The marijuana industry has been extremely lucrative over the course of the past several years, but new updates to legislation and the changing public perception of cannabis have all meant that many individuals are deciding to get into the market that never would have before. This seems to be the case as many of the largest alcohol distributors and producers in the world have decided to get involved in the marijuana space, by giving massive investments to companies in the sector.
One example of this comes from Molson Coors Brewing Co. (NYSE:TAP) who recently stated that they will begin entering into a deal with the company The Hydropothecary Corp. (HEXO). This will help to create as they state a joint partnership to “pursure opportunities to develop non-alcoholic cannabis-infused beverages for the Canadian market following legalization.” Frederic Landtmeters, the president and CEO of Molson Coors in Canada stated recently that “Canada is breaking new ground in the cannabis sector and, as one of the country’s leading beverage companies, Molson Coors Canada has a unique opportunity to participate in this exciting and rapidly expanding consumer segment.” It appears as though this mentality has become across the board as many of the largest beverage distributors in the world are beginning to enter this market at a rapid pace.
The company Tilray (NASDAQ: TLRY ) has also seen itself be a part of this massive introduction of alcohol brands into the cannabis space. The company recently received an investment from the company Nova Scotia Liquor Corporation. The CMO of High Park, an affiliate of Tilray, stated that “We’re thrilled High Park will have the opportunity to supply the province of Nova Scotia with a safe, secure and reliable source of adult-use cannabis products.” The company was recently given a massive order which has led to the stock price shooting up by as much as 21% as of Monday afternoon. The introduction of alcohol brands continues to fuel companies like Tilray’s growth into the future.
Another example of this comes from the investments from Constellation Brands (NYSE:STZ) into the company Canopy Growth Corporation (NYSE :CGC). The investment made by the former totaled as the largest investment in the history of the cannabis market, and the second time that STZ has invested in the company. Back in October of last year, Constellation Brands, the owner of Corona and Model, purchased an almost 10% stake in Canopy for around $190 million. This was quite a shock, but given the amount of returns they received on their investment, they stated that it only made sense to invest more in the company. In June, Constellation invested around $450 million once again in the company. The real shock however came when Constellation stated that they would be investing $3.8 billion equity investment into Canopy Growth which is around 104 million shares of common stock. The price of both companies quickly shot up, but Constellation simply stated that it would have been asinine for them not to make the decision to invest more in Canopy.
This partnership and the partnerships of alcohol companies into the cannabis market is one of the primary reasons in why the market has managed to grow so rapidly and over the course of such a short period of time. Any growing industry needs to have a large amount of capital, and the marijuana space is no stranger when it comes to that idea. The market however is still gearing up as we move toward the recreational start date where companies will be able to legally sell cannabis in Canada, which is scheduled to happen on October 17th. As more and more companies begin to invest in the cannabis space, it seems likely that this is only the beginning of what could become one of the largest industries to date. The hopes are high that companies in the alcohol sector will continue to find massive interest in the cannabis space, as the commonalities make the two a perfect pair.
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