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Cannabis is one of the biggest business opportunities that investors have seen in a long time, and some of the biggest companies in the world are looking for ways to cash in. With Canada having legalized marijuana, this week, they have been headquartered in the Great White North. Canopy Growth (NYSE: CGC) has become one of the most-followed cannabis companies in the market.
One reason why Canopy Growth has gotten so much attention that it was able to score a huge deal with beer and spirits maker Constellation Brands (NYSE: STZ) in August. With Constellation plowing $ 4 trillion in Canopy companies, they are excited about the prospects for collaboration between the two companies going forward. Cannon co-CEO and co-founder Bruce Linton and Constellation CEO Rob Sands to make a massive move. Fortunately, Linton told the story of how things were happening at a consumer-driven investment site last month, and what he said reveals a lot about what could lie ahead for Canopy and the Marijuana Industry.
Source image: Canopy Growth.
Going back to the beginning
Linton started by explaining how Canada came to the forefront of cannabis industry in the first place. Back in 2000, the Canadian Supreme Court ruled that any law prohibiting marijuana had to include exemptions for legitimate medical use, with the court suspending its decision medical marijuana. However, the regulatory and legal framework for marijuana production has been uncertain, as patients using medical marijuana have had to grow their own or have found a reputable source of medical cannabis. That makes it tough for law enforcement officials.
As time went by, the Canadian government figured out that the key to regulating the Cannabis Linton start Canopy Growth. By ensuring a ready source of unadulterated cannabis, it is possible to convince medical professionals and regulators that it is a superior alternative to other, less reputable sources of marijuana in the market. That in turn made Canopy's business model attractive to businesses in the rapidly growing marijuana industry.
Constellation's role in cannabis
Linton told a story about Canopy's efforts to get listed on a major U.S. stock exchange. As Canopy Co-CEO Explained, the NYSE was initially resistant to letting Canopy become the first marijuana company ever, but despite the fact that it can not be denied in any case. Yet when Constellation started investing in Canopy, the question came up Constellation would lose its NYSE listing for the same reasons that can not be allowed to get listed. As Linton says it, the exchange considered that issue, and that not only to a decision to keep Constellation's business but also to allow Canopy itself to trade on the NYSE.
The Constellation Investment is Founded by Rob Sands in 2016. Linton remembers that Sands said that investing in marijuana would not necessarily be a very bad idea, and that it would actually be smart for Constellation to be involved in cannabis-related opportunities. That would be a year-long discussion before Constellation's initial investment for a 9.9% stake in Canopy in late 2017.
Constellation's appetite, tout dans la consommation et la cuisine et de la composition et de la composition et de la consommation de la cuisine et de la ligne de la recherche de la recherche des cannabis. Linton explains what led to the massive $ 4 billion deal:
We could not make it easier if we added rocket fuel that a company called Canopy could probably achieve a breakout that would make the question of who's 2, 3, and 4 [in the cannabis industry] a very good question but not the question of who's going to be the dominant player in this sector. And so I think time will prove that acceleration at just the right time when you are orbiting.
Linton sees the current environment as a "life-in-a-lifetime global change" in which he's lucky to have a front-row seat. With other countries looking closely at Canada's regulatory structure as a potential model for their own legalization efforts, Canopy has put itself in a position to benefit from international expansion going forward.
What's next for Canopy?
Some believe that Canopy will not have a long life as an independent company, especially because A full takeover of Canopy seems like a logical next step for the maker of Corona and Modelo beer.
Whether or not of their Constellation and Canopy fully join forces or remain independent, their relationship stems from the vision that their respective leaders have. With Linton and Sands at their helms, Canopy Growth and Constellation should remain at the forefront of the industry for years to come.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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