Canopy Growth Corp. (TSX:WEED) is being added to the influential S&P/TSX Composite Index in another milestone for Canada's fledgling marijuana industry.
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The Ottawa-area cannabis producer will be added to the index's health-care sector prior to the start of trading on March 20, S&P Dow Jones Indices said late on Friday. It said it will be the first marijuana company to join the index.
Big institutional investors and index funds use the index to guide buying decisions, so being included can lead to more demand for a stock. Canopy shares were up 2.2 per cent at $11.07 late on Monday.
"Canopy's inclusion upon the next rebalancing expected this Friday March 17, 2017 will likely drive more investors to the name, and the sector as whole," Daniel Pearlstein, an analyst at Eight Capital who covers the marijuana industry, said in an email.
In order to be eligible for inclusion in the index, companies have to meet specific requirements with regards to market capitalization and liquidity.
They must also be traded on the Toronto Stock Exchange for at least six full calendar months.
Canopy has been trading on the Toronto Stock Exchange since July, 2016. Prior to that, the medical marijuana producer traded on the TSX Venture Exchange for roughly two years.
Canopy investors have been on a rollercoaster ride in recent days. Shares of the Smiths Falls-based firm plunged 10.8 per cent last Wednesday to $9.74 after the Trudeau government said it won’t rush into legalizing marijuana for recreational use.
While companies such as Canopy Growth currently focus on supplying cannabis to medical patients, executives have made no secret about their desire to “dominate” the recreational market.
– With a report by OBJ staff