Canopy cannabis woes drives huge loss at alcohol giant Constellation

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Constellation Brands, a New York-state based alcohol giant, on Thursday reported a net loss of $525.2 million in its most recent quarter, with most of the loss coming from its 38% stake in cannabis company, Canopy Growth.

The red ink underscores the uncertainties mainstream companies face when partnering with a business involved in the emerging cannabis industry, which is facing uncertainty in the wake of the vaping health crisis as well as marijuana’s illegal status under federal law in the United States.

Constellation, which reported net income of $1.15 billion for the same period in 2018, attributed “equity losses and related activities” of $484.4 million from its stake in Canada-based Canopy in its fiscal second quarter 2020, which ended Aug. 31.

In 2018, Constellation invested 5 billion Canadian dollars ($3.8 billion) in Canopy.

Constellation, which controls the board at Canopy, fired former co-CEO, Bruce Linton amid frustration about a lack of progress on turning a profit at the Smiths Falls, Ontario-based cannabis company.

Constellation, based in Victor, New York, trades on the New York Stock Exchange as STZ.

Canopy trades on the New York Stock Exchange as CGC and the Toronto Stock Exchange as WEED.

More details about Constellation’s earnings results can be found here.

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