Constellation Brands, Inc. (NYSE:STZ) is buying a 9.9% stake in marijuana company Canopy Growth Corporation.
The investment will have Constellation Brands, Inc. spending C$245 million for its nearly 10% stake in Canopy Growth. The company says that it is acquiring the stake in the company to “identify, meet and stay ahead of evolving consumer trends and market dynamics.”
Constellation Brands, Inc. notes that it doesn’t currently have any plans to sell marijuana-related products in the U.S. or other markets where the drug isn’t legal at all levels of government. Instead, it says that it will continue to focus on its core business of selling alcoholic drinks.
Constellation Brands, Inc. also points out that the deal with Canopy Growth for its stake in the company leaves it the option to purchase additional ownership in the future. STX expects its current investment in the company to be complete in its fiscal third quarter of 2018.
Canopy Growth is a medicinal cannabis company based out of Ontario, Canada. The company is traded on the Toronto Stock Exchange under the “WEED” stock ticker. It currently has a market cap that is over C$2 billion.
Constellation Brands, Inc. is reportedly planning to sell drinks that contain marijuana thanks to its stake in Canopy Growth. This may happen in Canada next year when legislation around the drug is loosened. It’s also possible that these plans could include the U.S. in the future.
STZ stock was up slightly as of noon Monday and is up 38% year-to-date.
As of this writing, William White did not hold a position in any of the aforementioned securities.