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Alcohol Company Spends $191M for 10% Stake in Marijuana Company

Corona Marijuana

Constellation Brands Inc., an international alcohol producer and distributor that is known mostly for the brands Svedka and Corona, is spending $191 million to purchase a nearly 10% stake in Canada’s Canopy Growth Corp., a company that sells medical marijuana products throughout the country.

Demand for alcohol in the U.S. is slowly decreasing, so Constellation wants its piece of the growing legal marijuana pie, Portland Press Herald reports. Constellation has no plans to participate in the legal marijuana market other than with its financial investment.

Constellation Brands CEO Rob Sands said, “Our company’s success is the result of our focus on identifying early-stage consumer trends, and this is another step in that direction.”

Recently, the value of Canopy’s stock rose 23%. Other industry stocks also saw increases in value with this new investment.

Constellation and Canopy will work together to create a marijuana-based beverage to be sold to adults in Canada. The beverages would only be sold where they are legally permitted, such as in legally operating marijuana industry businesses.

Vahan Ajamian, an analyst at Beacon Securities, said, “We see this transaction as a game-changer for Canopy, as well as the industry at large. We suspect more alcohol companies may look to accelerate plans to enter the industry – as well as the pharmaceutical and tobacco companies.”

Photo: Bloomberg