Constellation Brands is betting big that legalization of marijuana will gain traction in the United States, increasing its shares in Canopy Growth from 10 percent to 38 percent, with the option to further increase ownership to 50 percent if warranted.
With the announcement today Canopy shares jumped 33 percent to $42.95 at 9:53 a.m, giving it a market value of US$9.36 billion. Constellation fell 7.2 percent to US$205.79 in New York, reports the Financial Post.
Constellation was the first major alcoholic beverage producer to jump on the cannabis-infused beverage bandwagon. The U.S. distributor for Corona beer disrupted the cannabis industry by taking a 9.9 percent stake in Canopy Growth Corp. in October 2017 for $245 million.
Constellation has been joined by other brewers, like Molson Coors and Anheuser-Busch, all looking north to Canada and the soon to be legal market in marijuana. Molson Coors Brewing earlier this month said its Canadian arm would make cannabis-infused drinks with Hydropothecary Corp.
“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,” Constellation Chief Executive Rob Sands said in a statement, according to Reuters.
“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.”
