The CEO of Canopy Growth Corporation has said it is “fully go time” for the cannabis sector, after Constellation Brands increased its stake in the business by more than 25%.
Bruce Linton said it was “the end of warmup” for cannabis and claimed that the size of opportunity beyond Canada – including markets in Europe, Latin America and even the US – was not fully appreciated.
In a conference call to investors, he said the prospect that the UK would legalise medical cannabis products as it has done – even several months ago – would have been considered “bonkers”. “We’re seeing it [cannabis] everywhere,” Linton said.
The company posted first-quarter revenue of $25.9 million, a 63% increase on the same quarter last year, in part because of growing sales in Germany’s medical cannabis market.
Canopy Growth continues to be focused on the medical segment but was making good progress as it works towards the opening of the recreational market in Canada, CFO Tim Saunders added.
Earlier today, FoodBev reported that Constellation Brands – the owner of Svedka vodka and US importer of Corona beer – had increased its stake in Canopy Growth from 9.9% to over 38% in a transaction worth CAD 5 billion ($4 billion).
Both Bruce Linton and Constellation CEO Rob Sands emphasised the point that this investment would make Canopy Growth the “exclusivity platform” for Constellation Brands’ efforts in the cannabis space.
Sands predicted that cannabis would represent “one of the most significant growth opportunities in the next decade” and said that investing in Canopy Growth’s “market-leading capabilities” would enable it to take advantage of an increasingly favourable legislative environment.
In June, Canada became only the second country after Uruguay to completely lift restrictions on the sale of cannabis for recreational purposes – and so far nine US states, as well as Washington DC, have in some way loosened their laws around cannabis, according to research from Business Insider.
Where will Canopy Growth spend its $4bn windfall?
Sands said the cannabis market was opening up more significantly than people give it credit for, saying that cannabis products were “the next step in the evolution of our business”. It plans to leverage its partnership with Canopy Growth to develop a line of non-alcoholic cannabis-based beverages that are incremental to its position in beers, wines and spirits.
It was a sentiment echoed by Bruce Linton, who, in describing the challenge facing the cannabis market, highlighted the need for “brands, formats and outcomes that people want”.
Linton wouldn’t be drawn on exactly where Canopy Growth would spend the CAD 5 billion ($4 billion) cash injection, saying there were “no hard guidelines” and “no benchmarking”, but did reveal that the business had an acquisition list running to more than CAD 1 billion’s ($800 million) worth of non-cultivation assets.
He stressed that the company did not need to increase its cultivation in Canada, as he had done when the investment was announced earlier.
Linton said, with markets opening up, Canopy Growth was inclined to keep cash on the balance sheet and promised investors that “you’ll like what you see” from the company with regards to its acquisition targets in the coming months.
Linton did not predict that Constellation would end up controlling all of Canopy Growth’s business, but said that – if it was successful in its EBITDA objectives – the cannabis producer would become a business that anyone would like to own.
© FoodBev Media Ltd 2021
World Beverage Innovation Awards – NOW OPEN FOR ENTRIES!
The awards celebrate excellence and innovation across the global beverage industry.
Don’t miss out on having your innovations recognised on a global scale.
Deadline for entries 23 July – enter now!
Don’t get left behind
Start your free Foodbev magazine trial today and join thousands of fellow industry professionals in receiving food and drink trends direct to our business.
Click here to start your free trial