Corona invests $3.8bn in Canadian cannabis firm

Corona brewers, Constellation Brands, extends its investment in Canadian cannabis company Canopy Growth Corp


Constellation Brands, the New York brewer that owns Corona Beer, has extended its stake in Canadian cannabis grower, Canopy Growth Corp, by a further $3.8bn. This has increased its percentage of ownership in the company from the 10% stake it bought in 2017 to 38%, in what is believed to be the largest investment in the flourishing cannabis market to date.

Following the lead of Portugal, which decriminalized all drugs in 2001, and more recently Uruguay, which legalized cannabis in late 2013, Canada was the first G7 country to legalize marijuana countrywide. Since then, sales in cannabis, predominantly for recreational use, has continued to grow and is predicted to reach $4.9bn by 2022, with global consumer spending hitting $32bn globally, triple what it is now.

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Constellation Brands, which is visible in all 11 of the world's markets, has banked on this inherent popularity and looking to cannabis to diversify its slowing, traditional business, and it is not alone. Both Molson Coors Brewing co. and Heineken are developing non-alcoholic, THC (the active ingredient in marijuana) infused beers.

In a statement released by Constellation, CEO Rob Sands said, "Over the past year, we've come to better understand the cannabis market, the tremendous growth opportunity it presents and Canopy's market-leading capabilities in this space."

However, despite recreational marijuana being legalized in nine US states and medical marijuana legal in 30 states, the substance is still federally banned, which has put Constellation in a legally precarious position. Upon the announcement, while Canopy's shares skyrocketed up by 33%, Constellation's shares fell by 7.2%. Therefore, while Constellation is committing itself to a future where marijuana is legal, at least throughout the US, it is doing everything it can to ensure it is on the right side of the law till that time comes.

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"Canopy Growth remains committed to not entering the US market in any manner that would contravene US federal laws," the company explained in a statement. However, it did add that the law change may happen "sooner than people think", and claimed it is doing everything it can to get ready for the law once (if) it does change.

Currently, more than 200,000 are employed in the US cannabis industry and it is slowly but surely gaining more societal acceptance and, maybe more importantly, political clout. To Canopy CEO Bruce Linton, the future looks positive. "This is rocket fuel," he said. "We're going to be way more global."

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