CGC stock gains in the opening session on Monday after Canopy Growth (TSX:WEED) (NYSE:CGC) announced key developments in Europe thanks to Spectrum Therapeutics.
Canopy Growth Extends Reach
The cannabis sector might have had its fair share of trouble for the better part of 2019, but the biggest companies in the industry have been working diligently towards expanding their businesses. Canopy Growth is definitely one of the largest companies in the industry, and today, the company made positive announcements with regards to its operations in Europe.
The company announced that its pharma arm in the United Kingdom, Spectrum Therapeutics, has been granted permission to hold and distribute cannabis-based medical products. The permissions were granted by both the Home Officer and the Medicines and Healthcare Products Regulatory Agency.
Once the news was announced, investors piled onto CGC stock, which rose by as much as 1% to $20.40 in the early trading session.
The license is a significant one since it will allow Spectrum Therapeutics to import cannabis from all companies in its network across the globe and in Europe. In addition to that, the company has also managed to gain an exclusive distribution contract for the entire Grand Duchy of Luxembourg. By way of that particular contract, Spectrum will be able to import cannabis from across the world and also from Denmark. That contract is going to end in 2021.
That being said, CGC stock has not done that well over the past months, and while that might be an industry-wide trend, there are certain issues that are specific to Canopy Growth. The company is not profitable yet and might not be for the foreseeable future. In addition to that, its biggest investor, Constellation Brands (NYSE:STZ), which made a $4 billion equity investment, drove out the company’s founder earlier this year due to poor financial performance.
While it is true that international expansion is a good move, the cannabis jewel remains the United States, and federal marijuana legalization is still a long way off. However, Canopy Growth has bet big on international expansion, and while it might take many years to bear fruit for CGC stock investors, fruit does appear to be budding.
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