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Pot stocks are flying high: Here’s what you need to know

Although the market as a whole has sunk into the red this morning, Australia’s leading pot stocks have continued their climb higher unabated.

At the time of writing, here is the state of play in the industry:

The Auscann Group Holdings Ltd (ASX: AC8) share price has climbed 6% to 53 cents, bringing its five-day return to almost 25%.

The Cann Group Ltd (ASX: CAN) share price is up 5% to $1.98. This means that Cann’s shares have climbed almost 21% since this time last week.

The Creso Pharma Ltd (ASX: CPH) share price is higher by almost 3% to 57.5 cents, meaning its shares are 7.5% higher since Monday of last week.

The MGC Pharmaceuticals Ltd (ASX: MXC) share price are up just over 1% to 8.1 cents. This brings the cosmetic cannabis company’s five-day return to over 17%.

Finally, the Zelda Therapeutics Ltd (ASX: ZLD) share price is up around 1% to 7.4 cents. The cannabis-focused biotechnology company is the laggard in the group and higher by just over 1% since this time last week.

Why has investor sentiment improved in the industry?

As I mentioned last week, global alcoholic beverage company Constellation Brands has agreed to buy a 9.9% stake in Canadian pot stock giant Canopy Growth Corp for C$245 million.

Constellation Brands took the step as it sees the cannabis market as a significant consumer category in the future. Especially in the United States and Canada where regulations around recreational use are loosening.

Traders appear to believe that this will create significant demand for produce in the future, which could be great news for Australian growers.

Foolish takeaway

While I’m not an investor in the industry at this point, I’ll certainly be watching on with interest as things develop in the future. I would suggest fellow investors do the same.

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Motley Fool contributor James Mickleboro has no position in any of the 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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