Cannabis company HEXO Corp (TSX:HEXO) (NYSE:HEXO) has been in some difficulty over the past months, but things seemed to have turned around a bit over the past few weeks. On Thursday, the Hexo stock experienced a rally and went up by as much as 6%.
The rally in the stock price was wholly due to a significant announcement from the company, and it was the second time in three days that the Hexo stock recorded gains. Hexo announced a larger 30-gram version of its Tsunami brand of cannabis flower, and it is an important development since the product has proven to be quite lucrative for the company.
It has been a good week for Hexo. Prior to the announcement regarding the new Tsunami product yesterday, the company had earlier announced that it got a crucial license extension for its principal processing and production facility in Belleville. The double boost has created a lot of optimism among investors with regard to the stock. The extension to its facility is particularly important since it will allow Hexo to manufacture a wide range of cannabis products. The company will be able to sell cannabis 2.0 products from Belleville, and it is also looking to widen its medical marijuana offerings.
Considering the fact that the economy is slowly opening up again, the timing has been particularly great for Hexo. The announcement on June 2 with regards to the Belleville facility is also highly crucial for Hexo. It has become abundantly clear that cannabis derivative products like beverages are expected to be highly popular, and the amendment to the license allows Hexo to start selling beverages from the aforementioned facility. Hexo has already formed a beverage joint venture named Truss Beverages with Canadian brewer Molson Coors, and the company is particularly keen to get into the CBD infused beverage space. Cannabis 2.0 products generate higher margins as well, and that is another important reason why this is such a significant development for Hexo.