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Constellation Brands buys into the marijuana business

The $42-billion company behind Corona, Modelo, and Svedka is betting on marijuana’s national legalisation in the US, if not the world.

CONSTELLATION BRANDS has announced that it has taken a 9.9% minority stake in the $2-billion Canadian medical marijuana company, Canopy Growth.

The stake is worth about $191-million, though Constellation will have the option of purchasing additional stakes in the future.

Using Canopy’s expertise, Constellation is attempting to create cannabis-infused drinks, the Wall Street Journal reported in an interview with Constellation’s CEO.

“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 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.”

The wines and spirits conglomerate has no intention of selling cannabis products in the US until it is legal nationwide. But the company is betting that legalisation is just a matter of time, according to the Journal.

However, Constellation may soon sell the marijuana drink product in Canada, where legalisation of edible and drinkable cannabis products is expected by 2019.

The move comes amid signs that suggest some consumers are reducing alcohol usage in favour of cannabis.

“We believe alcohol could be under pressure for the next decade,” said Cowen analysts led by Viven Azer.

“Consumer survey work suggests [about] 80% of consumers reduce their alcohol consumption with cannabis in the mix.”

Source: Fortune

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