Curaleaf Holdings Inc. shares soared Wednesday to lead the cannabis sector higher, after the company announced it is acquiring Cura Partners, the parent of the Select brand, in an all-stock deal valued at C$1.27 billion, or about $949 million.

Curaleaf shares CURLF, -4.31% shot up 15% on the news, which includes all of the Portland, Ore.-based company’s manufacturing, processing, distribution, marketing and retailing operations and all adult-use cannabis products marketed under the Select brand name, including its intellectual property. Select products are sold at more than 900 retailers in states that have legalized cannabis.

Curaleaf will issue about 95.6 million subordinated voting shares to finance the deal, which is expected to close this year. Like many deals in the new cannabis sector, this one constitutes a “related party transaction,” because Curaleaf chairman Boris Jordan has an interest in the proposed deal, Curaleaf said in a statement.

To avoid any appearance of conflict of interest, the deal was negotiated by management and advisers under a special committee, which paid for a fairness opinion from Beacon Securities Ltd. On closing, Cura’s Founder Cameron Forni will join Curaleaf as president of Select.

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Hexo Corp. shares HEXO, -3.91% HEXO, -1.11% rose 1.8%, recovering some of their prior-day losses that came amid concerns about heavy flooding near its production facility in Gatineau, Quebec. The company said the facility was not at risk and had been spared in 2017 during another flood.

However, in the company’s fiscal 2017 financial statements, Hexo said it took a C$118,264 ($88,234) write-down as a “result of a flood at the company’s facility.”

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When asked about that discrepancy, a company spokeswoman said, “The write-down of inventories indicated in our 2017 financial statement refers to an equipment malfunction in June of 2017.” The spokeswoman clarified that a malfunction caused the flooding, but did not go into detail about what transpired.

For more, see: Hexo denies cannabis facility is affected by flood as stock suffers

The company early Wednesday said it has named its vice president of strategic finance as interim chief financial officer. Steve Burwash is replacing Ed Chaplin, who is leaving. The company is expecting to conclude an executive search in the near term.

Canopy Growth Corp. CGC, -1.63% , WEED, -0.87% the biggest cannabis company in the world measured by market capitalization, and Tilray Inc. TLRY, -0.95% , are expected to benefit from the news that the U.S. Food and Drug Administration is requiring that many prescribed sleep aids carry a Boxed Warning, the regulator’s most severe warning, according to Piper Jaffray analyst Michael Lavery.

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The FDA is concerned that some medications lead patients to engage in life-threatening activities while not fully awake.

“We believe this news may be positive for cannabis-derived sleep aids, especially products containing CBD, which are not associated with similar risks or side effects,” Lavery wrote in a note to clients.

He noted that the World Health Organization has concluded that CBD does not appear to have abuse potential or cause harm and said the FDA may view CBD products as an alternative.

Piper rates Canopy and Tilray as overweight, the equivalent of buy. Canopy shares were up 2.1% and Tilray was up 1.0%.

In regulatory news, military veterans hoping for legislation to ease their access to medical cannabis and allow U.S. Department of Veterans Affairs doctors prescribe and research it were likely disappointed by a congressional hearing on Tuesday. Officials from the department and the administration of President Donald Trump said they oppose a series of bills on the matter, as reported by Marijuana Moment, a website that works with activists, industry representatives and policy makers on trends affecting cannabis.

Advocates have pushed for legislation that will help veterans suffering from a number of conditions including post-traumatic stress disorder and chronic pain. Support was widespread among witnesses and subcommittee members, however, according to the website.

Elsewhere in the sector, Green Organic Dutchman Holdings Ltd. TGOD, -3.27% TGOD, -3.27% was up 1.8%. The company said it would open a second legal cannabis store in Jamaica in cooperation with Epican Medicinals on May 4. Three further outlets are planned.

GW Pharmaceuticals PLC GWPH, -1.79% was down 3.2%. Aurora Cannabis Inc. was down 0.7%, medical cannabis retailer MedMen Enterprises Inc. shares MMNFF, -2.08% were flat and Aphria Inc. APHA, -4.84% APHA, -3.87% was down 2.1%. Valens GroWorks Corp. US:VGWCF was down 0.3%.

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Read:Tilray stock rises after the company shows it can sell recreational pot

The Horizons Marijuana Life Sciences ETF HMMJ, -1.53% was up 0.3%, and the ETFMG Alternative Harvest ETF MJ, -0.67% was flat.

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Meanwhile, the Dow Jones Industrial Average DJIA, +0.03% was up 0.4%, while the S&P 500 index SPX, +0.13% was up 0.3%.

Additional reporting by Max Cherney

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