Canopy Growth Corporation (NYSE: CGC) is a well known Canadian cannabis producer. In fact, with a market cap of more than $18 billion, it is the largest cannabis producer in the world. The company has earned this market cap by executing well in Canada and around the world, leading to it receiving the largest investment in the cannabis space to date from Constellation Brands (NYSE: STZ).
Nonetheless, while the company has executed well in Canada and around the world, a new market is beginning to emerge. The United States CBD market is one that we’re seeing Canadian companies rushing to get involved in. Canopy Growth is no different. In fact, the company saw a 4.25% increase in value today after announcing a milestone in its entrance into the United States market. Here’s what’s happening:
CGC Announces Major United States Milestone
In a press release issued in the pre-market hours this morning, Canopy Growth Corporation announced a major United States milestone. The milestone is related to the company’s establishment of Hemp Industrial Park in the Southern Tier region of New York State.
According to the release, Canopy Growth has secured a 308,000 square foot facility on a 48-acre property. The facility is located in Kirkwood, New York.
In the release, the company said that it plans to build the infrastructure necessary to support hemp-derived cannabinoid extraction at the property. Moreover, the company will use the facility for related CBD manufacturing and as a way to provide an opportunity for participation by other businesses in the hemp industry.
CGC said that it plans on hiring senior leadership in late 2019 and recruit a full workforce for the facility by mid 2020. The company also said that it has started to secure farm capacity to supply enough hemp for its own future extraction and formulation activities within Hemp Industrial Park.
Why This Announcement Is So Important
The fact of the matter is that the United States CBD market is a massive one. In fact, it is estimated that the market will reach a value of over $3 billion by the year 2025, growing at a CAGR of 39.5%.
While Canopy Growth is a very active company with a strong global presence, the US CBD market just started to emerge with the passage of the 2018 Farm Bill. This Bill allowed for the growth, extraction and manufacture of hemp and its derivatives, including cannabidiol.
However, the bill just recently passed, making its way through the United States Senate on December 11, 2018. Considering this, the market is in its infancy, just barely starting to emerge.
I’ve followed emerging markets for some time and one thing that is clear is that those who invest early on generally become the leaders in the long run. Canopy Growth is taking that to heart, making large investments into the production of the Hemp Industrial Park facility.
Considering the company’s early jump on the industry, its success both in Canada and around the world, and its incredible investing power, due to the $4 billion investment received from Constellation Brands, it seems as though the company has everything it needs to take a leadership role in the United States.
While it’s never a good idea to simply act on speculation, there are some instances where speculation could be the sign of an evolution. For instance, some speculated that the internet would change the way that we do just about everything. Those that got in early on the trend turned hundreds into millions.
Getting into the United States market now is an important move. That’s especially the case considering the idea that the US may soon legalize cannabis for recreational use. In fact, even the CEO of Acreage Holdings, a leading cannabis producer in the United States, operating in various legal recreational and medical markets throughout the country believes that 2019 will be the year for Federal Legalization.
Should the legalization take place, both CGC and Acreage Holdings have quite a bit to look forward to. Not only will Canopy already have a foot in the door in the United States CBD market with Hemp Industrial Park, it plans on acquiring Acreage Holdings, making it the leading cannabis producer in the United States upon federal legalization.
Should cannabis become legal in the United States, estimates suggest that the annual value of the cannabis market could be well over $100 billion. With the aggressive expansion of Hemp Industrial Park and a plan to acquire the largest cannabis producer in the United States when cannabis becomes legal on a federal level, CGC could quickly become the top dog in the United States cannabis and CBD market.
Canopy Growth is in a great position at the moment. The company currently has billions of dollars in the bank that it can use to build infrastructure to become a leading player in multiple cannabis markets as they emerge.
With the company’s work to enter into the United States market, it may quickly become a leader in the region that is expected to hold the most value for cannabis and CBD companies and their investors. All in all, with a strong global presence and proven ability to get its products to consumers around the world, CGC may be the highest value cannabis stock on the market today, but it also represents one of the strongest opportunities for long-term growth!