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Why Marijuana Stock Cronos Group Shot 8% Higher on Friday

By Eric Volkman - Updated May 22, 2020 at 6:22PM

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An early-stage research study indicates a cannabis substance may be effective in treating COVID-19.

What happened

The stock of Cronos Group (CRON -1.62%) ended the week on a high note, rising more than 8% on Friday to outpace the gains of the broader market. The catalyst seemed to be various media reports of a medical study indicating cannabidiol (CBD) might be useful in fighting COVID-19. Cronos has a major CBD asset in its Lord Jones product line. 

Stethoscope with marijuana leaf.

Image source: Getty Images.

So what

Although the results of the study, conducted by researchers at the University of Lethbridge in Canada, were published last month, they are only now hitting the news media and getting on the radar of investors.

The findings are extremely promising for CBD, a compound in marijuana and particularly in hemp that apparently has medicinal properties. The Lethbridge study indicates that it helps block "pathway" proteins that COVID-19 uses to enter host cells.

The researchers emphasized that this is only an initial study, and more research is needed. 

Among marijuana companies, Cronos stands out somewhat for having a dedicated CBD product line. It bought U.S. CBD products specialist Lord Jones in 2019; these days, the subsidiary is responsible for more than a quarter of the company's net revenue after excise taxes.

Now what

We should note that the Lethbridge study has not yet been peer reviewed, a crucial step with such research. The researchers are currently seeking funding to expand their project. Anyone invested in or tracking the progress of marijuana stocks should certainly keep an eye on developments with this research, and any similar efforts that may be launched.

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