On January 14, Canopy Growth (CGC) (WEED) announced a major win in the US market after receiving a license in the State of New York to run hemp operations. In its press release, Canopy Growth highlighted that Senator Chuck Schumer said he is pleased that Canopy Growth is joining efforts “to make the Southern Tier the Silicon Valley of industrial hemp production and research.” He added that he hopes “industrial hemp becomes a true cash crop in the region.”
Why is this important?
Canopy Growth’s stock gained nearly 11% on January 14, while the ETFMG Alternative Harvest ETF (MJ) gained just about 2% during the day. The market was excited about the news for several reasons. First, the US market is much larger than the Canadian market. The state of New York alone has a population of ~20 million, which is nearly half of the entire population of Canada at ~37 million in 2017. Thus, the market opportunity in terms of demand is huge. And this is just one state.
The market size for US cannabis could hit nearly $50 billion in sales, according to Aphria (APHA) chair Irwin Simon. Read Aphria Thinks the US Cannabis Market Could Hit $50 Billion for more information. Companies such as Tilray (TLRY) and Cronos Group (CRON) all have their eyes on this market. Continue reading to see why receiving a hemp license is big for Canopy Growth.