(FinancialPress) — Corona beer-owner Constellation Brands (STIZ) recently purchased a minority stake in a Canadian marijuana company – thus sparking the flame for one of the most intriguing business deals of 2017.
While its business model has been centered around beer, wine and spirits, the fact that the company has dipped its toe into the owner pool for Canopy Growth Corp. has caused considerable noise in the market. What will come of the deal, however, is still unknown by either the Ontario-based company, whose stock symbol is, of course, “WEED“, or Constellation itself.
Constellation is the first “Big Alcohol“ that‘s ventured this aggressively into the space. Several corporations in the consumer products sector, including those in the Big Tobacco portion, have long wondered how much revenue could realistically be gained from cannabis-laced products.
Chris Walsh, VP of editorial and strategic development for Denver-based publication Marijuana Business Daily, chimed in on the subject: -“The Constellation deal caught the attention of the alcohol industry and other companies,” said the cannabis commerce journalist.
Canopy cashed in to the tune of USD $195 million from Constellation, for a stake of 9.9% in the company, with an option to acquire more shares further down the road. The former is one of the world leaders in medical marijuana supply. It‘s also readying up to profit from the wave of recreational marijuana legalization.
When the deal was announced, Constellation stated that the move was made as a means to “meet and stay ahead“ of new consumer trends. It also clarified that it will not commercialize cannabis-related products until the consumption is completely legalized “at all government levels“.
This way, Constellation pioneers the investment market for the legal marijuana business with a bold move that really puts an exclamation mark as far as their expectations for the sector go. But it will certainly not be the last major corporation to make strong moves in it.