100 billion dollars of pot companies? These 3 actions could be the first – The Fool Motley

Marijuana stocks have taken off and investors have never been so excited about the future prospects of the cannabis industry. Now that recreational marijuana is legal in Canada, Canadian cannabis companies have come to the fore, especially with Cover growth (NYSE: CGC) and Tilray (NASDAQ: TLRY) especially see the high interest of marijuana investors.

Tilray's CEO, Brendan Kennedy, recently said he's expecting the marijuana industry to produce stocks with a market capitalization of over $ 100 billion. Kennedy clearly wants Tilray to be one of these companies, and many shareholders of Tilray and other Canadian cannabis companies have high hopes of their ability to control the Canadian market and then develop international activities. elsewhere.

If you really want to identify the companies most likely to play the megacap role in the cannabis world in the near future, you do not need to look north of the border. In all likelihood, well-established values ​​like the three companies listed below will be the first to reach the $ 100 billion mark, exploiting the craze for marijuana to bolster their already large and profitable businesses.

1. Constellation Brands

Among the companies that have already held important positions in the marijuana industry, Constellation Brands (NYSE: STZ) lead the field. With a market capitalization of more than $ 40 billion, beer maker Corona and Modelo have made their way into the cannabis space with successive investments in Canopy Growth. The last investment of about 4 billion dollars from the brewery has allowed to increase by 38% its stake in Canopy. In addition, Constellation also received warrants giving it the opportunity to take control of the cannabis specialist.

Some speculate that Constellation will eventually take control of Canopy, which will fully integrate the cannabis company in its consolidated financial reports. Until now, Constellation's measured approach reflects a healthy skeptic about whether marijuana will overcome challenges such as an extensive black market and ongoing regulatory challenges in key jurisdictions to grow. even faster. If the pot takes off, however, Constellation will be in the best position among the current players in the cannabis space to take advantage of market capitalization and push its market capitalization to a level above 12 digits.

2. Philip Morris International

Investors have long understood that it would be natural for tobacco companies to get into the marijuana trade. With extensive experience in dealing with smoking products and with the vast distribution networks already in place, companies like Philip Morris International (NYSE: PM) are in an obvious position to diversify their product offerings with cannabis. While the US federal government would potentially have the right to fight partnerships between US companies and marijuana companies in Canada, the fact that Philip Morris operates all of its activities outside the United States gives it an advantage over national societies such as Altria (NYSE: MO) as well as tobacco players like British American Tobacco (NYSE: BTI) that work both in the United States and around the world.

So far, Philip Morris has expressed little interest in cannabis, saying he is more aware of his efforts to adopt lower-risk tobacco products, such as his iQOS heated tobacco system. But that did not deter investors from remaining hopeful of a change in strategy in the future. With a market capitalization already exceeding $ 100 billion, even a major transaction for one of the largest pure-play marijuana companies would not be out of reach of Philip Morris International.

3. Coca-Cola

Investing in cannabis is not just about smoking marijuana. Companies in several industries have embraced the potential benefits of cannabis derivatives, including cannabinoids, or CBD. Several companies, such as New Age Drinks (NASDAQ: NBEV), have considered making CBD-containing beverages with the intention of allowing consumers to participate in the growing welfare folly surrounding the cannabis-derived chemical. This has attracted the interest of the industry giants, including Coca Cola (NYSE: KO).

Recently, reports suggesting that Coca-Cola could be in talks with Aurora Cannabis (NASDAQOTH: ACBFF) or Aphria (NASDAQOTH: APHQF) make a partnership similar to what Constellation Brands did with Canopy Growth. With a market capitalization approaching $ 200 billion, Coca-Cola would need a considerable investment to be able to move the needle relative to its existing sources of revenue. However, given the difficulties faced by the beverage giant with non-alcoholic beverages of the same name, Coca-Cola would probably adopt an orientation that would provoke a new craze among its customers.

Think big with marijuana

Investing in big consumer giants such as Coca-Cola, Philip Morris International and Constellation Brands may not be as exciting as giving money directly to cannabis producers. However, if you prefer the relative safety of these established franchises to the potential of small home-grown marijuana stocks, these three stocks may well become the giants of the marijuana industry in the near future.

Dan Caplinger has no position in the mentioned actions. The Motley Fool recommends Constellation Brands. Motley Fool has a disclosure policy.