Constellation jumps into pot with Canopy Growth stake

Tuesday, 31 Oct, 2017

Cowen and Company analyst Vivien Azer, who tracks the overlap between marijuana and alcohol use in the US, maintains that cannabis is an alcohol substitute. The alcohol industry is about to start buying up cannabis brands, and a first major purchase was announced this morning.

It's a move that's been long anticipated in the cannabis industry. Medical use of marijuana has been legal in Canada since 2001. Falling ROA is nearly always a problem, but investors and analysts should bear in mind that the ROA does not account for outstanding liabilities and may indicate a higher profit level than actually derived. Marshall Wace North America L.P. acquired a new position in Constellation Brands during the 1st quarter worth about $132,686,000. "There's no need to include alcohol, nor is there an intent to include alcohol in how we follow through with things". Constellation Brands - a company that owns Svedka vodka, imports Corona and several other beers, and is the world's largest wine producer - thinks the adult beverage of the future involves pot, so it's dropping $191 million into the planet's largest publicly traded cannabis producer.

Constellation Brands and Canopy Growth agreed to collaborate on cannabis-based beverages. The company is now traded on the Toronto Stock Exchange (TSX) under the symbol "WEED" and has a market cap of more than C$2 billion.

Outlining their rationale behind the newly potent brew Constellation Brands chief executive Rob Sands told the Wall Street Journal that he expected a wider shift in the industry and was aiming for "first-mover advantage". The transaction between Constellation Brands and Canopy Growth Corporation is subject to the satisfaction of certain closing conditions, including receipt of any necessary regulatory approvals. Constellation could also theoretically launch pot drinks in Canada, assuming it legalizes use as expected by 2019.

Both wine and beer makers in the USA have expressed concern that cannabis may begin to encroach on their turf as people swap their after work glass of wine or can of beer for a joint. Products now on the market in USA states where they are legal include buzz-inducing sodas, coffees and fruit elixirs.

Constellation says it has no plans to sell any cannabis products in the USA or any other market unless or until it is legally permissible to do so at all government levels.

Alcaliber has been granted a license to cultivate, produce, manufacture, export/import, and commercialize cannabis for medical and scientific purposes by the Spanish Agency of Medicinal Products and Medical Devices.

"We are thrilled to have the backing of such a well-established and respected organization such as Constellation Brands". Overall beer penetration fell 1% from 2016 to 2017 in the U.S. market, while both wine and spirits were unmoved, according to Nielsen ratings. Finally, Zacks Investment Research cut shares of Constellation Brands from a "buy" rating to a "hold" rating in a research report on Tuesday, September 6th. Canopy Growth has established partnerships with leading sector names in Canada and overseas, with interests and operations spanning four continents. The company is not yet profitable, "but we don't want to be".

Brue Linton, Canopy's CEO said that Canada is planning to legalize recreational marijuana by July 2018.