U.S. Based Beer Maker to Buy Into Cannabis Grower

Constellation Brands the U.S. based beverage company agreed it would buy a stake of nearly 10% in Canopy Growth Corporation, which is the largest cannabis company in the world that is publicly traded.

Constellation, which is a beer distributor and the owner of Corona beer and Svedka vodka, will reportedly work with the cannabis grower to develop, market as well as sell beverages that are cannabis infused.

The agreement to take a stake in the company was confirmed Monday through a press release. The stake is for C$245 million or $191 million for a stake of 9.9% in Canopy Growth Corp.

It is considered by the CEO and President of Constellation Brands Rob Sands in anticipation to the legalization nationwide of marijuana recreational use in the U.S.

During an interview online Sands said that the company is of the opinion that it is very likely, given what has taken place in different states, that marijuana use will eventually become legal across the country.

During 2018, California will legalize cultivation as well as the selling of marijuana for recreational use, but the Constellation Brands CEO said his company was not planning to sell that product in the United States, until marijuana was made legal nationwide.

Sands added that the beverage maker and distributor would look to begin selling in nations where that already have legalized the recreational use of marijuana and one option for that would be Canada, as it appears likely that scheduled legislation to relax the law could be passed as soon as 2018.

Constellation Brands posted a record of net sales for its 2017 fiscal year of $7.3 billion and is listed on the S&P 500 index.

Canopy Growth, which is the largest cannabis company in the world that is publicly traded, has a C$2.2 billion market valuation. It trades on the Toronto Stock Exchange.

The beer make and distributor said it expects that this transaction will close during the fiscal 2018 third quarter for the company.

It has been estimated that the market in Canadian for cannabis is worth between $5 billion and $10 billion ahead of the expected legalization nationwide in 2018.

The deal signed by Constellation and announced on Monday gives the company an option of purchasing more ownership in Canopy at a future date. At the time of publishing $1 was equal to C$1.283.

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