Corona Beer Parent Company Invests $4 Billion into Cannabis

Corona cannabis industry mg Retailer

VICTOR, NY- The maker of Corona and Modelo is making a major investment into the cannabis industry.

Constellation Brands is investing $4 billion in Canopy Growth, a cannabis producer. The investment comes after an initial investment in October by Constellation which included an option to acquire more of Canopy in the future. Now Constellation will control 38 percent of Canopy.

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“Over the past year, we’ve come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy’s market-leading capabilities in this space,” Constellation Brands CEO Rob Sands said in a statement.

“We think the premium paid as well as the size of [Constellation’s] investment reflects the long-term attractiveness of the global cannabis opportunity,” an analyst at Cowen, an investment and consultation firm, said in a statement.

Constellation also has the chance to purchase an even greater share of Canopy. They can acquire an additional 139.7 million new shares over the next three years which could be valued at up to $5 billion.

Analysts are concerned that the Canadian cannabis market is overvalued. If that is the case then Constellation’s investment could be considered risky. But Canopy Bruce Linton pushed those concerns aside and signaled that Canopy will adapt with whatever the future cannabis market demands.

In Canada,¬†“by 2020 or 2021, there will be too much cannabis produced. If I’m still selling primarily an ingredient, I have completely dropped the ball. You want to transform it,” Linton told CNBC.

Canopy does not plan to sell cannabis-infused drinks in the United States until national legalization occurs. However, since Canada will start recreational sales nationally in October, Canopy may offer infused drinks as soon as next year there.

Constellation is not the first beer producer to enter the cannabis industry lately. Lagunitas, owned by Heineken, already produces a cannabis beer and Molson-Coors also recently announced a plan to produce non-alcoholic cannabis drinks in Canada.

Canopy may be looking to take its cue from Lagunitas.

“It goes back a long time. We’ve been thinking about beverages as a way to mood modify and socialize,” Linton said according to CNBC.

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