Corona Beer Adds Cannabis
That's exactly what Constellation Brands (NYSE: STZ) has in mind. The S&P 500 member, known for its Corona beer and other alcohol brands, announced that it's investing $245 million (in Canadian dollars) to buy a 9.9% stake in Canopy Growth Corporation (NASDAQOTH: TWMJF). Canopy Growth is a leading medical marijuana provider in Canada.
Constellation will pay about $191 million (C$245 million) for a 9.9 percent stake in Canopy Growth Corp., a Canadian seller of medicinal-marijuana products. The deal kicked off the biggest rally in nearly a year for Canopy, which trades on the Toronto Stock Exchange under the ticker WEED.
The legalization of marijuana in Canada and a growing number of U.S. states is opening up a huge potential market — just as demand for alcohol is slowing. Still, pot remains prohibited at the U.S. federal level, meaning American companies have to tread carefully.
As part of the Constellation agreement, the two companies will collaborate on cannabis-based beverages that can be sold as adult products — but only in places where the products are legal at the federal level. There are several huge ramifications of this deal.