“Smart money” investors are starting to get into this sector . . . and you can too.
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In late October, The Wall Street Journal reported that Constellation Brands (NYSE: STZ) has invested C$245 million ($191 million U.S.) in licensed cannabis producer Canopy Growth (OTC BB: TWMJF).
Constellation is a huge company that’s valued at $43 billion. It owns wineries including Robert Mondavi, a beer portfolio including Corona, and spirits brands such as Velvet Canadian Whisky and Svedka. Last year, the company’s revenues topped $7 billion.
Constellation is now buying a 9.9% stake in Canopy Growth, Canada’s largest cannabis company. Constellation will also have the option to increase its ownership stake to 20%, making it the biggest shareholder.
Shares of Canopy traded below C$13 before the Constellation investment was announced. Today, the stock is trading at around C$20. That marks an all-time high for Canopy stock, which is up 118% year-to-date.
Biggest Legal Cannabis Company
Canopy Growth is the most valuable legal cannabis company in Canada, with a market cap of C$3.8 billion.
In its most recent quarterly earnings report, Canopy reported revenues of $15.9 million. That was a 127% increase from the year-earlier quarter. The company reported a net loss of $4.4 million during the quarter.
Canopy’s growth thus far has been exclusively from selling cannabis to medical patients. In Canada, cannabis is 100% legal nationwide with a prescription from a doctor.
Yet on July 1, 2018, cannabis will be completely legal for recreational use. Full legalization could open up this market. In fact, Deloitte thinks the market in Canada could be between C$4.9 billion to C$8.7 billion.
A New Gold Rush
There’s a “green gold rush” underway in Canada, with early investors cashing in. Click here for my top ideas in this growth sector.
That’s a big business that’s growing extremely quickly. With this investment, Constellation is making a bold move to secure its partnership with a premier legal cannabis company.
Constellation and Canopy plan to work together to develop cannabis-infused drinks. This will allow the partners to work together on new products in Canada . . . while they wait for the U.S. government to legalize weed.
Rob Sands – the CEO at Constellation – told The Journal, “We think that it’s highly likely [that marijuana will be legal in the U.S.], given what’s happened at the state level. We’re obviously trying to get first-mover advantage.”
The market for legal cannabis is growing quickly. In 2018, Euromonitor International estimates sales of $7.5 billion in Canada and $10.2 billion in the U.S.
Now’s the time to make your move.
Constellation is investing nearly $200 million in Canada’s No. 1 cannabis stock. There’s still time to get invested.
Click here for my urgent briefing – before the Green Gold Rush of 2018 gets underway.