Constellation Brands is spending C$5 billion ($3.8 billion) to boost its stake in Canadian cannabis grower Canopy Growth Corp., betting legalization of the drug will continue to gain traction in the U.S. and around the world.
Constellation, the brewer of Corona beer, will raise its stake in Canopy to 38 percent in what the companies described was the biggest investment in the burgeoning marijuana industry yet, according to a statement Wednesday. The agreement, which could eventually give the Victor, New York-based beverage company control, follows an initial purchase of about a 10 percent stake last year. Canopy shares jumped 33 percent to C$42.95 at 9:53 a.m, giving it a market value of C$9.36 billion. Constellation fell 7.2 percent to $205.79 in New York.
“This is rocket fuel,” Canopy Chief Executive Officer Bruce Linton said of the investment of on the company’s earnings call on Wednesday. “We’re going to be way more global.”
Makers of alcoholic beverages are looking to cash in on the growing use of cannabis around the world as their traditional business slows. Molson Coors Brewing Co. has started a joint venture with Hydropothecary Corp. to develop non-alcoholic, cannabis-infused beverages for the Canadian market. [Read more at The Denver Post]