Specialty cannabis investment boutique Canopy Rivers has placed a new bet on cannabis-laced gummies. The company announced on Monday that it has invested 2 million Canadian dollars ($1.4 million) in privately held Dynaleo, which intends to manufacture gummies for other companies to sell under their own brands.

Canopy Rivers' investment takes the form of an unsecured convertible debenture accompanied by a set of warrants. These instruments are convertible into Dynaleo common stock; if fully exercised, they would give Canopy Rivers an equity stake of more than 12% in the white-label manufacturer.

Canadian maple leaf surrounded by cannabis leaves.

Image source: Getty Images.

Canopy Rivers' contribution was just one part of a funding round that amounts to CA$7 million ($5 million) in total. The company did not name the other investors.

According to Canopy Rivers, once Dynaleo obtains a license from the Canadian government to produce cannabis-infused edibles, it should begin operations at the factory it owns. 

"In the gummies market specifically, we see a significant supply and demand imbalance and a move toward outsourcing products to leading manufacturers," Canopy Rivers wrote in its announcement. "We think Dynaleo's manufacturing capabilities, combined with its capable management team, position it to help close this supply gap in the short term and become a trusted manufacturer of cannabis edibles in the long term."

Canopy Rivers acts as the so-called "cornerstone investor" for top marijuana company Canopy Growth (NYSE:CGC), the entity it was spun off from in 2018. The two companies are strategic partners; Canopy Growth holds a roughly 27% stake in its relative.

In early afternoon trading Tuesday, Canopy Growth shares were up 2%, approximately in line with the major U.S. stock indexes.