for what could trigger the next big round of hikes in pot stocks, keep your eye on government legislation – on both sides of the Canada-U.S. border.
If you have any doubts, look at what happened yesterday. Stocks of Canadian marijuana company Tilray Inc (NASDAQ:TLRY) jumped more than 7 percent before settling for a 5.28-percent gain on the day at the close after announcing it would buy another Canadian company – hemp food producer, Manitoba Harvest.
The deal, reported to be valued at C$419 million, would see Tilray take over the Winnipeg-based firm that touts to be the world’s largest manufacturer “to grow, make and sell” their own line of hemp food products. The announcement of the deal is what propelled the Tilray stock to tick higher on the day. The timing of the take-over, however, offers a window into how companies are positioning themselves in this emerging market.
Manitoba Harvest is the maker of the hugely popular Hemp Hearts brand of shelled hemp seeds, a product that been positioned as being a ‘super-food’ of sorts that is higher in protein and omega oils than flax and chia seeds, and lower in carbs, while high in iron and is gluten-free. Hemp is a species of cannabis, but not the same as marijuana.
Why is all of this important?
Because in December the U.S. Congress passed a major farm bill that legalized the commercial production of hemp. Legalizing hemp in the U.S., where there are no significant players at the moment, gave this small Canadian company, which is the current world leader, a much bigger market. It is also equipped to help propel the next step in the marketing of marijuana-infused edibles in this country, which will be the next big deal in this country.
And for that, keep an eye on what Health Canada plans to do. These products are scheduled to be approved for sale in Canada in October.