Ron Strider
Well-Known Member
It's a mind-expanding investment, man.
With the recent purchase of a minority stake in a Canadian marijuana company, Constellation Brands – whose major beer division is based in Chicago and is best known for selling Corona beer, wine and spirits – is lighting up one of the year's most intriguing business deals.
What ultimately emerges from this union remains to be seen – even to Constellation and Ontario-based Canopy Growth Corp., a publicly traded medical marijuana grower and supplier with the apt stock symbol "WEED."
Nonetheless, many corporate eyes are on Constellation's aggressive pot play, especially consumer product giants that have long wondered how much green could be made by legally selling grass-laced concoctions. This group includes Big Alcohol and Big Tobacco.
"The Constellation deal caught the attention of the alcohol industry and other companies," said Chris Walsh, vice president of editorial and strategic development for the Denver-based Marijuana Business Daily, which chronicles cannabis-related commerce.
Recently, Constellation announced a $195 million purchase (in U.S. dollars) of a 9.9 percent stake in Canopy, a world-leading provider of medical marijuana that also expects to profit from widespread legalization of recreational pot.
Constellation has options to buy more shares at a later time.
When announcing the Oct. 30 deal, the company said it wanted to "meet and stay ahead" of new consumer trends. Constellation added it would not be selling any cannabis products in the U.S. until it was "legally permissible at all government levels."
Since a Constellation spokesman did not return my phone calls or email, it is unclear what lies ahead.
But let's consider some possibilities.
Constellation's investment may be a smart hedge against any future declines in its beer and spirits sales – brought on by new competition spawned from the increased legalization of recreational marijuana. Right now, seven states and Washington, D.C., allow such marijuana use, and Canada is working out details to do the same.
There's more legalization to come and the recreational cannabis market is expected to hit a lofty $50 billion by 2026, according to Cowen and Co., a New York-based investment house. Cowen is also predicting brewers and distillers will lose market share as more customers decide to smoke instead of sip.
At the very least, Constellation's bid gives it a front-row view of the marijuana business and how it might capitalize off that emerging market.
For example, Constellation and Canopy could develop new grass-based beverages or product lines – items that would be sold via Constellation's global marketing and distribution network.
In addition, Canada's handling of recreational marijuana sales – along with the financial, taxes and other regulatory issues that accompany its introduction – will give Constellation a good idea of what to expect should the U.S. government eventually approve such nationwide pot selling.
At the very least, the Canopy deal gives Constellation a toehold in what promises to be a highly lucrative commercial segment.
Looking ahead, you have to wonder if Constellation's rivals – and other types of consumer product companies – see this agreement as a template for making similar arrangements or partnerships.
There's long been industry speculation that the alcohol and tobacco giants have been itching for a way to tap into the legal pot business.
That hasn't yet happened, mainly because of regulatory and public opposition. But acceptance to recreational weed is picking up momentum even in Illinois.
This week, for example, Cook County Board President Toni Preckwinkle came out in favor of an advisory referendum on whether pot use should be legal.
And a plan to legalize recreational marijuana use was floated this year in the Illinois General Assembly. The state already has approved medical marijuana.
Constellation is making a pioneering investment in the legal marijuana business.
But it won't be the last major company to smoke out this type of venture.
News Moderator: Ron Strider 420 MAGAZINE ®
Full Article: There's a buzz surrounding Constellation's legal marijuana deal - Chicago Tribune
Author: Robert Reed
Contact: Chicago Tribune contacts - Chicago Tribune
Photo Credit: Getty Images
Website: Chicago Tribune: Chicago breaking news, sports, business, entertainment, weather and traffic
With the recent purchase of a minority stake in a Canadian marijuana company, Constellation Brands – whose major beer division is based in Chicago and is best known for selling Corona beer, wine and spirits – is lighting up one of the year's most intriguing business deals.
What ultimately emerges from this union remains to be seen – even to Constellation and Ontario-based Canopy Growth Corp., a publicly traded medical marijuana grower and supplier with the apt stock symbol "WEED."
Nonetheless, many corporate eyes are on Constellation's aggressive pot play, especially consumer product giants that have long wondered how much green could be made by legally selling grass-laced concoctions. This group includes Big Alcohol and Big Tobacco.
"The Constellation deal caught the attention of the alcohol industry and other companies," said Chris Walsh, vice president of editorial and strategic development for the Denver-based Marijuana Business Daily, which chronicles cannabis-related commerce.
Recently, Constellation announced a $195 million purchase (in U.S. dollars) of a 9.9 percent stake in Canopy, a world-leading provider of medical marijuana that also expects to profit from widespread legalization of recreational pot.
Constellation has options to buy more shares at a later time.
When announcing the Oct. 30 deal, the company said it wanted to "meet and stay ahead" of new consumer trends. Constellation added it would not be selling any cannabis products in the U.S. until it was "legally permissible at all government levels."
Since a Constellation spokesman did not return my phone calls or email, it is unclear what lies ahead.
But let's consider some possibilities.
Constellation's investment may be a smart hedge against any future declines in its beer and spirits sales – brought on by new competition spawned from the increased legalization of recreational marijuana. Right now, seven states and Washington, D.C., allow such marijuana use, and Canada is working out details to do the same.
There's more legalization to come and the recreational cannabis market is expected to hit a lofty $50 billion by 2026, according to Cowen and Co., a New York-based investment house. Cowen is also predicting brewers and distillers will lose market share as more customers decide to smoke instead of sip.
At the very least, Constellation's bid gives it a front-row view of the marijuana business and how it might capitalize off that emerging market.
For example, Constellation and Canopy could develop new grass-based beverages or product lines – items that would be sold via Constellation's global marketing and distribution network.
In addition, Canada's handling of recreational marijuana sales – along with the financial, taxes and other regulatory issues that accompany its introduction – will give Constellation a good idea of what to expect should the U.S. government eventually approve such nationwide pot selling.
At the very least, the Canopy deal gives Constellation a toehold in what promises to be a highly lucrative commercial segment.
Looking ahead, you have to wonder if Constellation's rivals – and other types of consumer product companies – see this agreement as a template for making similar arrangements or partnerships.
There's long been industry speculation that the alcohol and tobacco giants have been itching for a way to tap into the legal pot business.
That hasn't yet happened, mainly because of regulatory and public opposition. But acceptance to recreational weed is picking up momentum even in Illinois.
This week, for example, Cook County Board President Toni Preckwinkle came out in favor of an advisory referendum on whether pot use should be legal.
And a plan to legalize recreational marijuana use was floated this year in the Illinois General Assembly. The state already has approved medical marijuana.
Constellation is making a pioneering investment in the legal marijuana business.
But it won't be the last major company to smoke out this type of venture.
News Moderator: Ron Strider 420 MAGAZINE ®
Full Article: There's a buzz surrounding Constellation's legal marijuana deal - Chicago Tribune
Author: Robert Reed
Contact: Chicago Tribune contacts - Chicago Tribune
Photo Credit: Getty Images
Website: Chicago Tribune: Chicago breaking news, sports, business, entertainment, weather and traffic
