At least one American Big Beer company has realized that fighting cannabis legalization is a losing battle, and they’re jumping in with a $191M USD investment in one of Canada’s largest licensed producers, Canopy Growth Corporation.
On Oct. 30, Constellation Brands, the American distributor of Corona and Modelo, announced their $191M USD ($245M CDN) investment in Canopy Growth Corporation for a 9.9% ownership stake, although in their press release, Constellation stresses that “it has no plans to sell any cannabis products in the U.S. or any other market unless or until it is legally permissible to do so at all government levels”.
Despite medicinal cannabis being legal in 29 states (plus D.C.) and recreational cannabis being legal in 8 states, Canada is poised to beat the U.S. to the punch when it comes to legalizing cannabis federally with the July 2018 deadline.
That makes Constellation Brands’ investment a strategic move by getting their foot in the door of the Canadian market, and as Constellation Brands’ CEO Rob Sands told the Wall Street Journal, “We’re obviously trying to get the first-mover advantage”.
Constellation Brands’ investment also illuminates a double standard when it comes to Canadian and American companies investing in cannabis across the border. It’s apparently ok for Americans to invest in Canadian cannabis, as evidenced by this deal, but Canadian companies that are involved in the U.S. cannabis industry risk delisting on the TSX and TSX-V, as was recently announced by the TMX Group, the operator of those Canadian stock exchanges.
Big Beer vs. Big Cannabis
Constellation Brands’ investment in Canopy Growth Corporation may signal a turning of the tides when it comes to Big Beer and Big Cannabis, as historically, alcohol has fought cannabis legalization over worries of what it would do to their market share.
These concerns are well-founded. In states that allow recreational cannabis, beer sales have fallen between 2-4.4%, according to Business Insider, and a March report from Cannabiz Consumer Group said legal cannabis could cause a $2B drop in beer sales.
That makes Constellation Brands’ investment in Canopy Growth Corp. a milestone moment and a major change in the beer industry’s approach. As the old saying goes, if you can’t beat them, join them.
Cheers to Canna-beers
Cannabis-infused beers are already popping up on the market from craft brewers who have been infusing their brews with terpenes, CBD, and hemp. This isn’t as crazy as it might sound as hops and cannabis are very closely related- both belong to the Cannabinaceae family.
For those looking for a bit of a THC buzz when imbibing, there are a growing number of cannabis cocktail recipes in addition to non-alcoholic drinks such as Modern Martini RX that contain 50-100 mg of THC per bottle. There are also dissolvable THC tablets and powders that consumers can add to their own drinks as well.
But until the U.S. legalizes cannabis federally, Americans won’t see any cannabis-infused beers from Constellation Brands. In Canada, we may get the opportunity to have a cannabis-infused can of beer as soon as July 2018 rolls around.
Constellation Brands: Constellation Brands to Acquire Minority Stake in Canopy Growth Corporation.