Cannabis infused beer is coming: Canopy Growth gives green light to $5B investment by Constellation Brands Inc.

Beer

The U.S.-based marketer and producer of beer, wine, and spirits Constellation Brands Inc.  (NYSE:STZ) increases its ownership stake in Canopy Growth Corp. (TSX:WEED) to 38%.

As the world’s 10th largest economy becomes the second country in the world to fully legalise recreational use of cannabis within its borders, we are the dawn of the creation of an entirely new industry. It’s no wonder that innovation is flourishing even before cannabis is officially legal.

Constellation Brands Inc. is a Fortune 500 company owning the third largest market share out of the major beer suppliers. Like many other investors, it is attempting to grab a piece of the legal cannabis industry by being ahead of the game and by thinking big.

Cannabis Beer

If you have been following Canopy Growth closely in the recent months, it’s no surprise that this deal came through. Canopy has been teasing the idea of clashing the marijuana industry with the alcoholic beverages industry for a while now. With this most recent deal, the combination of both products is no longer a question of if, but when.

It’s unlikely that we’ll see any cannabis-based beverages available to consumers before at least a year after legalisation comes into effect. Constellation has lots of expertise in premium branding and critical business operations, all of which will be incredibly valuable to Canopy as it grows at breakneck speeds.

Uncertain regulatory challenges await

One significant question is what regulators will think about the combination of alcohol with cannabis in a consumer product. As alcohol and cannabis are highly controlled, and with a federal election coming up in 2019, the federal government will surely keep a close eye on which products are attempting to enter the new marijuana market. But as we know, regulators are reactive rather than proactive and take a significant amount of time to react to new events and products. That being said, it’s still unclear as to what the regulatory challenges will be once cannabis-infused beer is ready to hit the shelves.

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