Corona Parent Co. Buys Stake In Canada's Canopy Growth

Constellation Brands, (NYSE:STZ) the U.S. distributor of Corona beer, is buying a 9.9% stake in Canada’s largest MMJ concern, Canopy Growth (TSE:WEED), for just under US$200 million. “We’re obviously trying to get first-mover advantage, “Constellation CEO, Rob Sands told the Wall Street Journal, which broke the story. Other Constellation brands include Svedka vodka, Modelo beer, and Kim Crawford wine.

The agreement, confirmed in a press release Monday, is $245 million Canadian dollars ($191 million) in exchange for a 9.9 percent stake in the Canopy Growth Corporation. Constellation said the transaction is expected to close during the Company's third quarter of fiscal 2018.

It is seen by Constellation Brands President and CEO, Rob Sands, as an anticipation of a nationwide legalization of marijuana in the United States. "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.

Sands says he plans to produce alcohol-free fruit-based drinks, sodas, and coffees for the Canadian (and possibly other global) market, with no plans to sell any MJ products into the US until national legalization.

California is set to legalize recreational marijuana in 2018, but Sands said his company didn't plan to sell the product in the U.S. until marijuana was legal nationwide. Meanwhile, the company is looking into selling in countries where recreational marijuana is already legal. Canada’s recreational marijuana program is scheduled to be launch July 1st, 2018.

Constellation Brands is a listed on the S&P 500. The company posted record net sales of $7.3 billion for its fiscal 2017 results. Canopy Growth is listed on the Toronto Stock Exchange. It is the world's largest publicly traded cannabis company, with a market valuation of 2.2 billion Canadian dollars. Constellation reportedly has the option to purchase up to 20% of Canopy.

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