The company is set to pay US$191m to acquire a 9.9% equity share in the Canada-based Canopy Growth Corporation, however Constellation has no plans to sell any cannabis products in the US or any other market unless it’s considered legal.
The Canadian government is aiming to make the recreational use of cannabis legal on 1 July, 2018.
“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 Rob Sands, president and CEO of Constellation Brands.
“Our company’s success is the result of our focus on identifying early stage consumer trends, and this is another step in that direction.”
Canopy Growth is the world’s leading provider of medicinal cannabis products and is listed on the Toronto Stock Exchange.
Following a recent report released by Euromonitor called Cannabis and the Alcohol Industry; Weed or Fertiliser?, Spiros Malandrakis, senior analyst at Euromonitor International said that this acquisition is a crucial moment in the cannabis industry.
Malandrakis said: “The taboo is now broken, a symbiotic alternative to big alcohol’s traditionalist conservatism and knee-jerk antagonistic positioning is now available and hybrid products can be seen in the horizon once obfuscated by the green haze wafting over North America.”
The report by Euromonitor, released September 2017 said: “The marijuana industry could fuel alcohol’s next growth cycle or instead suffocate an industry already on the defensive.
“The cannabis revolution is in full swing while the alcohol industry appears to be largely sitting on the fence, drink in hand, occasionally throwing crumpled cans in the general direction of the on-going legalisation debate.
“Large parts of the alcohol industry acknowledge and highlight the dangers to their penetration rates and profitability, but largely fail to see the huge potential behind the plumes of hazy smoke.
“Fighting the surging green tide will hence become an expensive exercise in futility. Ignoring it will guarantee the belated, panicky, knee-jerk reactions that greeted the craft juggernaut once it had already established offensive positions at the microbrewers’ gates.
“Cannabis can indeed cross-pollinate and, ultimately, become the fertiliser for radical innovation and experimentation.”
While cannabis decriminalisation and legalisation initiatives are currently focused on the US and Canada markets, their relevance will be global through setting up regulatory frameworks, providing branding and positioning and distribution benchmarks.
