Back in 2014, Canopy Growth Corporation set up operations in an old Hershey’s chocolate factory in Smith Falls, Ontario under the name Tweed Marijuana Inc. Now valued at around $2 billion, and the first federally regulated and publicly traded (TSX: WEED) cannabis producer in North America, Canopy was described by the Financial Post news organization as “one of the world’s first—and Canada’s first—premier exporters of marijuana.”
When Canopy began cultivating their first crops, they may or may not have envisioned a future relationship with entities in the alcohol industry, but that’s exactly what came to be. The American parent company of Corona beer, Ballast Point, and other alcohol brands crossed the northern border this week to stake a claim in the Canadian cannabis company.
On October 30, Victor, New York-based Constellation Brands announced their acquisition of a 9.9% share in Canopy Growth for $245 million Canadian (USD 191 million), bridging the gap between the alcohol and cannabis industries. The deal also includes the option to purchase additional ownership in the future and is expected to close during the company’s third quarter of fiscal 2018.
In a statement, Constellation Brands President and CEO Rob Sands noted: “Our company’s success is the result of our focus on identifying early-stage consumer trends, and this is another step in that direction.” He says “Canopy Growth has a seasoned leadership team that understands the legal, regulatory, and economic landscape for an emerging market that is predicted to become a significant consumer category in the future.”
According to the statement, Constellation does not currently have any plans to sell cannabis products in the United States or anywhere else in the world where marijuana does not have a legalized status.
And while Constellation is dipping into the cannabis industry, there is a Canadian cannabis company that is delving into the alcohol industry. Sort of.
Toronto-based Province Brands has developed a London Dry Gin that they distill from hemp and is alcohol-free. They also manufacture a pilsner which goes through a reverse osmosis process to remove the alcohol but leave the flavor. A phytocannabinoid-terpene blend called “evolved cannabis” is added to make adult drinks that are alcohol-free, low-calorie, and capable of delivering a short onset time and duration of effect.
In the United States, you won’t currently find any alcohol companies with official ties to domestic cannabis businesses due to the federal government’s continued prohibition of marijuana. The only exception might be in Nevada where, after legalization, alcohol distributors were given priority for distribution licenses. But their actual interest in obtaining the permits was dismally low, and a product shortage resulted at dispensaries when retail sales initially commenced in July.
The acquisition of shares in a Canadian cannabis business by an American alcohol company may be a sign of things to come. While people commonly consume products from both kinds of businesses, even in some of the same environments, the two industries haven’t tended to mixed with each other traditionally. As legal cannabis becomes more mainstream, these types of commercial-enterprise crossovers may become more common; especially if the United States federal government decides to finally reschedule marijuana or take it off the list altogether.
