Shares of pot stocks saw a jump on Monday after it was revealed that Canadian marijuana company Canopy Growth had bought a US hemp researcher in order to help it grow marijuana better.
Canopy Growth has purchased a Colorado-based company called Ebbu that will “complement and accelerate” its goals of expanding into newer types of consumer products.
According to Ebbu’s website, the company specializes in the purification and study of cannabinoids for product development, wholesale and research purposes.
The company made the announcement to investors, revealing that it will pay 25 million Canadian dollars in cash and issue 6,221,210 common shares to the research company in exchange for the assets being acquired.
“Intellectual property and research and development advancements achieved by ebbu’s team apply directly to Canopy Growth’s hemp and THC-rich cannabis genetic breeding program and its cannabis-infused beverage capabilities,” stated the company.
The stock saw a pop of 9% following the announcement and sent shares of other pot stocks including Tilray and Aurora Cannabis higher too.
Cowen analyst Vivien Azer remarked on the acquisition and said, “The deal will be complementary to Canopy’s current hemp operations in Saskatchewan, Canada. In addition, the transaction provides an opportunity for Canopy to reduce the cost of its CBD [cannabidiol] production by applying ebbu’s intellectual property.”
She added, “We think this transaction is an important milestone to Canopy as it marks its entry into U.S.-based operations,” she added. “We continue to believe that Canopy will have a first-mover advantage in expansion outside of Canada and today’s deal represents an important first step vs. its Canadian peers.”
Canada will begin legal recreational marijuana sales on Wednesday.