Bloomberg — Constellation Brands Inc., which for seven decades has made its money off beer, wine and whiskey, sees its future in a marijuana leaf.
In the biggest (legal) cannabis deal, the Victor, New York-based beverage company will spend about $3.8 billion to boost its stake in Canadian grower Canopy Growth Corp., betting legalization will gain traction around the world and especially in the U.S.
“This is rocket fuel,” Canopy Chief Executive Officer Bruce Linton said on the company’s earnings call Wednesday. “We’re going to be way more global.”
Constellation, among whose brands are Corona and Ballast Point beers and Robert Mondavi wine, will own 38 percent of Canopy, up from about 10 percent, according to a statement Wednesday. The record investment reflects a world in which pot has become ubiquitous as its counterculture stigma fades. In the U.S., a patchwork of state laws and gentle enforcement under the Obama administration have made its pungent odor common from Colorado ski towns to the sidewalks of New York.
Now, makers of alcoholic beverages are trying to add cannabis as an edgy ingredient as their traditional business slows. Molson Coors Brewing Co. has started a joint venture with Hydropothecary Corp. to develop non-alcoholic, cannabis-infused beverages for the Canadian market. Heineken NV’s Lagunitas craft-brewing label has launched a brand specializing in non-alcoholic drinks infused with THC, marijuana’s active ingredient.
After Wednesday’s deal, Canopy’s Canadian shares jumped as much as 52 percent to the highest since the stock began trading in 2010. Constellation fell as much as 9.2 percent, the most intraday since November 2016.
Marijuana once was anathema to polite society and its use harshly punished. It was popular among bohemian types like jazz musicians, and the subject of sensationalist entertainment like “Reefer Madness,” a 1936 film advertised with the line “Women cry for it — Men die for it.” In 1987, the revelation that federal Judge Douglas Ginsburg once sampled its charms torpedoed his nomination to the U.S. Supreme Court. But as decades passed — and prisons filled with otherwise law-abiding users — governments began to run up the white flag.
On Oct. 17, Canada will become the first G-7 country to legalize pot for recreational use. In the U.S., federal law still prohibits the drug, but states from California to Colorado have made it legal, and its medical use is thriving. The situation has created legal dissonance, but also the expectation that America will one day support …read more
Source:: Time – Business