[ad_1]
A long-time follower of cannabis stocks, I have always believed that the best long-term choice in the marijuana industry is Cover growth (NYSE:GSC). Many things fall into this belief. But above all, it always comes down to the following: Canopy has a $ 4 billion investment in Constellation Brands (NYSE:STZ) by the middle of 2018, and this $ 4 billion makes all the difference in terms of financial resources allowing it to become the world leader in cannabis.
Source: Shutterstock
Fast forward to April 2019. In the past eight months, Canopy has convincingly demonstrated that $ 4 billion is a critical factor in the marijuana industry. With this money, the company has expanded its growth footprint, launched new products, entered the US market, made major acquisitions, penetrated more into foreign markets and expanded its leading position in the Canadian market.
In other words, Canopy takes the $ 4 billion Constellation Brands and uses it strategically to create a viable path for this company to one day become Altria (NYSE:MO) or Anheuser-Busch (NYSE:BUD) of the global cannabis market.
These companies have a market capitalization of more than $ 100 billion in the global tobacco and alcoholic beverage markets, respectively. The recreational cannabis market should be as big as these markets one day.
Add to that the market for medical cannabis and the entire cannabis market should be even larger than tobacco and alcoholic beverages. Thus, the cannabis Altira or Anheuser-Busch will easily become a business of more than 100 billion dollars.
Big picture? With a rapid advance, significant resources and significant investments, CGC's actions are becoming a $ 100 billion business one day.
What does CGC do with $ 4 billion?
The global cannabis market is in its infancy. In early-stage markets, the key to success is investing for growth. The company best placed to do it? GSC.
While a few other Canadian cannabis producers have made significant investments from major consumer staples companies, none has achieved the same result as the $ 4 billion investment. made by Constellation Brands in Canopy. As such, CGC shares naturally have more power to strike than anybody else in the industry.
However, the power of investment does not mean much unless you invest wisely. That's what CGC did. Just look at all the investments, partnerships and expansions that Canopy has made in the past month alone:
- Canopy is associated with the new Canadian cannabis brand Houseplant, led by Hollywood stars Seth Rogen and Evan Goldberg.
- The company has launched a new production facility whose project is to increase annual cannabis production by 5,000 kilograms.
- The company also acquired AgriNextUSA, a US hemp company, which plans to help Canopy strengthen its presence in the US hemp market following the adoption of the 2018 Farm Bill.
- Canopy has expanded its partnerships with the cannabis brands Hollyweed and DNA Genetics.
- The NHL Alumni Association is associated with Canopy to do research on DBC and its potential use as a treatment against concussions.
It's all in the past month. Come back eight months back and you will see the same things, multiplied by eight, with recurring themes of cannabis-brand partnerships, extensions of production facilities, CBD research collaborations and growth initiatives specific to the US market.
In other words, CGC uses its unprecedented firepower to make the investments, partnerships and strategic extensions that best position it to maintain and even expand its leadership in the global cannabis market.
Leadership in the cannabis market is a precious position
The global market for recreational cannabis is the best parallel with global markets for tobacco and alcoholic beverages. The three substances are loosely classified and perceived as largely benign "drugs", and their consumption is widespread nowadays.
The only difference is the legality. But, trends are already evolving in favor of legal cannabis around the world. When this occurs, current consumer trends suggest that the global cannabis market will be as large as the global markets for alcoholic beverages and tobacco. Each of these markets has produced several companies over $ 100 billion. For example, the recreational cannabis market plans to produce several companies worth over $ 100 billion as well.
This does not even take into account the medical side of this market, which many think is more important than the leisure market.
Therefore, it is easy to see that whoever settles on the global cannabis market will ultimately be a very big and very valuable company. At present, the most likely choice for being this leader is the CGC. Given that the company still has about $ 3 billion in cash on the balance sheet, it seems likely that CGC will remain the most likely choice to be the world leader for a long time.
Conclusion on the CGC stock
Canopy Growth shares were the best choice in the booming cannabis industry with Constellation Brands' $ 4 billion investment, which allowed it to gain unparalleled firepower to expand its position. market leader.
That's what the company did. And with $ 3 billion left in the balance sheet, this growth story is still in its early stages.
At the time of writing, Luke Lango was a long title of the CGC.
[ad_2]
Source link