CANADA – Leading American alcoholic beverages producer Constellation Brands has acquired a 9.9% minority stake in Ontario, Canada-based Canopy Growth Corporation, the leading provider of medicinal cannabis products in Canada for US$245 million.
According to the company, the investment and relationship are set to lend insights on the emerging and evolving consumer trends in the cannabis market.
“Canopy Growth has a seasoned leadership team that understands the legal, regulatory and economic landscape for an emerging market that is predicted to become a significant consumer category in the future,” said Constellation Brands President and Chief Executive Officer, Rob Sands.
“Our company’s success is the result of our focus on identifying early-stage consumer trends, and this is another step in that direction.”
The investment gives Constellation Brands the option to purchase an additional ownership interest in the future.
Canopy Growth Corporation is one of the earliest commercial players in Canada’s legal cannabis market, currently traded on the Toronto Stock Exchange (TSX) under the symbol “WEED” and has a market cap of more than CAD$2 billion.
The company owns a collection of diverse brands serving customers in Canada and international markets where medicinal cannabis products are legal.
The global medicinal cannabis market is projected to reach US$55.8 billion by 2025 according to a recent research by Grand View Research Inc.
Driven by a number of legalisations in over 29 US states and other countries around the world that have legalised its use in pain management and medical procedures such as chemotherapies, the category is expected to grow substantially as consumer and Governments’ attitudes change.
In Canada, Statista estimates that the market for medicinal cannabis will hit US$902 million by 2020, if the country doesn’t legalise recreational use by that time, which would increase the market potential substantially.
“We are thrilled to have the backing of such a well-established and respected organization such as Constellation Brands,” said Bruce Linton, Chairman and Chief Executive Officer, Canopy Growth Corporation.
“We look forward to working with the Constellation Brands team to access their deep knowledge and experience in growing brands as we continue to expand our business.”
The investment in the cannabis producer and relationship are consistent with Constellation Brands’ long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics while maintaining focus on its core total beverage alcohol business.
Constellation says that it has no plans to sell any cannabis products in the US or any other market unless or until it is legally permissible to do so at all government levels.