constellation canopy

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What is Constellation Brands’ stake in Canopy Growth?

Constellation Brands first acquired a 9.9 percent stake in Canopy Growth in October 2017, as it sought to gain a foothold in the recreational marijuana market. The beer and wine giant later raised its stake in Canopy Growth to 38 percent in August 2018 after it announced an investment of C$5 billion, or $4 billion.

Is constellation’s partnership with Canopy Growth a green rush in cannabis?

The same strength can’t be said of its partnership with Canopy Growth ( CGC -6.57%), the Canadian cannabis company Constellation invested $4 billion into in 2017 in what became a green rush among giant corporations to stake claims in the budding pot market.

What are Constellation Brands’ partnerships up to?

Speaking of partnerships, Constellation Brands also announced it was entering into one with Coca-Cola ( KO -0.46%) to produce ready-to-drink (RTD) beverages under the soda maker’s Fresca brand. Industry site IWSR expects RTD volume to double in size by 2025, growing at a 15% annual rate between 2020 and 2025 in 10 global markets.

Why do we want to work with Constellation?

“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.”

What is the stake in Canopy Growth?

Constellation Brands first acquired a 9.9 percent stake in Canopy Growth in October 2017, as it sought to gain a foothold in the recreational marijuana market. The beer and wine giant later raised its stake in Canopy Growth to 38 percent in August 2018 after it announced an investment of C$5 billion, or $4 billion.

How many common shares does Constellation have?

As a result of the acquisition of new common shares in Canopy Growth, Constellation Brands now indirectly holds a total of 142.25 million common shares, 139.75 million warrants to purchase common shares, and C$200 million principal amount of senior notes.

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Don’t underestimate just how big of a deal Constellation’s expanded investment in Canopy is

Keith began writing for the Fool in 2012 and focuses primarily on healthcare investing topics. His background includes serving in management and consulting for the healthcare technology, health insurance, medical device, and pharmacy benefits management industries. Follow @keithspeights

Rocket fuel for Canopy

Canopy Growth CEO Bruce Linton said in the company’s quarterly earnings conference call that the Constellation investment is "rocket fuel" for his company. That’s a good way of putting it.

Massive impact

Don’t look for Canopy Growth to acquire any of its fellow Canadian marijuana growers. Canopy stated that its "Canadian platform does not require additional cannabis cultivation assets." But the news of the Constellation investment generated plenty of buzz for other Canadian marijuana stocks.

What’s next?

Canopy Growth will probably begin spending some of its massive cash stockpile very soon. Linton said there could be strategic investments each quarter and hinted at the possibility of future U.S. expansion.

Beer, not pot, is the alcoholic beverage maker’s strength, but the cannabis stock keeps generating losses

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Key Points

Constellation Brands’ beer sales continue to show strength, with Corona and Modelo depletions surging.

Beer hasn’t gone flat for Constellation

Constellation Brands said net sales of $2.32 billion were 4.9% lower than last year, but they still eked out a gain over analyst consensus estimates by $40 million.

Cannabis still causing headaches

The same strength can’t be said of its partnership with Canopy Growth ( NASDAQ:CGC), the Canadian cannabis company Constellation invested $4 billion into in 2017 in what became a green rush among giant corporations to stake claims in the budding pot market.

Cashing in on a growing trend

Speaking of partnerships, Constellation Brands also announced it was entering into one with Coca-Cola ( NYSE:KO) to produce ready-to-drink (RTD) beverages under the soda maker’s Fresca brand.

A stock ready to pop?

Still, the RTD space is very crowded, and Constellation is going to be spending between $5 billion and $5.5 billion on upgrading its brewery capacity in Mexico between now and fiscal 2026. That is going to constrain Constellation’s ability to expand earnings, even without the drag of marijuana on its operations.

What is canopy growth?

Canopy Growth (TSX: WEED) (NYSE: CGC) is a world-leading diversified cannabis and hemp company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time. The Company has operations in 12 countries across five continents. The Company is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public’s understanding of cannabis, and through its wholly owned subsidiary, Canopy Health Innovations, has devoted millions of dollars toward cutting edge, commercializable research and IP development. Through partly owned subsidiary Canopy Rivers Corporation, the Company is providing resources and investment to new market entrants and building a portfolio of stable investments in the sector. From our historic public listing on the Toronto Stock Exchange and New York Stock Exchange to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth. Canopy Growth has established partnerships with leading sector names including cannabis icon Snoop Dogg, breeding legends DNA Genetics and Green House seeds, and Fortune 500 alcohol leader Constellation Brands, to name but a few. Canopy Growth operates ten licensed cannabis production sites with over 4.3 million square feet of production capacity, including over 500,000 square feet of GMP certified production space. For more information visit www.canopygrowth.com.

What is the Constellation brand?

Constellation Brands (NYSE: STZ and STZ.B), a Fortune 500® company, is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada.

Does Constellation own Canopy Growth?

With this investment, Constellation Brands increases its ownership interest in Canopy Growth to approximately 37 percent of outstanding common shares of Canopy Growth and has appointed two members of its executive team, as well as two independent directors, to the Board of Directors of Canopy Growth. Constellation estimates the interest expense associated with this transaction to approximate $55 million before tax with an approximate $0.25 impact on fiscal 2019 comparable basis EPS results. Constellation also continues to evaluate the potential equity in earnings impact from the Canopy Growth investment and related items.

What is the agreement between Canopy and Constellation?

Constellation and Canopy enter into a commercialization agreement providing Constellation with exclusive rights to Cannabis based beverages

What province does canopy supply?

Canopy enters supply agreement with province of AlbertaE

How long is the canopy supply agreement?

Canopy completes three year supply agreement with the Société des alcools du Québec

What is the new frontier of human and animal health?

New Markets to Drive Incremental Growth Cannabis is the New Frontier of Human and Animal Health

Who has the first right to commercialize IP that is developed by Canopy Health?

Canopy Growth has the first right to commercialize IP that is developed by Canopy Health