Canopy Growth Corp is a medicinal cannabis company based in Canada

Canopy Growth Corp is a medicinal cannabis company based in Canada

To anyone that questioned whether cannabis will play a major role in the future of beverages, here is your US$191m answer.

Today, Constellation Brands bought a minority stake in medicinal cannabis company Canopy Growth Corp, and put an end to doubts that the drug, which is slowly being decriminalised in the US, will remain on the margins of the industry. It is the first time a major alcohol producer has invested at this level in a cannabis-related company and is a loud endorsement of the market's future potential.

As more states legalised cannabis, there was initial concern that it could impair alcohol sales

Previously, all we had were indications of this potential - slight shifts in the prevailing winds as the industry considered the threat of a rival intoxicant. As more states legalised cannabis, there was initial concern that it could impair alcohol sales. Brown-Forman, for example, cited the drug in its 2014 annual report as a risk to future earnings.

Others, meanwhile, lent in. Molson Coors' Blue Moon founder revealed the plant was just one of many he was playing around with in his private lab. Rival brewers toyed with flavour innovations, offering an idea of what future brands could look like.

Constellation's move, however, takes matters to the next level. The investment gives it a stake in the world's largest publicly-traded cannabis company, and though Canopy is based in Canada - where the recreational use of cannabis is expected to become legal next year - it has its sights set on international markets. Investors today gave the strategy a big thumbs up as Canopy stocks surged by as much as 18% on the Constellation news.

What Constellation's investment doesn't answer, however, is what the future cannabis industry will look like. That is still very much up in the air as regulators scramble to get to grips with the nascent industry, which in the US has grown faster than many predicted.

Constellation today said that it has no plans to sell cannabis products in the US or elsewhere "unless or until it is legally permissible to do so at all government levels".

In Canada, that may be as soon as 2019, according to Wells Fargo analyst Bonnie Herzog. In the US, however, where the cannabis market is an estimated ten-times the size, it may take longer. Eight US states allow recreational cannabis use, but the drug is still illegal at a federal level. 

Consumer attitudes towards cannabis are changing

At the moment, no one knows when that will change, but with consumer attitudes towards cannabis changing and state governments latching on to the new tax dollars attached to the drug's legalisation, it is only a matter of time.

When it does happen, Constellation will want to be first to market with new products. After all, here is a company that has successfully chased the premium end of alcohol, with swoops for the super-premium Ballast Point and wine brands including the US$50 a bottle Prisoner. 

Today's deal gives Constellation a front-row seat for the beverage industry's next premium trend.

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