Marijuana stocks may finally be getting some respect from professional investors.

Funds holding stock in Ontario-based marijuana producer Canopy Growth (NYSE:CGC) increased their holdings massively in the 2nd quarter. In Q1 2018, CGC comprised a total of 1.69% of all 13F portfolios holding the stock. In the 2nd quarter that number jumped to 31.30%.

A close look reveals that Greenstar Canada Investment LP accounted for much of the jump in CGC’s fund ownership. Greenstar Canada is an affiliate of Constellation Brands, the brewer of Corona beer and distributor of Robert Mondavi wine. Constellation announced on August 14 that is will raise its stake in Canopy to 38 percent in what the companies described was the biggest investment in the marijuana industry yet. The agreement, which could eventually give the Victor, New York-based beverage company control, follows an initial purchase of about a 10 percent stake last year. Canopy shares currently trade at $40 vs $24.60 pre-announcement.

Vanguard Group, JW Asset Management, Morgan Stanley, Two Sigma Investments and the Bank of Montreal were among additional funds significantly increasing their CGC stakes in the 2nd quarter.

Top % of Portfolio – Biggest % Increases – 2nd quarter 2018

Source: WhaleWisdom.com

While Canadians voted last June to legalize cannabis sales at the national level, marijuana remains illegal under federal law in the U.S. However, nine states have legalized recreational marijuana along with many more that allow medicinal sales.

RBC Capital Markets, a subsidiary of the Royal Bank of Canada, released a report on Wednesday estimating that legal US marijuana sales are quickly catching up to those of beer and wine and that legal sales alone could be worth $47 billion within a decade. The firm notes that polls show 83% of Americans back legalization of marijuana.

Nonetheless, U.S. institutions have been reluctant to invest in the burgeoning industry, because of the legalization issues. Constellation Brands’ major investment in Canopy Growth may be a harbinger of increased hedge fund investment in Cannabis companies.

Leading North American cannabis-related stocks by market cap and performance since Constellation announced increasing its stake in Canopy Growth.