Stocks in Canadian marijuana companies rose sharply Friday after it was widely reported that Diageo Plc, the world’s largest alcohol company, is in discussions with several Canadian marijuana producers about developing cannabis-infused drinks.
The UK alcohol manufacturer has met with marijuana companies in Canada over the last month as it assesses a possible investment or alliance to make cannabis-infused beverages. That news sent share prices for publicly traded marijuana companies soaring on the Toronto Stock Exchange Friday.
Aphria Inc. rose 6.8% to $12.20, Aurora Cannabis gained 3.6% to $8.32 and Canopy Growth Corp. surged 7.2% to close at $45.55. The broad based gains helped drive the Canada Cannabis Competitive Peers stock index up 2.8% to its highest level in more than six weeks.
Canada’s legalization of recreational marijuana, which begins this October, has attracted interest from the beverage industry. In the past month, Constellation Brands Inc. announced that it will spend $3.8 billion to increase its stake in Canopy Growth, the biggest deal in the burgeoning marijuana industry to date. Meanwhile, Molson Coors Brewing Co. is starting a joint venture with Hydropothecary Corp. to develop cannabis drinks.
Marijuana and alcohol industries are increasingly seen by analysts as converging into a one-stop shop for recreational drinks and drugs, with Heineken’s California-based craft brewery Lagunitas announcing this past June that it is working on an India pale ale-inspired sparkling water infused with THC, the active ingredient in marijuana.
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