Canopy Growth (CGC) is Making Headlines This Week, What Does it Mean for the Stock?

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December 19, 2019 2:26pm NYSE:MJ

NYSE:MJ | News, Ratings, and Charts

Canopy Growth (CGC) is making headlines again this week, from opening a new cultivation facility in Oregon, to tapping a new marketing agency in Florida, the company continues to make moves that has many investors wondering: Is now the time to buy this stock?

All of this comes on the heels of last week’s big story about the company’s newly appointed CEO. 

The newly selected CEO

For the most part, Wall St seemed to respond well to the news that David Klein, the CFO of parent company Constellation Brands, would assume the role of Canopy Growth CEO by mid-January next year.

Klein represents a more buttoned-up side of business that is probably more in line with Constellation’s long-term vision for Canopy. But many investors already sensed this when the former CEO Bruce Linton was ousted last year.  

The long and short of it is: Canopy Growth (along with the rest of the cannabis sector) faced industry-wide problems that no CEO could fix. Primarily, a slow-to-rollout Canadian retail market coupled with black market competition. Thus far, there are no signs that these constraints will be letting up anytime soon.

The glimmer of hope for Canadian-based cannabis companies is Rec 2.0, as the country is on the verge of finally legalizing edibles and derivatives for recreational consumption. But yet again, the market for these products has yet to be tested.

American Growth

In spite of all the hang-ups taking place in the Great White North, CGC is laying out a growth strategy south of the Canadian border via its alliance with Acreage Holdings, Inc. – which just announced its first cultivation facility in the Pacific Northwest.

Based in Medford, OR, the 30,000 sq. foot indoor facility will cultivate cannabis for use in a variety of products intended for Canopy brands such as the health and wellness-oriented brand the Botanist, and another Canopy brand Tweed. 

The first harvest is scheduled for this month. Consumers can expect to find product on the shelves soon after. 

“We are proud to open our new Oregon facility in an area renowned for producing some of the best cannabis in the world,” said Acreage Chairman and CEO Kevin Murphy.

“We are particularly excited to introduce the Tweed brand to U.S. consumers for the first time. It’s a further indication that our arrangement with Canopy Growth is yielding opportunities to accelerate Acreage’s growth.”

American CBD 

In other news this week, Canopy Growth collaborated with FL-based marketing agency Ideabar to develop and market CGC‘s new CBD brand First & Free. Ideabar’s parent company is telecom giant Cox Enterprises.

“Our agency’s cannabis team was thrilled to collaborate with world leader Canopy Growth’s CBD division to build First & Free,” said Amy Royster, Founder and Managing Director of Ideabar.

First & Free is a hemp-derived CBD product line available in a variety of formats, such as softgels, oil drops and creams.

“Ideabar’s partnership, passion and creativity are unmatched,” said Michelle Douglas, Canopy Growth’s Director of Global Marketing and CBD.

Canopy Growth has a market value of around $7 billion, partially thanks to the $4 billion capital injection from Constellation Brands.

Canopy Growth Corp. (CGC) was trading at $20.25 per share on Thursday afternoon, up $0.52 (+2.64%). Year-to-date, CGC has declined N/A%, versus a 20.70% rise in the benchmark S&P 500 index during the same period.

About the Author: Eric Bowler

eric-bowlerEric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.

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