Curaleaf Holdings Inc. (CURLF) soared more than 20% on news that drug chain CVS Health Corp. (CVS) will carry Curaleaf’s line of CBD products in more than 800 stores, per Bloomberg. CBD contains a non-intoxicating derivative of the cannabis plant. The news boosted Curaleaf's market value to nearly $3.8 billion as CVS shares rose more than 2%.

Curaleaf and CVS are tapping into a potentially huge market. Cowen and Co. says CBD products could reach $16 billion in annual retail sales by 2025.

CBD Remains Illegal

CVS confirmed it already is selling cannabis-derivative products include creams, sprays, roll-ons, lotions and salves in some states. The announcement of Curaleaf's distribution partnership with America’s largest drug store chain comes at a time when cannabis products are still under pressure from federal regulators, despite more states across the nation legalizing both medical and recreational use of the plant. Currently, recreational use of marijuana is legal only in a few states.

The USDA has said that CBD remains a drug ingredient, listing it as an illegal additive to food and health products. CBD, unlike tetrahydrocannabinol, another cannabis derivative, has no psychoactive effect.

More Partnerships in the Pipeline

Curaleaf CEO Jose Lusardi said on Wednesday that its products will be available in CVS stores by this Friday, and on the drug chain’s online store soon, which could accelerate the product's U.S. and global sales. Lusardi added that the firm has been in dialogue with national retailers for many months, resulting in a “number of potentially exciting partnerships in the pipeline.”

In the firm’s earnings report posted on Wednesday, the company said revenue was up over 400% to $32 million for the latest quarter, while net losses widened. The company reiterated its revenue guidance at $400 million for the coming year.

Curaleaf's shares have been on a roll, rising about 79% this over three months, more than 5 times the gain of the S&P 500. Despite the rally, the stock has yet to reach its sale price in an October private placement.

Looking Ahead

The cannabis industry has been viewed as a riskier bet than other growth markets because of its legal issues with federal regulators. For that reason, the political and financial risks of investing in CBD products may be lower because of its non-intoxicating characteristics.