Goldman acted as financial advisor to $32 billion Constellation Brands last year when the Corona beer owner increased its investment in Canadian marijuana producer Canopy Growth. Bank of America Merrill Lynch, meanwhile, provided committed financing for Constellation's $4 billion bet on the weed company.
"The global cannabis market presents a significant growth opportunity and Canopy Growth is well-positioned to establish a strong leadership position in this fast-evolving category," outgoing Constellation CEO Rob Sands said in November.
Even traditional tobacco companies have taken note of the powerful uptrend in legal cannabis sales. Marlboro maker Altria said in December that it had agreed to buy a 45 percent stake in leading cannabinoid company Cronos Group for about $1.8 billion.
Such bets have often made lucrative, albeit volatile, investments. The stock price of medical marijuana giant Tilray is up more than 250 percent over the last six months, while rival Canopy Growth is up 86 percent. The ETFMG Alternative Harvest ETF — which tracks the stock performance of companies that are engaged in the legal cultivation of cannabis — is up 40 percent in 2019 alone.
Analysts "have to decide if it's value added," said Pat Hearns, director of research at Longbow Research. Though Longbow does not cover cannabis, Hearns said any sell-side analyst must ask themselves a number of questions before launching coverage. Some things to consider: is there an appetite for such research and if the analyst has any background knowledge that would lend unique insight.
But ultimately, the decision over whether to cover a basket of equities comes down to profit and whether a group of equities is under-covered, Hearns said.
"That's usually the case with an emerging industry. That could be true with cannabis," he added. "I don't think coverage of cannabis — it won't be a moral issue — but [rather]: can you be one of the first to provide some real insights and understand the regulatory backdrop."
Longbow does not cover cannabis because the brokerage is still too small to cover an additional industry, Hearns said. Starting marijuana or hemp coverage "would mean pulling someone from supporting another industry vertical, which I can't do at this time without sacrificing some productivity" elsewhere, he wrote.
Meanwhile many analysts will likely keep their eyes on federal legislation and announcements from the U.S. Justice Department.
The recent U.S. farm bill removed hemp from the federal government's list of controlled substances, a move many in Canadian and American corporate suites believe sparked interest in CBD, cannabidiol. Some who infuse products with CBD claim it can be used to ease a wide range of medical ailments, including epilepsy and arthritis.
Marijuana remains illegal on a federal level in the United States, but 10 states and the District of Columbia have allowed its use for recreational purposes. Michigan became one of the latest to OK marijuana in November.
WATCH: Canopy stock explodes higher