Alcohol giant buys $190M stake in Canadian cannabis company

One of the biggest alcohol businesses in the world is entering into a strategic relationship with one of the largest medical marijuana companies on the globe, a move that could usher in a new era of investments and partnerships between the industries.

New York-based Constellation Brands will acquire 9.9% of Smiths Falls, Ontario-based Canopy Growth for 245 million Canadian dollars ($190 million), The Wall Street Journal reported.

Constellation – which owns, distributes and markets 100 beer, wine and spirits brands, including Corona and Robert Mondavi – also will be granted warrants that would raise its stake to just under 20% if exercised, according to the newspaper.

The two companies will work together to develop and sell cannabis-infused beverages for the Canadian market, which is expected to legalize infused products in the summer of 2019 – one year after legalizing cannabis oil and dried leaf for recreational use in July 2018.

Constellation, traded on the Nasdaq under the symbol STZ, said it has no plans to sell any cannabis products in the United States.

But its CEO told the Journal that legalization of marijuana at a national level in the United States is “highly likely, given what’s happened at the state level.”

Canopy, traded on the Toronto Stock Exchange as WEED, said Constellation will provide broad support in consumer analytics, market trending, marketing and brand development.

Canopy said in a news release it will use most of the investment from Constellation to fund the expansion of its international growing platform and to support research and development.

In a research note, Toronto-based Beacon Securities analyst Vahan Ajamian said more alcohol companies – as well as pharmaceutical and tobacco businesses – could accelerate plans to enter the legal marijuana industry.

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2 comments on “Alcohol giant buys $190M stake in Canadian cannabis company
  1. George Bianchini on

    What do they think that adding these poisons to the medicine will improve sales? Alcohol and tobacco kill, Cannabis does not! Be careful, the public is waking up poison dealers! nutraceuticals, that’s the big play.
    Healthy food products with CBD. Huge! as far as getting medicated I”ll 4:20 with 7:10.

    Reply

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