A $4 billion agreement between Constellation Brands and Canopy Growth

The alcohol giant Constellation Brands has just increased the value of its investment in the Canadian company Canopy Growth Corp. with a $4 billion investment. This is the largest investment to date in the world of cannabis. The consolidation of the cannabis industry leaves no room for doubt: oligopoly and globalization in perspective, the law of the market triumphs when it comes to cannabis.

The marriage of the two industries

This is the latest transaction in the trends in the alcohol industry to get involved in the cannabis industry. Constellation Brands had already signed an agreement with Canopy Growth and owned around 10% of the company. Other alcohol giants had taken similar initiatives in response to the stagnation of the alcohol market and the considerable speculation surrounding the cannabis market. For example, the share price of Canopy à Wall Street has already increased by 20%, the company is now worth 6.6 billion euros. In comparison, Constellation fell by 7% recently.

Faced with the competition's reaction, Constellation has decided to strengthen its position and increase its shareholding at Canopy which now represent 38% of the company's capital. With additional investment in the form of convertible debt, these shares could rise to 50%, making Constellation a fully-fledged player in the world of cannabis. For the alcohol giant, cannabis can no longer be considered a secondary business sector.

A world leader

Although the cannabis industry is still in its infancy and not yet profitable, these agreements are an opportunity to deploy substantial resources for rapid expansion, with a view to globalizing the cannabis trade. On this point, the Managing Director of Canopy said: «I don't think we realize yet how much the market is opening up in Europe, Latin America and even the United States». In Europe alone, the group is already present in Denmark, in Spain, in Czech Republic and provides Germany in medical cannabis.

Analysts at Arcview estimate that the global market will be worth $32 billion by 2022. Last year, the market was worth almost $10 billion, a fact that attracts the alcohol giants, who have the advantage of being already developed and capital-intensive. The group's leading position Canopy ensures Constellation in this promising market: «We are delighted to support the expansion of Canopy and its position as a recognized global leader in the world of medical and recreational cannabis,» said Rob Sands, CEO of Constellation. Constellation is poised to become a major player in the Canadian and, by extension, the global cannabis market