Beer Gut to Pot Head - Beer Mak­ers to Cash in on Mar­i­juana

Trillions - - Contents -

Con­stel­la­tion Brands, Inc., the maker of Corona Beer and Robert Mon­davi Wine, just made what has been la­beled as the big­gest deal yet in the boom­ing mar­ket in le­gal mar­i­juana. It is in­vest­ing $3.8 bil­lion to in­crease its own­er­ship in Cana­dian cannabis grower Canopy Growth Cor­po­ra­tion.

Canopy Growth’s home coun­try, Canada, will on Oc­to­ber 17 be­come the first G7 coun­try to make recre­ational mar­i­juana use le­gal. While in the U.S. mul­ti­ple states in­clud­ing Colorado and Cal­i­for­nia have also le­gal­ized mar­i­juana, fed­eral law still blocks le­gal sales of the drug, mak­ing ev­ery­thing from bank­ing to na­tion­wide dis­tri­bu­tion a chal­lenge. That is why the se­lec­tion of Canada and ma­jor provider Canopy Growth is smart strate­gic in­vest­ment for Con­stel­la­tion Brands.

Canopy Growth ‘grew’ its ex­pe­ri­ence in the mar­i­juana field through cul­ti­vat­ing and dis­tribut­ing med­i­cal mar­i­juana within Canada. It can build on that ex­pe­ri­ence as the as-yet-un­known recre­ational de­mand for the drug takes off.

Ac­cord­ing to U.S. re­search firms Ar­cview Mar­ket Re­search and BDS An­a­lyt­ics, ex­pected global con­sumer spend­ing on cannabis prod­ucts could hit $32 bil­lion in 2022. That is triple the cur­rent rev­enues in this area. It also em­ploys a lot of peo­ple, with the U.S. le­gal cannabis in­dus­try – even though frag­mented – cur­rently em­ploy­ing over 200,000 work­ers.

For Canopy Chief Ex­ec­u­tive Of­fi­cer Bruce Lin­ton, the new in­vest­ment from Con­stel­la­tion “is rocket fuel”, as he said in the com­pany’s earn­ings call on Au­gust 15. “We’re go­ing to be way more global.”

With Con­stel­la­tion’s back­ing, the com­bined com­pa­nies could also be get­ting into some­thing else their com­peti­tors are cur­rently ex­plor­ing. Mol­son Coors Brew­ing Co., also with a very strong pres­ence in Canada from the beer side, re­cently launched a joint ven­ture with Hy­dropothe­cary Corp. to cre­ate non-al­co­holic, cannabis-in­fused bev­er­ages for the Cana­dian mar­ket. La­gu­nita, Heineken NV’S craft brew­ing la­bel is even fur­ther ahead. It just started pro­duc­tion on its own non-al­co­holic drink brand fea­tur­ing THC, the ac­tive in­gre­di­ent in mar­i­juana known to cause cog­ni­tive im­pair­ment.

As part of the Canopy deal, Con­stel­la­tion will be able to name four of Canopy Growth’s seven di­rec­tors. While Canopy will still be led by ex­ist­ing man­age­ment, this shift in board power will help pro­vide fo­cus on the new prod­uct and dis­tri­bu­tion strate­gies in the con­sumer field, some­thing Con­stel­la­tion knows very well.

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