INTERNATIONAL – Here’s one way to get investors back into the battered marijuana sector – throw $1.8 billion (R25bn) into it.
Cannabis stocks climbed Friday after Altria Group, the maker of Marlboro cigarettes for the US market, agreed to buy a minority stake in Cronos Group, the fourth-largest Canadian cannabis producer by market valuation.
The gains bring some relief to cannabis investors, who, as of Thursday’s close, had been poised for their worst weekly loss in six weeks after a short-seller report targeted Aphria, raising questions about broader governance and financial disclosure in the adolescent industry.
Cronos surpassed Aphria’s market value for the first time this week and is now more than C$1 billion larger than its competitor.
“An investment of this magnitude provides overall legitimacy to the industry as a whole and should represent a positive catalyst for the sector, with the news likely to drive valuations higher (particularly considering the sector’s recent pullback),” Canaccord Genuity analyst Matt Bottomley wrote in a note.