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Canada's Canopy Growth shares bloom as it receives license to develop industrial hemp in New York

Canopy said it plans to invest between US$100 million and US$150 million in the new site

Pictured is a field of hemp
Canopy Growth will source hemp exclusively from American farmers for the operation

Shares in Canada's Canopy Growth Corporation (TSE:WEED) (NYSE:CGC) moved higher Monday as its hemp ambitions were bolstered with the receipt of a license from New York state to grow and process the plant.

Hemp does not contain the psychoactive ingredient associated with cannabis but does contain CBD (or cannabidiol), which is of increasing interest to consumers as it is believed to combat a range of health problems, including stress and sleep disorders.

Canopy Growth shares gained nearly 9% to $55.29 in Toronto.

READ: Constellation Brands closes $4B investment in Canopy Growth

Hemp also has industrial applications and Canopy wants to establish a large-scale production center in the state and it is currently evaluating a number of sites in the Southern Tier. It will be the first such facility outside Canada.

Canopy said it plans to invest between US$100 million and US$150 million in the site, which will be able to generate tons of hemp extract a year.

New York-based beverage group Constellation Brands Inc (NYSE:STZ), whose shares are up 1.2% at $161, recently invested US$4 billion into Canopy, raising its stake to 37% as it becomes bullish of the future of the cannabis industry.

Canopy Growth said it will source hemp exclusively from American farmers for the operation, once it is up and running.

The company highlighted in a press release the work of Governor Andrew Cuomo and US Senator Charles Schumer in helping to make the hemp deal happen.

"Governor Andrew M. Cuomo's leadership at the state level led to the creation of the Hemp Research Pilot Program, a standout in the nation," it said.

"US Senator Charles E. Schumer was instrumental in the passage of the Farm Bill, a transformative piece of legislation that gave Canopy Growth the federal guidance it needed to make a significant investment in New York."

Contact Giles at giles@proactiveinvestors.com

Quick facts: Canopy Growth Corporation

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Price: 18.09 CAD

Market Cap: $7.11 billion

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