3rd Biggest Beer Company Spends $191M On Largest Marijuana Producer, Will Make Weed-Based Drinks
Many believed that the legalization of marijuana would make alcohol manufacturers worry because it would take away from their business, which is a very, very lucrative industry. In 2016, the total alcoholic beverage sales in the United States amounted to approximately $223.2 billion. The alcohol industry has enjoyed an increase in sales over the past few years, but as more and more states legalize marijuana, legal weed jeopardizes big alcohol’s profits. One of the biggest alcohol companies in the world has already decided that if you can’t beat them, join them.
Constellation Brands, the third biggest beer company in the United States, acquired a 9.9% stake in Canopy Growth, the largest legal marijuana producer in the world. The beer behemoth paid $191 million for its stake in Canopy Growth, making Constellation the biggest shareholder of the weed giant. “Our company’s success is the result of our focus on identifying early-stage consumer trends, and this is another step in that direction,” Constellation Brands CEO Rob Sands said in a statement. Sands said that it is “highly likely” that marijuana will be legalized nationally in the United States in the coming years. The same sentiment is held by a 64% majority of the U.S. population who wants to legalize weed according to a Gallup poll released last week, and it is the highest percentage since the polling company began asking the question back in 1969. For now, Constellation is said to have no plans to sell cannabis in the U.S. or other markets until it’s legal “at all government levels.”
Many believe that legalized marijuana could hurt beer sales, but Constellation believes it may go in a new direction. As part of the agreement, the two companies will collaborate on cannabis-based beverages. However, they will only be available where weed is legal at the federal level. “This looks a lot like the new normal,” Canopy CEO Bruce Linton said of the cannabis drinks. “There’s no need to include alcohol, nor is there an intent to include alcohol in how we follow through with things.”
Constellation, which is based in Victor, N.Y., consists of big-name alcohol brands such as Corona, Modelo Especial, Pacífico, Svedka Vodka, Casa Noble Tequila, and Robert Mondavi. The Ontario-based Canopy Growth was founded in 2014 and has had spectacular growth and already supplies nearly half of Canada’s medical marijuana. As of Nov. 16, 2016, Canopy Growth had a $2 billion valuation, thanks in part to eight U.S. states passing ballot initiatives to legalizing marijuana in some form, which happened the week before. Fun fact: Canopy Growth has the greatest stock market ticker symbol of all-time and trades on the Toronto Stock Exchange under the name “WEED.”