What happened

Shares of Neptune Technologies & Bioressources (NASDAQ:NEPT) gained nearly 24% today after the company announced a new multiyear agreement with Canopy Growth (NYSE:CGC). The tiny technology company will supply cannabis extract products to complement the industry leader's existing capabilities. Further information wasn't disclosed. 

Today's news is the second major partnership Neptune Technologies has announced in 2018. Back in February, the company unveiled a new partnership with Tetra Bio Pharma that will see the two develop, commercialize, and market cannabinoid oil products for medical applications. Investors are taking recent developments as a sign the company is making progress transitioning to a business focused on the fast-growing cannabis market.

As of 12:10 p.m. EDT, the stock had settled to a 12.4% gain.

Seedlings in a row with each plant being taller than the one before it.

Image source: Getty Images.

So what

Neptune Technologies has worked quickly to pivot toward what it sees as a huge growth opportunity. In August 2017, the company sold its krill oil manufacturing business for $34 million. The move simplified the business and opened management bandwidth to focus on larger market opportunities in cannabis oils, rather than omega-3 fish oils. 

Investors sure haven't complained, as the stock has gained 353% in the last year. That has come from a slew of announcements including partnership agreements, regaining compliance with requirements to remain listed on the Nasdaq exchange, and Canada's broadening of the legalization of marijuana.

Now what

The announcement with Canopy Growth, the leading company in the cannabis market with a market cap of $6.6 billion, is the biggest move to validate the recent all-in bet by Neptune Technologies on the exciting new market. It could provide a great opportunity to boost sales volumes and improve the financial standing of the $300 million business, but investors might be better served playing it safe and waiting for the tiny company to deliver.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.