Why Cann Group Ltd shares jumped 35% to a record-high today

The Cann Group Ltd (ASX:CAN) share price has been a huge mover on Thursday. Here’s why…

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The Cann Group Ltd (ASX: CAN) share price has built on its early gains and pushed significantly higher in late morning trade.

At one stage the medicinal cannabis company’s shares were up over 35% to a record high of $3.90. It has since given back a bit of this gain, but still sits higher by 29% at $3.70.

Incredibly this means that Cann Group’s shares have rallied a massive 1,130% since listing on the ASX at 30 cents per share in May of last year.

What happened?

As I mentioned earlier, Australian pot stocks have stormed higher today after the Federal Government changed regulations to allow the export of medicinal cannabis.

Health Minister Greg Hunt made the decision in order to help the developing domestic medicinal cannabis market to grow further.

Whilst this is a major positive for all pot stocks, including the likes of Auscann Group Holdings Ltd (ASX: AC8) and Creso Pharma Ltd (ASX: CPH), investors appear to be betting on Cann Group being a big winner due to its sizeable production capacity.

Cann Group recently commissioned its second production facility and is progressing plans to develop a 16,000m2 state of the art cultivation, research and development, and manufacturing facility as part of its phase three expansion. The new facility will incorporate approximately 9,600m2 of “flowering” production area.

Is it too late to invest?

With a market capitalisation approaching $400 million, there certainly is a lot of future growth built into Cann Group’s share price now. This does make a risky proposition for investors.

I would suggest investors hold off an investment in Cann Group for the time being and wait to see how things unfold over the next few months. I suspect profit-taking could present investors with better entry points in the future.

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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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