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REUTERS/Chris Wattie
Canada is on a cannabis roll.
JOINT VENTURE

Corona’s parent company is spending $4 billion on Canadian weed

By Aisha Hassan

Beer, wine, and liquor seller Constellation Brands is pumping another $4 billion into Canopy Growth, Canada’s top weed producer, in the biggest investment into the industry yet.

Constellation, which owns brands like Corona and Modelo, already invested $191 million into Canopy last October. But with the purchase of 104.5 million Canopy shares at a 51.2% premium to Tuesday’s stock closing price, the most recent deal increases Constellation’s ownership of the cannabis company from 9.9% to 38%.

In an earnings call on Wednesday, Canopy CEO Bruce Linton called Constellation’s new investment “rocket fuel.”

Canada will become the first G7 country to legalize recreational use of cannabis this October, and many beer companies like Constellation see the drug as a way to hedge their bets for the future. While the beer business is stagnating as Millennials increasingly opt for wine and spirits instead, the cannabis business is expected to grow to $57 billion globally by 2027.

Cannabis products will likely extend well beyond the traditional cigarettes. Linton has previously told CNBC that Canopy hopes to market cannabis beverages and sleep-aids. And earlier this year, Molson Coors similarly announced that it was partnering with The Hydropthecary Corp, a Canadian cannabis producer, to design a line of non-alcoholic and pot-infused beverages.

At the time, Spiros Malandrakis, head of alcoholic drinks at market research firm Euromonitor, told the Wall Street Journal that “a transition towards a holistic, responsible intoxication model will be the end game.”