Cannabis shares rally as Canopy seeks to accelerate U.S. market entry

NEW YORK (Reuters) – Shares of marijuana producers jumped on Tuesday, led by a rally in Canada’s Canopy Growth Corp, after it said it will create a holding company to fast track its entry into the United States.

U.S.-listed shares of Canopy ended up 27.1% at $2.91, and were among the biggest daily percentage gainers on Nasdaq. The stock also registered its biggest one-day percentage gain since Aug. 15, 2018.

Shares of Tilray Brands were up 13.3%, U.S.-listed shares of Aurora Cannabis were up 19.2% and SNDL Inc was up 9.4%.

Canopy on Tuesday outlined a holding company structure to set up Canopy USA LLC. The new entity will take over Acreage Holdings Inc in return for shares of Canopy Growth.

Gaining exposure to the U.S. market would be a plus for Canopy, but since public marijuana companies’ stocks are low-priced, “any move is amplified because markets expect little from these names,” Jessica Rabe, co-founder of DataTrek Research, said in an e-mail.

Federal legalization of marijuana in the United States could still be “a long way off, especially if Republicans take back Congress in the upcoming mid-term elections,” she said, and cannabis companies need to navigate many U.S. state laws and regulations.

Canopy Growth’s U.S.-listed shares are down about 67% for the year.

Cannabis stocks jumped earlier this month after U.S. President Joe Biden took steps to overhaul U.S. marijuana policy.

Among other cannabis stocks, U.S.-listed shares of Hexo Corp were up about 8% and OrganiGram Holdings’ U.S.-listed shares were up 7.4%.

Meanwhile, beverage firm Constellation Brands announced a plan to convert its existing ownership in Canopy into new exchangeable shares. Constellation’s stock ended up 3.9%.

(Reporting by Caroline Valetkevitch; Additional reporting by Lance Tupper in New York; Editing by Bill Berkrot)