Constellation Brands, the parent company behind Corona beer, said they\u2019re already making a huge profit off their investment in the Canadian marijuana market \u2014 and the country\u2019s recreational cannabis shops don\u2019t open for months.<\/p>\n
Last fall, Constellation Brands, whose portfolio also includes Svedka vodka and Modelo beer, announced they\u2019d\u00a0invested $190 million\u00a0<\/a>in the Canadian cannabis giant Canopy Growth Corporation, netting them 10 percent of the company. Now, nine months later,\u00a0Bloomberg reported\u00a0<\/a>that\u00a0Constellation announced during its first-quarter earnings report the investment had already realized a gain of more than $700 million.<\/p>\n \u201cOur investment in Canopy is certainly paying off,\u201d Constellation\u2019s Robert Sands said Friday on a conference call with Bloomberg.<\/p>\n Sands went on to say the company would invest in the U.S. cannabis market if it were legal to do so, but would never risk the wrath of federal regulators.<\/p>\n<\/blockquote>\n This growth that Constellation has earned comes despite the fact that Canopy Growth recently missed some estimates that investors \u2014 excited about Canada\u2019s recent push towards adult-use legalization \u2014 had projected. Consequently, Canopy\u2019s stock dropped by 10 percent.<\/p>\n However, the financial analysts at\u00a0Trefis Team<\/a>, led by MIT engineers and Wall Street analysts, say the market is overreacting and Canopy\u2019s stock will soon rise again.<\/p>\n \u201cWe figure that this is a market over-reaction to the earnings miss and believe that the stock has a huge upside potential with the opening up of the recreational marijuana market in third quarter of fiscal 2019,\u201d the Trefis Team\u00a0noted in Forbes<\/a>\u00a0on Monday.<\/p>\n At the time of closing bell on Monday, Canopy was trading at $40.64 Canadian dollars in Toronto. Trefis, however, expect Canopy\u2019s stock to rise to $53 Canadian dollars by October, when Canada is slated to open its recreational cannabis market.<\/p>\n Charlie Alovisetti, a senior associate and chair of the corporate department at\u00a0Vicente Sederberg LLC<\/a>\u00a0in Denver broke down the meaning of Constellation Brands\u2019 assertion that they\u2019d earned $700 million from their cannabis investment.<\/p>\n \u201cThey haven\u2019t really realized a gain of $700 million because they haven\u2019t sold it,\u201d Alovisetti told Cannabis Now. \u201cIf they exited, they would realize a $700 million gain, but it\u2019s just a paper gain for the moment. I think it\u2019s a little bit sensational. If Constellation sold any of their stake, at once it would have a downward pressure on the stock price.\u201d<\/p>\n Alovisetti said that Constellation\u2019s earnings, however, do reflect the general enthusiasm levels of investors in the Canadian cannabis space.<\/p>\n<\/blockquote>\n \u201cIt\u2019s nuts, the Canadian markets are on fire,\u201d said Alovisetti. \u201cEveryone we talk to is either trying to list on the Canadian Stock Exchange \u2014 and these are U.S.-based companies \u2014 or thinking about listing. There is definitely a ton of interest. I think a lot of it is driven by the fact you don\u2019t really see fast-growing industries in Canada.\u201d<\/p>\n Alovisetti also explained it\u2019s harder to see the kind of growth we\u2019re now seeing in cannabis in Canada\u2019s more embedded industries like oil and gas. He closed on the realities for companies like Constellation that want to get involved in the market.<\/p>\n \u201cIf you\u2019re an alcohol company that wants to enter the industry, your options are pretty limited. You can\u2019t do a deal in California, and then there are only a few big players in Canada,\u201d said Alovisetti. \u201cInstitutional money being filtered into a limited set of options.\u201d<\/p>\n Longtime industry expert Kris Krane of\u00a04Front Advisors<\/a>\u00a0pointed to Canada\u2019s federal government when asked about Constellation\u2019s big earnings report.<\/p>\n \u201cThis is the benefit of being federally legal,\u201d Krane told Cannabis Now. \u201cWe just don\u2019t have that luxury in the U.S. Everyone is betting on Canopy and these bigger Canadian companies being the globally dominate players and I understand why. Because they can operate all over the world and U.S. companies can\u2019t.\u201d<\/p>\n Krane pointed out other realities for U.S. producers that may give investors pause before they make the jump.<\/p>\n \u201cWe basically have to rebuild our infrastructure to go from state to state, we can\u2019t build the economy to scale in any one place,\u201d said Krane. \u201cThings are so much more expensive and so much more challenging for companies in the U.S. It\u2019s all due to federal prohibition.\u201d<\/p>\n But this doesn\u2019t mean thirsty Canadian pot investors are going to miss out on opportunities stateside.<\/p>\n<\/blockquote>\n \u201cThe Canadian public market is really bullish on cannabis companies right now, both Canadian and American. But the Canadian companies get a huge boost for not being in violation of federal law,\u201d said Krane.<\/p>\n We asked the ArcView Group\u2019s Director of Business Development John Downs if Canopy Growth was the hottest stock U.S. investors could pick up north of the border.<\/p>\n \u201cI think it\u2019s important investors want to look not in the rearview mirror but ahead. It\u2019s important to realize just because those large gains for Constellation Brands and Corona are there, it doesn\u2019t mean we\u2019re going to see another huge gain.\u201d<\/p>\n Downs believes the input of capital into the industry will hit even harder as the war on cannabis comes to an end.<\/p>\n \u201cI think as we continue to see signs that prohibition is ending, you\u2019re going to see an acceleration of capital into U.S. assets as people try to recreate the rise in prices we\u2019ve seen in Canada,\u201d said Downs. \u201cI think we\u2019ve seen a huge run-up on the back of federal policy in Canada, and I thinks it\u2019s reasonable to believe we will see the same thing here in the U.S.\u201d<\/p>\n TELL US<\/b>, have you invested in cannabis stocks?<\/p>\n The post Corona\u2019s Parent Company Gains $700 Million from Pot Investment in 9 Months<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
Constellation Brands, the parent company behind Corona beer, said they\u2019re already making a huge profit off their investment in the Canadian marijuana market \u2014 and the country\u2019s recreational cannabis shops don\u2019t open for months. Last fall, Constellation Brands, whose portfolio also includes Svedka vodka and Modelo beer, announced they\u2019d\u00a0invested $190Continue Reading<\/a><\/span><\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[34,50,1228,461,4500,2177,170,4833,36],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/27536"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=27536"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/27536\/revisions"}],"predecessor-version":[{"id":27537,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/27536\/revisions\/27537"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=27536"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=27536"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=27536"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\nRead More: Corona\u2019s Parent Company Gains 0 Million from Pot Investment in 9 Months<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"