Cannabis stocks soar to new highs

Cannabis stocks have been soaring since the maker of Corona beer boosted its investment in Canadian cannabis company Canopy Growth by $4 billion.

Rival Cronos Group (CRON) has soared more than 40% in the past week, including an 11% pop Tuesday. Tilray (TLRY), another competitor that just went public on the Nasdaq last month, has skyrocketed more than 60% in the last five days. Tilray shares were up 10% alone on Tuesday.

Both companies, which are also based in Canada, have clearly attracted more interest after Constellation (STZ) took an increased stake in Canopy Growth. That deal, announced last week, led to a 30% surge in Canopy’s stock (CGC).

Investors are betting that Constellation, which owns Corona and other spirits and wine brands, may eventually launch cannabis-based beverages and other products.

Infused drinks likely won’t be for sale in the United States, where cannabis continues to be prohibited by the federal government.

But they could pop up in Canada. Recreational marijuana sales will become legal there on October 17, which may be another reason why the stocks have been smoking.

Cronos and Tilray, as well as Canopy, are all seeking to take advantage of Canada’s legalization of pot and there have been a flurry of announcements from the companies about their plans.

Tilray announced on Monday that it will supply marijuana for the Ontario Cannabis Retail Corporation through its High Park Holdings affiliate. Tilray plans to sell products under the Marley Natural, Irisa and CANACA brands.

Cronos said Tuesday that its products will also be sold through the Ontario Cannabis Retail Corporation. It also has deals to sell recreational marijuana in the Canadian provinces of British Columbia, Nova Scotia and Prince Edward Island.

Tweed, a subsidiary of Canopy Growth, said late Monday that it also has a deal to sell pre-rolled joints, dried flower, oils, and softgel capsules in Ontario starting on October 17.

Investors seem to be hoping that legalization in Canada will spark more calls for recreational marijuana use to be approved in other countries, including the United States.

But the decision by Constellation to invest in Canopy seems to be enough justification for some investors to gobble up cannabis stocks like Cronos and Tilray as if they were pot brownies.

CNNMoney (New York) First published August 21, 2018: 1:31 PM ET