Corona owner pumps $4 billion more into weed producer Canopy

Canopy Growth

Global consumer spending on cannabis will hit US$32 billion by 2022, triple current levels, according to a report this week by USA research firms Arcview Market Research and BDS Analytics. "As we look around the world, we're going to be expanding production, we're going to be doing more research, we're going to develop more intellectual property, we're going to create more leading brands, we're going to have more products and we're going to be way more global".

Constellation Brands Inc., marketer of Corona beer and Kim Crawford wines, is pumping $5-billion into Canopy Growth Corp.to accelerate the Canadian cannabis company's global expansion plans.

Constellation, Molson Coors and Anheuser-Busch are all using the move by the United States' northern neighbor to hedge their bets for the future at a time when beer sales, roughly 60 percent of Constellation's business, are stagnating, particularly with younger Americans.

Now, makers of alcoholic beverages are trying to add cannabis as an edgy ingredient as their traditional business slows.

Also on Wednesday, Canopy reported a net loss $91-million, or 40 cents a share for its fiscal first quarter of 2019, as it made large investments ahead of Canadian legalization. Heineken's Lagunitas craft-brewing label has launched a brand specializing in nonalcoholic drinks infused with THC, the active ingredient in marijuana.

The U.S., where cannabis is legal for medical or recreational use in several states but remains illegal at the federal level, is the "best market" and will become "federally legal sooner than people think", he said.

Canada's largest cannabis company has announced they have closed the biggest deal in the history of the legal cannabis industry.

Constellation Brands acquired a minority stake in Canopy past year for US$191m, announcing its intention to create cannabis-infused drinks.

This transaction also provides further (and needed) affirmation that big alcohol and multi-national CPG's are committed to the cannabis sector for the long term.

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Linton said Wednesday the money would largely be used to position the licensed producer for global expansion opportunities as cannabis becomes legal in new regions.

Canopy, based in Smiths Falls, Ontario, has specialized in the medical product and doesn't now have operations south of the border.

Canopy Growth was founded in 2013 and has a presence in 11 countries.

It is a 51-per-cent premium to Tuesday's closing price on the Toronto Stock Exchange.

Wednesday's gains, if materialized when markets open, could easily take Canopy's stock price past Wall Street's $30 target, as high as $37.

Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner...

The agreement Wednesday will also see Constellation nominate four directors to Canopy Growth's seven-member board of directors.

Canopy's revenue rose 63 percent to C$25.9 million in the three months ended June 30 from a year earlier.

Canopy Growth will remain a Canadian company with its headquarters in Smiths Falls, Ontario, and will continue to be led by its existing management team.

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