While a possible entry into the cannabis space is moving the needle for shares of Molson Coors, a leading analyst does not expecting a chain reaction of merger and acquisition activity.

Molson Coors (TAP.N) stock has jumped more than five per cent over the past two trading days, trading as high as US$70.96 on Monday, after a BNN Bloomberg exclusive revealed the company was exploring a Canadian cannabis partnership ahead of the Oct. 17 legalization of recreational marijuana. And that news follows a deal struck last October between Constellation Brands (STZ.N) and Canopy Growth (WEED.TO).

BNN Bloomberg Exclusive: Molson Coors said to be in talks with pot firms as legalization looms

While investor interest is clearly piqued by traditional industries partnering with cannabis companies, Vivien Azer, a senior analyst covering beverage and tobacco companies at Cowen & Co. says these developments are unlikely to trigger a wave of mergers and acquisitions.

“Right now, outright M&A as it relates to beverage alcohol coming into the Canadian cannabis market is probably going to be pretty limited,” Azer said in an interview with BNN Bloomberg.

“I think taking stakes where these alcohol companies can gain exposure, gain understanding of how the market is evolving will really be step one necessarily,” she said. “I think outright M&A is going to be a longer-term probability as the market continues to develop.”

As investors moved money into the marijuana names in recent years, some of the stocks have made impressive gains. Canopy, for instance, is up more than 370 per cent in the past 12 months alone.

“Valuations are a bit of a challenge in the public markets in Canada because all of the stocks, really, are pricing out a fully available market,” said Azer. “So, not even the ‘wave one’ products we’d see on Oct. 17, but we do think that a lot of the stocks reflect the evolution of the category with expanded access to vape and beverages and edibles.”

Azer believes Molson would seek out a Canadian cannabis company – such as the reported partners Aphria (APH.TO) or Aurora Cannabis (ACB.TO) – merely to dip its toes into the space.

“I think, really, as Molson Coors thinks about this investment, I think it’s much more about deploying, for them, what is a small amount of cash - even though it would be meaningful for Aphria - just to establish the right kind of structure where they’re getting access to the R&D and really starting to get first-hand understanding of the evolution of the market.”

Azer said that cannabis companies are acting responsibly in seeking out potential partners for a beverage space, if and when it opens up.

“Each of these managers is raising capital in a way that they think is prudent for their existing business. But, I think as we see the category develop and we see how consumer demand plays out that that could evolve.”

Azer warns investors should be wary of whether cannabis companies can meet the obligations they’ve already signed for ahead of the legalization date.

“Funded capacity and the ability to meet the supply agreements that all these LPs are now striking with the crown corporations is going to be critical.”