If you can’t beat them, own them. The alcohol industry is about to start buying up cannabis brands, and a first major purchase was announced this morning.
Constellation Brands, one of the major alcohol corporations and the owner of Corona, High West Whiskey, Svedka Vodka and others, has purchased a 9.9 percent stake in Canadian medicinal marijuana seller Canopy Growth Corp, according to Bloomberg.
It’s a smart way to skirt legality issues in the U.S., where marijuana exists in a sort of gray area. Here it’s hard to invest corporate money, because a change in law enforcement procedures could cost a major company millions.
But medicinal marijuana has clearer legality in Canada, and as an international corporation, Constellation can dabble in the great white north without ruffling feathers at home (they’re based in New York).
But this is the first major move from an existing alcohol entity into the cannabis arena. That could be a signal of changing tides from a broader alcohol industry that has been accused in the past of hindering legalization because it hurts alcohol sales.
Canada plans to legalize recreational marijuana in 2018, so Constellation’s nearly $200 million buy into Canopy is a solid investment, with a lot of growth potential. And if the U.S. follows suit, they’ll have a leg up on the competition in experience, and potential access to a lot of product.
We won’t try and draw parallels with Prohibition, but there’s a reason Canadian whisky was so ubiquitous after it was repealed.