Constellation Brands Inc (NYSE:STZ) Chief Operating Officer William Newlands told a conference Wednesday that cannabis could be “a US$200bn business in fairly short order."
Constellation, among the first big alcohol makers to invest in the marijuana industry, pumped almost US$200mln in Ontario-based Canopy Growth Corp (NYSE:CGC), last year in a deal to produce a non-alcoholic cannabis-based beverage. It recently upped its investment in cannabis with a record US$4bn investment in Canopy, spurring a buying frenzy in marijuana stocks.
"Fundamentally, we believe cannabis is going to be a big business worldwide … not going to be limited to Canada. This will be undoubtedly a market that develops in the United States, it's already done so on a state-by-state basis here,” Newlands told the Barclays Global Consumer Staples Conference in Boston. “It's developing around the world, in places like Germany and Australia and other markets. So the whole combination of things is shaping up in a way that this is going to be a big business."
READ: Constellation Brands ups stake in Canopy Growth, invests an additional US$4bn
Newlands also spoke about what why the maker of Corona beer brought its stake in Canopy Growth to 38%. The company earlier held a 9.9% stake in October 2017 with the option for future investments.
“We want to bet on who we think will be the winner in this space and the market leader. And we want to bet on a management team and a business strategy and approach that we think is positioned to win,” said Newlands.
“By doing the investment the way we did, we've created an effective war chest for us to be able to invest and for Canopy to be able to invest in whatever markets and categories and sectors of the business that makes sense. We wanted to take a strong market-leading position around the world in the business that we think could be a US$200bn business in fairly short order."
Contact Uttara Choudhury at uttara@proactiveinvestors.com
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