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Constellation Brands, who owns popular beer company Corona, is looking to get into the cannabis industry. They are reportedly looking to work with a grower to create, marker, and eventually sell cannabis-infused beverages.
The Corona Extra giant is looking to buy a 9.9% stake into the world’s largest publicly traded cannabis growing company, Canopy Growth Corporation, according to the Wall Street Journal.
The agreement was confirmed on Monday in a press release from the drink powerhouse.
The $$191 million USD contract is in exchange for almost 10% of the marijuana corporation.
Constellation Brands President and CEO, Rob Sands, decided to go into the business in what he calls “anticipation” of a nationwide legalization of the drug.
"We think that it's highly likely, given what's happened at the state level," said Sands in an interview with the Wall Street Journal.
Beacon Securities analyst Vahan Ajamian expects more alcohol companies to get involved with the pot industry.
“We suspect more alcohol companies may look to accelerate plans to enter the industry — as well as pharmaceutical and tobacco companies,” Ajamian said. “We see this transaction as a game-changer for Canopy, as well as the industry at large.”
The legal cannabis market was $6 billion in 2016 and is expected to reach $50 billion by 2026, according to Cowen & Co. The Financial Post also noted that Canopy shares, referred to “WEED” on the Toronto Stock Exchange, rose 23% to a year-high on Monday.
Sands added that Constellation would also look to start selling in countries where recreational marijuana is legal and that Canada could be a possible option if, as scheduled, legislation there becomes less conservative and more liberal. As of right now, Canada plans to legalize recreational marijuana by July 2018.
Constellation expects the transaction to officially close during the third fiscal quarter of next year, CNBC reports.
California is set to legalize selling of recreational marijuana on January 1st. But, Sands said his company doesn’t intend on selling the new drink in the United States until the drug is legal nationwide.
In the United States, 64% of the population now wants to lift the ban on cannabis, according to a Gallup poll released last week.