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Why the MMJ Phytotech Ltd share price has surged higher today

One of the best performers on the market today has been the MMJ Phytotech Ltd (ASX: MMJ) share price.

At the time of writing the medicinal marijuana company’s shares are up almost 6% to 63.5 cents, bringing its year-to-date return to an astonishing 188%.

Today’s rise is related to news that Harvest One Cannabis is due to commence trading on the Toronto stock exchange as soon as this Friday.

According to the release MMJ Phytotech will have a 60% ownership in Harvest One Cannabis, which is a fully-financed company with two strategic cannabis brands operating in one of the fastest growing cannabis markets globally.

In the near-term Harvest One Cannabis will be focused on scaling up production at its Duncan Facility in Canada on order to enable it to establish a first-mover advantage in the soon to be legalised Canadian recreational market.

Should you invest?

I can’t say I’m surprised to see MMJ Phytotech’s share rally today. If Harvest One Cannabis does manage to establish a first-mover advantage in the Canadian market then it could prove to be extremely lucrative.

After all, management believes the Canadian medical and recreational markets will have an estimated combined value of up to C$9 billion (A$8.8 billion) by 2024.

But there’s still a long way to go before this becomes a reality. So with its shares and those of its peers Auscann Group Holdings Ltd (ASX: AC8) and Zelda Therapeutics Ltd (ASX: ZLD) all priced for significant growth, there is a risk that they could fall sharply should the growth not materialise.

For this reason I think it would be prudent for investors to hold back and wait to see how things unfold over the next 12 months.

In the meantime I would suggest investors focus on these explosive high-flying shares. Each looks set to smash the market this year in my opinion.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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