Beer Maker Bets $3.8 Billion on Big Marijuana

Beverage company Constellation Brands, which produces and markets Corona beer and numerous other alcoholic beverages, is making a nearly $4 billion investment in Canadian marijuana grower Canopy Growth Corp.

What you need to know:

• The $4 billion investment raises Constellation’s ownership stake in Canopy to 38%, with the option to increase it to 50% within the next three years.
• Canopy is the first and largest cannabis company to trade on the New York Stock Exchange.
• A large investment in the cannabis industry from a big business like Constellation might signal that marijuana is officially entering the mainstream.
• “Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner,” Constellation Brands CEO Rob Sands said in a statement.

More details:

Marijuana is becoming a mainstream commodity, and with relatively few big businesses willing to wade into the cannabis market thus far, Constellation’s move is a big indicator that the corporate world sees it as a promising market.

Likewise, governments are getting on board, too. Several U.S. states have legalized marijuana, and Canada will fully legalize cannabis later this year, becoming the second country in the world, after Uruguay, to do so.

Constellation’s move will make a splash, but it’s not the first company in the alcohol industry to wade into the cannabis industry. Molson Coors is also looking at the cannabis industry as a potential source of growth as beer sales have slowed. The company inked a deal with marijuana company Hydropothecary Corp. to create marijuana drinks in early August, and another beer company, Heineken, is also working on THC-infused brews through its Lagunitas brand.