We talked about CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) earlier this year, and actually observed the stock trading below $5 per share. At the time, Canada was still awaiting word on whether the government would pass nationwide marijuana legalization laws to go into effect in the summer of 2018.
We mentioned that the company could be in line for some serious growth, especially if the laws passed, which we all know by now that they did. Since June, the stock has more than doubled in value, and a high profile announcement this week is continuing to push the envelope as the stock once again streaked to new highs.
The boost for CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF), which as we mentioned has been trading with real strength to begin with, was provided by a company on a higher exchange making a significant investment in Canopy, in Constellation Brands, Inc. (NYSE:STZ).
STZ announced it would become a minority stakeholder in Canopy, to the tune of just under 10% According to Constellation, this investment and relationship is consistent with its long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics, while maintaining focus on its core total beverage alcohol business. Constellation has no plans to sell any cannabis products in the U.S. or any other market unless or until it is legally permissible to do so at all government levels.
“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,” said Constellation Brands President and Chief Executive Officer, Rob Sands. “Our company’s success is the result of our focus on identifying early stage consumer trends, and this is another step in that direction.”
Canopy Growth is one of the earliest commercial players in Canada’s legal cannabis market. The company is currently traded on the Toronto Stock Exchange (TSX) under the symbol “WEED” and has a market cap of more than $2B (CAD). The company owns a collection of diverse brands serving customers in Canada and international markets where medicinal cannabis products are legal. In conjunction with this investment, both companies intend to enter into an agreement to exchange knowledge and expertise.
“We are thrilled to have the backing of such a well-established and respected organization such as Constellation Brands,” said Bruce Linton, Chairman and Chief Executive Officer, Canopy Growth Corporation. “We look forward to working with the Constellation Brands team to access their deep knowledge and experience in growing brands as we continue to expand our business.”
The investment is expected to approximate $245M (CAD, ~$190M USD), representing an ownership interest of 9.9% of Canopy Growth Corporation, plus warrants which give Constellation Brands the option to purchase an additional ownership interest in the future. The transaction is expected to close during the Company’s third quarter of fiscal 2018.
For those unfamiliar with Constellation itself, the Fortune 500® company based near Rochester, New York is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada. Founded in 1945, Constellation has grown to become a significant player in the beverage alcohol industry with more than 100 brands in its portfolio; about 40 wineries, breweries and distilleries; and approximately 9,000 employees. (Source: Globe Newswire)
At this point, a well-known company making a sizable investment in Canopy is icing on the cake, as the company has alone found great success in 2017, at least from a share value standpoint. We recognized this company’s potential long ago, so it’s nice to see others catching on with increasing frequency. Keep it locked to Street Register for updates, and we’ll deliver those important developments on TWMJF to you as they unfold. In the meantime, if you’ve yet to sign up for our 100% free newsletter, do so now! Just enter your active email address into the box below and submit!
Disclosure: No one at Street Register has been compensated in any way for the publishing of this article, nor do we hold any position in TWMJF stock, short or long.