It certainly has been a great start to the week for the Hydroponics Company Ltd (ASX: THC) share price.
In late morning trade the diversified cannabis company's shares are up a whopping 28% to $1.09.
Why have its shares rocketed higher?
This morning Hydroponics Company announced that its Canndeo business has signed a letter of intent with leading Israeli medicinal cannabis group BOL Pharma for the supply of cannabinoid related products in Australia.
Management believes that gaining access to high quality targeted medicinal cannabis products through BOL Pharma supports its duel supply strategy of importing some of the best cannabinoid related products and cultivating its own medicinal cannabis strains.
According to the release, BOL Pharma has agreed to supply all products required for an initial clinical trial, with the long-term view of providing products for additional clinical trials that are expected to take place in 2018.
Should you invest?
While this is of course a positive development for the company, I'm surprised by how positive investors have reacted to the news.
After all, there is still an enormous amount of work ahead for both the company and the industry as a whole.
In light of this, I would suggest that investors hold off an investment for the time being and wait to see how the situation develops over the coming 12 months. The same applies for industry peers Auscann Group Holdings Ltd (ASX: AC8) and Cann Group Ltd (ASX: CAN).
