Start the conversation
Big Alcohol just made another huge bet on the cannabis industry this month.
Constellation started out by picking up a 9.9% share in Canopy, now the largest Canadian cannabis firm, back in October 2017. The beverage giant behind Corona beer, Robert Mondavi wines, Svedka vodka, and a host of other brands saw the potential in the marijuana industry back then… and investors responded. Shares in Canopy soared 19%+ on the news at the time.
Sure enough, Canopy shares again exploded – by about 30% at the opening bell on Aug. 15 – thanks to Constellation's $3.8 billion. Plenty of other pot stocks soared by double digits, too.
Constellation could acquire as much as 50% of Canopy over the next three years, if it decides to exercise its opportunity to buy more Canopy warrants. Plus, it has the option to nominate four directors to Canopy's seven-member board.
"Over the past year, we've come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy's market-leading capabilities in this space," Constellation Brands CEO Rob Sands said in a statement.
Canopy CEO Bruce Linton has already said the company plans on working with Constellation to develop a cannabis-infused beverage for the Canadian market. Indeed, cannabis beverages and other value-added products like sleep aids are the wave of the future… and where marijuana companies will find the higher margins they need to succeed.
Cannabis-infused products like oils, tinctures, candies, snacks, and drinks can earn profit margins as high as 32%, which is significantly higher than similar consumer goods. Wine and spirits typically earn about 19% net margin, while soft drinks producers earn about 11% on average.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.