By Keith Speights, The Motley Fool
It’s easy to think of Canopy Rivers (NASDAQOTH: CNPOF) as an extension of Canopy Growth (NYSE: CGC). After all, Canopy Growth formed Canopy Rivers as a way to pursue investing opportunities in the cannabis industry that help (you guessed it) Canopy Growth.
But as of Sept. 20, Canopy Rivers obtained its own stock listing. The two companies might still be joined at the hip for the most part, but they present very different prospects for investors. Which is the better marijuana stock over the long run? Here’s how the parent, Canopy Growth, stacks up against its child, Canopy Rivers.
The case for Canopy Growth
You’ve heard of big pharma and big tobacco. Make way for big marijuana. And its leader is Canopy Growth. Sure, Tilray might claim a higher market cap for now. Aurora Cannabismight have greater production capacity. But it’s Canopy Growth that stands atop the global cannabis industry.
A major reason why is Canopy’s relationship with Constellation Brands (NYSE: STZ). The Fortune 500 alcoholic beverage company owns a 38% stake in Canopy thanks to its $4 billion investment in August. Canopy and Constellation plan to market a variety of cannabis-infused beverages as soon as regulations permit.
The cash that Constellation poured into Canopy also gives the company unparalleled flexibility to expand globally. Canopy has already bought Colorado-based hemp researcher ebbu Inc. and Manitoba retailer ManitobaCo since the closing of its deal with Constellation. Plenty of other acquisitions could be on the way, potentially including bottling operations and a cannabis-focused biotech.
Canopy Growth is already formidable even without buying other companies. It claims 4.3 million square feet of licensed growing space, with even more on the way. Canopy has secured supply agreements with all of Canada’s provinces.
The company saw early on the potential for the global medical marijuana market and aggressively built its international presence. Today, its subsidiaries operate in Australia, Chile, Colombia, the Czech Republic, Denmark, Germany, and Lesotho. Germany is the most promising of these markets. The company should also be in a good position to profit as the new medical cannabis market in the United Kingdom expands.
The Case for Canopy Rivers
Many of the same opportunities in front of Canopy Growth are also present for Canopy Rivers. The latter’s focus, though, is on finding companies across the cannabis industry’s value chain.