The Corona beer brand’s parent company on Wednesday said it acquired a $4 billion stake in Canadian marijuana producer Canopy Growth Corp, in a deal said to be the largest in the history of the legal pot industry.
Continue Reading Below
Constellation Brands, which also owns the Ballast Point brewing company and Svedka vodka, said the deal would “position Canopy Growth as the global leader in cannabis production, branding, intellectual property and retailing.” Constellation purchased 104.5 million shares, upping its stake in Canopy to 38 percent from a previous level of 10 percent.
“Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner,” Constellation Brands CEO Rob Sands said. “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. We look forward to supporting Canopy as they extend their recognized global leadership position in the medical and recreational cannabis space.”
Canopy Growth shares rose more than 30 percent in trading Wednesday. Constellation Brands shares fell about 6 percent.
Under the deal’s terms, Constellation can exercise options over the next three years that would grant it a controlling stake in Canopy. The alcoholic beverage company joins rivals, including Molson-Coors Brewing and Anheuser-Busch, in exploring business opportunities in the cannabis sector.
At present, recreational marijuana is legal in nine U.S. states, as well as Washington D.C. Constellation and Canopy said they will not sell marijuana products in the U.S. until the substance is legal at federal and state levels, Reuters reported.