VICTOR, N.Y. -- As more states legalize the sale of marijuana, beer and alcohol marketers have been wondering how the change might affect their sales. If consumers can now catch a buzz from pot legally, will fewer look to beer, wine or liquor to relax and escape?
Rather than react after the fact, one marketer has gotten out in front of the issue by buying into the marijuana business.
Constellation Brands, the Victor, N.Y.-based importer of Corona and Modelo beers, Svedka vodka and Mark West wines, among other alcohol brands, has acquired a minority stake in Ontario, Canada-based Canopy Growth Corp., a public company and provider of medicinal cannabis products.
The investment and relationship "is consistent with Constellation Brands’ long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics, while maintaining focus on its core total beverage alcohol business," the company said. "Constellation has no plans to sell any cannabis products in the U.S. or any other market unless or until it is legally permissible to do so at all government levels."
"Canopy Growth has a seasoned leadership team that understands the legal, regulatory and economic landscape for an emerging market that is predicted to become a significant consumer category in the future,” said Constellation Brands President and CEO Rob Sands. “Our company’s success is the result of our focus on identifying early stage consumer trends, and this is another step in that direction.”
Founded in 2014, Canopy Growth Corp. is one of the earliest commercial players in Canada’s legal cannabis market. The company is currently traded on the Toronto Stock Exchange under the symbol WEED and has a market cap of more than $2 billion. The company owns a collection of diverse brands serving customers in Canada and international markets where medicinal cannabis products are legal. In conjunction with this investment, both companies intend to enter into an agreement to exchange knowledge and expertise.
“We look forward to working with the Constellation Brands team to access their deep knowledge and experience in growing brands as we continue to expand our business,” said Bruce Linton, chairman and CEO of Canopy Growth Corp.
The investment is expected to be about $245 million representing an ownership interest of 9.9% of Canopy Growth Corp., plus warrants that give Constellation Brands the option to purchase an additional ownership interest in the future. The transaction is expected to close during the company’s third quarter of fiscal 2018.