The headline is that Canada’s largest pot company, Canopy Growth Corp (US:CGC / CAN:WEED) has a new CEO, David Klein. The important sub-text is that Klein is the former CFO of alcohol multinational – and major Canopy shareholder – Constellation Brands (US:STZ).
For some cannabis observers, the move will be seen as a shrewd business decision. Klein has deep experience in the alcohol beverage industry and Canopy is making a strong move into cannabis-infused beverages. These products have just become legal in Canada with Phase 2 of cannabis legalization.
However, others will see this as Constellation consolidating its grip over Canopy. With its second, US$4 billion investment in Canopy, Constellation currently holds a 38-percent stake in the company. However, it is holding a large, additional number of warrants that by themselves allow Constellation to approach majority control.
Regardless of what was behind the move, the market is signaling its approval of the news, at least initially. Canopy is up 13.46% to $21.16 as of this writing.
Canopy’s stock fell to a 52-week low of $13.81 following the release of weak results for its fiscal Q2 2020. Since that time, the stock has rebounded by more than 50%.
The initial jump was fueled on news of a “buy” recommendation from Bank of America Merrill Lynch. Now this latest move has rewarded cannabis investors who were bold enough to jump into Canopy at its low.
Even marijuana stocks have bottoms. That tautology may have eluded many cannabis investors during the steep slide in pot stocks in 2019. But heading into 2020, it's an idea that may get more traction.
Cannabis 2.0 has arrived in Canada. In the U.S., the CDC is now saying that the worst is over with the vaping crisis.
It could be argued that Canopy Growth led the way down for pot stocks in 2019. Could it be about to lead the way up in 2020?