Cannabis producer Tilray is making a big bet on the world's largest hemp food company (TLRY)

Tilray announced Wednesday that will acquire Manitoba Harvest, the world's largest hemp food company, in a cash and stock deal.
Tilray will pay 419 million Canadian dollars ($318 million).
Tilray began trading on the Nasdaq in July, becoming the first cannabis company to have an initial public offering in the US. Since then, it has sped up developing its cannabis business.
Watch Tilray trade live.

The Canadian marijuana-producer Tilray announced Wednesday that it will acquire Manitoba Harvest, the world's largest hemp food company. Shares were up 1.1% to $77.88 in early action.

Tilray said it has entered into a definitive agreement to acquire Manitoba Harvest for up to 419 million Canadian dollars ($318 million) in a deal that will be financed through cash and Tilray's class 2 common shares. It won't involve any debt, according to the marijuana company.

Hemp is a plant that's roughly identical to marijuana and is a key source of the highly touted wellness ingredient cannabidiol. It was legalized in the US after the passage of the Farm Bill in December.

"Were excited to work with Manitoba Harvest to develop and distribute a diverse portfolio of branded hemp-derived CBD food and wellness products in the U.S. and Canada," said Tilray President and CEO Brendan Kennedy in a press release.

"Tilrays acquisition of Manitoba Harvest is a milestone for the cannabis industry. It builds on the strategic partnerships we have formed with consumer brand industry leaders and demonstrates our track record of disrupting the global pharmaceutical, alcohol, CPG, and functional food and beverage categories."

The deal gives Tilray "access to a broad portfolio of food products that are currently distributed in 16,000 stores in the US and Canada, with the opportunity to expand beyond the food category, including extracts," said Cowen analyst Vivien Azer in a note out Wednesday.

Tilray began trading on the Nasdaq in July, becoming the first cannabis company to have an initial public offering in the US. Since then, it has sped up developing its business.

In December, Tilray announced a partnership with a division of the Swiss drug giant Novartis AG , hoping tocommercialize itsnon-smokable medical-cannabis products, develop new products, and educate pharmacists and physicians about cannabis.

In January, the company said it planned to acquire the cultivator Natura Naturals . After the deal, Tilray will be able toexpand its capacity to supply high-quality branded cannabis products to the Canadian market.

Tilray was up 11% this year through Monday.