Constellation Brands, the alcohol company that makes Corona beer, Svedka vodka, and Robert Mandavi wine, has invested $4 billion in Canopy Growth (NYSE:CGC), a Canadian cannabis producer, in what is the "biggest known deal in the marijuana industry". Ten months earlier, Constellation took a 10 percent stake in Canopy to help create nonalcoholic cannabis-infused drinks and other products. The company now has a 38 percent stake and has the right to increase that to 50 percent.
If Constellation decides to take a majority stake in Canopy Growth, will Canopy Growth be listed under the parent company Constellation? (i.e. will CGC be delisted and relisted under the Constellation company ticker (NYSE: STZ)? Have any of you guys invested in Constellation Brands or Canopy Growth?
More Information:
Legal cannabis is among the biggest possible risks to the alcohol business, according to Molson Coors.
So far Heineken and Molson Coors have moved to sell cannabis-infused drinks. Heineken’s Lagunitas brand has started selling nonalcoholic sparkling water featuring THC, the active component of marijuana. And Molson Coors has formed a joint venture with Hydropothecary, a weed producer, to make cannabis-infused beverages.
Constellation has had slowing growth in its alcohol business and thus diversified with possibly one of the biggest up and coming markets, the marijuana industry, which is expected to more than triple in size from 2015-2020:
The research firm Euromonitor estimates that the American market for legal marijuana products will reach $20 billion by 2020, up from $5.4 billion in 2015. - Michael J. de la Merced, N.Y. Times
What Corona Owner’s $4 Billion Bet on a Marijuana Firm Says About Pot’s Future
I personally think this is a great move for Constellation Brands. It's much better to be a first-mover in this space than a follower after the movement is well underway. It also helps diversify the company away from its alcohol business line.
As far as whether or not I would invest in either of these companies, Canopy Growth just had a huge run-up, so I might invest in them if their share price drops soon. Otherwise, I think I may invest in Constellation Brands due to the benefits the company may reap from its stake in Canopy.
Quisquam ipsam non eligendi ut perspiciatis assumenda. Sed minima asperiores excepturi fugiat voluptate et.
Neque commodi ut dignissimos deserunt. Error ratione labore rerum rem tempora iusto nesciunt voluptate. Labore eveniet est est. Assumenda consectetur voluptatem libero sequi non asperiores est. Fugiat impedit occaecati sit fuga officiis. Reiciendis eos quas iusto accusamus repudiandae id.
Temporibus id ullam earum aut. Corrupti qui omnis tempore enim minus nihil. Eos et consectetur hic error deserunt odit inventore qui. Quia eligendi ea eum dolores magnam. Non illo sint aut repellendus et quo consectetur. Molestiae non non voluptatem temporibus. Velit consectetur quos quasi delectus eligendi veniam.
Nesciunt aut accusamus quae aspernatur. Officia soluta et sit accusantium ratione natus. Eveniet a totam totam neque explicabo. Vero voluptatem rerum laborum molestias.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...