Playing the “game” is Corona brewer Constellation Brands Inc. (STZ) with a $4 billion investment into a Canadian marijuana grower Canopy Growth Corporation (CGC).
Constellation Brands Inc. (STZ), produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. It provides beer primarily under the Corona Extra, Corona Light, Modelo Especial, Modelo Negra, Modelo Chelada, Pacifico, and Victoria brands, as well as Funky Buddha, Obregon Brewery, and Ballast Point brands. The company offers wine under the 7 Moons, Black Box, Clos du Bois, Estancia, Mount Veeder, The Dreaming Tree, Franciscan Estate, Nobilo, The Prisoner, Kim Crawford, Ravage, The Velvet Devil, Kung Fu Girl, Mark West, Meiomi, Robert Mondavi, Ruffino, and Simi brands, as well as Schrader Cellars and Charles Smith brands; and spirits under the Casa Noble, High West, SVEDKA Vodka, Black Velvet Canadian Whisky, Casa Noble Tequila, and High West Whiskey brands. It provides its products to wholesale distributors, retailers, on-premise locations, and state alcohol beverage control agencies. The company was founded in 1945 and is headquartered in Victor, New York.
Canopy Growth Corporation (CGC) engages in growing, possession, and sale of medical cannabis in Canada. Its products include dried flowers, oils and concentrates, soft gel capsules, and hemp. The company offers its products under the Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow, and Foria brand names. It also offers its products through Tweed Main Street, a single online platform that enables registered patients to purchase medicinal cannabis from various producers across various brands. The company was formerly known as Tweed Marijuana Inc. and changed its name to Canopy Growth Corporation in September 2015. Canopy Growth Corporation is headquartered in Smiths Falls, Canada. With a $9.95 billion market app on sales of $66.14 million, and 9.7% short position, CGC appears overprices at $45.20. However, with an October date for recreational marijuana legalization in Canada, and edible and drinkable cannabis products are expected to be legalized in 2019, CGC can run to the $80 range in the next six months.
With Constellation Brands adding more horsepower, CGC is a bargain in the $35.00 range. The Subjective Probability Model - SPM algorithm tracts a projected consolidation range of $35-$37 as a “buy target with a near-term move to the $78-$85 level.
By Constellation Brands partnering with Canopy Growth Corporation demonstrates the dynamics of marijuana-related investment. With the marijuana/cannabis industry still in its emerging stage, the investment opportunities are ripe for the picking. Case in point: CGC was trading at $22.35 on 1/29/18.
According to SPM, estimated that legal marijuana sales in 2018 with total US$7.3 billion in Canada and $10.6 billion in the U.S.(excluding black market sales of $4.9 billion) where it is allowed for recreational use in nine U.S. states and Washington, D.C.