- The Canadian marijuana company is investing up to $500M into US CBD market after receiving a license from NY
- With the US market currently fragmented, Canopy is positioned to be a major player in the largest global market
Canopy Growth (NYSE:CGC) (TSX:WEED), the Canadian cannabis company, is planning to increase investment in the US hemp market to $500M after adding hemp production in Rhode Island and 2-3 other US states. The company first announced an investment of $100 million to $150 million to process and produce hemp in New York after securing a license from the state’s government officials in January.
The move to invest in a hemp processing facility in New York represented the company’s first large push into cannabis extraction and processing outside of Canada. The timing works out well for Canopy given that the US cannabis market is highly fragmented. The seven largest publicly traded U.S. cannabis operators captured 6% of market share, leaving space for Canadian companies to enter.
Canopy has also been bolstering its US position through acquisitions. The company bought Evergreen, Colorado-based cannabis research startup ebbu in November 2018 for $330 million and gained control of more than 40 cannabis-related patent filings.
Canopy said the intellectual property it gained from the deal gave the company the potential “to vastly reduce the cost of CBD production.” Those cost savings could prove even more important as the company’s focus on hemp production becomes a more significant part of its business moving forward.
Article by: Mick Ross
Mick is currently a full-time investor and formerly a buy-side analyst (2yrs) covering healthcare companies. Before that, he was a salesperson at a bulge-bracket firm, based in Dallas, Texas. Mick blogs to clarify and synthesize his investment thought process and to elicit feedback; additionally he likes to connect with other investors and swap ideas.