By Charles Bovaird, Investopedia.com
Constellation Brands, Inc. (STZ)—a Fortune 500 company that owns brands such as Corona beer, Black Velvet Whisky and Casa Noble tequila—recently agreed to take a 9.9% stake in Canadian marijuana company Canopy Growth Corp. (TWMJF). The two companies plan to work together to develop and market beverages that will be infused with Cannabis, according to The Wall Street Journal. (For more, see also: Top 4 Marijuana Stocks to Watch.)
Rob Sands, president and CEO of Constellation Brands, told The Journal that the U.S. government will probably legalize marijuana at the federal level in the coming years, considering “what’s happened at the state level.” Even if these expectations don’t materialize, his company could sell marijuana-infused beverages in Canada, where they are expected to be legalized by 2019.
Since Canopy Growth is the world’s largest publicly traded marijuana company, the decision made by Constellation Brands gives the beverage maker a strong presence in the marijuana industry, The Journal reported.
Constellation Brands made this move at a time when there is evidence that some consumers are reducing their alcohol consumption in favor of marijuana, according to Fortune.
“We believe alcohol could be under pressure for the next decade,” analysts for Cowen Inc. (COWN), led by Viven Azer, wrote in a note earlier this year, Fortune reported. “Consumer survey work suggests [about] 80% of consumers reduce their alcohol consumption with cannabis in the mix.”
Currently, 28 states and the District of Columbia have legalized marijuana in one capacity or another, according to The Journal. Should more states permit the use of this drug, consumption could rise sharply, providing a strong market for edibles that are infused with marijuana. (For more, see also: Which States Have Legal Pot & Will It Stay Legal?)