Corona owner makes $4 billion bet on cannabis

The maker of Corona is betting that consumers want something more than beer and booze.Constellation B...

Posted: Aug 16, 2018 4:44 AM
Updated: Aug 16, 2018 4:45 AM

The maker of Corona is betting that consumers want something more than beer and booze.

Constellation Brands is spending $4 billion to boost its stake in cannabis company Canopy Growth. Constellation also owns a big wine business, SVEDKA vodka and Casa Noble tequila.

It first invested in Canopy Growth last year, when it bought a 10% stake. Wednesday's move upped its holding in Constellation to 38%, and leaves open the option to purchase a majority controlling share of more than 50%.

Shares of Canopy, which trade on both the New York Stock Exchange and Toronto Stock Exchange surged more than 25% on the Constellation news. (Canopy's TSE ticker is WEED by the way.)

Other publicly traded cannabis companies, such as Cronos and MedMen Enterprises, rallied in the United States and Canada.

Constellation's stock, however, fell nearly 6% after announcing the investment.

Constellation CEO Rob Sands said during Canopy's earnings conference call Wednesday morning that it was an extremely exciting time to be in the cannabis business.

"This could potentially be one of the most significant global growth opportunities for the next decade," Sands said.

Canopy Growth CEO Bruce Linton told CNN's Richard Quest in an interview Wednesday that the deal gives Canopy more credibility.

As more countries around the world start to legalize marijuana, Constellation may be able to launch more cannabis-based alcoholic beverages. Linton told Quest that a drink with no calories that can help fight depression is a possibility for example.

"Constellation gets it. This is happening globally," Linton told Quest, adding that Constellation can benefit by being the first to market with cannabis-based drinks while other beer and alcohol companies are still trying to figure out what to do in the market.

Even though the recreational use of marijuana is legal in California, Colorado and Vermont and several other states, it is still a federal crime to purchase and possess marijuana.

But Bonnie Herzog, an analyst with Wells Fargo, said she expects Constellation and Canopy to partner on "drinkable cannabis products given the enormous growth opportunity ahead" globally.

Herzog added "there is an expectation that marijuana will eventually be legalized in the U.S."

So it may be a matter of when, rather than if, Constellation will be able to sell cannabis beverages in America.

Constellation said it did not have a plan for such a product yet.

Kevin Murphy, CEO of Acreage Holdings, a cannabis producer that has former US House Speaker John Boehner on its board, said in an email to CNNMoney that he expects more beverage companies -- and perhaps even Big Pharma firms -- to look more closely at developing cannabis products too.

One drugmaker, GW Pharmaceuticals, has a cannabis-based treatment for epilepsy called Epidiolex that was recently approved by the US Food and Drug Administration.

West Lafayette
Clear
80° wxIcon
Hi: 81° Lo: 59°
Feels Like: 82°
Kokomo
Few Clouds
74° wxIcon
Hi: 81° Lo: 57°
Feels Like: 74°
Rensselaer
Clear
73° wxIcon
Hi: 79° Lo: 57°
Feels Like: 73°
Fowler
Clear
73° wxIcon
Hi: 81° Lo: 58°
Feels Like: 73°
Williamsport
Clear
78° wxIcon
Hi: 82° Lo: 58°
Feels Like: 80°
Crawfordsville
Clear
76° wxIcon
Hi: 80° Lo: 58°
Feels Like: 76°
Frankfort
Broken Clouds
80° wxIcon
Hi: 80° Lo: 58°
Feels Like: 81°
Delphi
Clear
75° wxIcon
Hi: 84° Lo: 58°
Feels Like: 75°
Monticello
Clear
75° wxIcon
Hi: 84° Lo: 58°
Feels Like: 75°
Logansport
Clear
75° wxIcon
Hi: 80° Lo: 57°
Feels Like: 75°
WLFI Radar
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 51079

Reported Deaths: 2756
CountyConfirmedDeaths
Marion12019693
Lake5588248
Elkhart353959
Allen2939134
St. Joseph210669
Hamilton1691101
Cass16449
Hendricks1454100
Johnson1340118
Porter82638
Tippecanoe7709
Vanderburgh7276
Clark69544
Madison67464
LaPorte61628
Howard59858
Bartholomew59745
Kosciusko5754
Marshall5449
Noble51328
LaGrange4849
Boone48244
Jackson4783
Delaware47152
Hancock46736
Shelby45425
Floyd40644
Morgan34231
Monroe34028
Grant31826
Dubois3046
Henry30018
Montgomery29720
Clinton2903
White27410
Dearborn25823
Decatur25632
Lawrence25225
Vigo2528
Warrick25029
Harrison21722
Greene19432
Miami1932
Jennings17912
Putnam1738
DeKalb1694
Scott1649
Wayne1546
Daviess15017
Perry14710
Orange13723
Steuben1362
Jasper1352
Ripley1307
Franklin1278
Gibson1202
Wabash1162
Carroll1142
Fayette1067
Whitley1066
Starke1043
Newton10010
Huntington942
Jefferson862
Wells821
Randolph794
Fulton731
Knox710
Jay700
Washington681
Pulaski661
Clay645
Rush613
Posey570
Spencer541
Owen521
Benton510
Sullivan501
Adams491
Brown431
Blackford402
Fountain352
Crawford330
Switzerland320
Tipton321
Parke270
Martin260
Ohio230
Vermillion200
Warren151
Union140
Pike110
Unassigned0193

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events