U.S. Markets open in 8 hrs 41 mins
  • S&P Futures

    3,812.25
    -15.00 (-0.39%)
     
  • Dow Futures

    30,948.00
    -113.00 (-0.36%)
     
  • Nasdaq Futures

    11,560.25
    -51.00 (-0.44%)
     
  • Russell 2000 Futures

    1,719.30
    -9.20 (-0.53%)
     
  • Crude Oil

    110.30
    +1.87 (+1.72%)
     
  • Gold

    1,807.40
    +5.90 (+0.33%)
     
  • Silver

    19.86
    +0.19 (+0.98%)
     
  • EUR/USD

    1.0428
    +0.0001 (+0.0104%)
     
  • 10-Yr Bond

    2.8890
    0.0000 (0.00%)
     
  • Vix

    26.70
    -2.01 (-7.00%)
     
  • GBP/USD

    1.2109
    +0.0006 (+0.0484%)
     
  • USD/JPY

    135.6670
    +0.4920 (+0.3640%)
     
  • BTC-USD

    20,221.56
    +1,104.92 (+5.78%)
     
  • CMC Crypto 200

    420.84
    +0.70 (+0.17%)
     
  • FTSE 100

    7,232.65
    +64.00 (+0.89%)
     
  • Nikkei 225

    26,153.81
    +218.19 (+0.84%)
     

The maker of Corona beer made an early bet on cannabis — and it's already made more than $1 billion (STZ, CGC)

marijuana cannabis
marijuana cannabis

AP Photo/Richard Vogel

Constellation Brand’s investment in the world’s largest publicly traded marijuana companies is already paying off.

In its earnings report Thursday morning, the company behind Corona beer, Svedka vodka, and other alcoholic beverages said its two investments into Canopy Growth Corporation has already netted it more than $1 billion in unrealized gains thanks to the marijuana producers surging stock.

"Reported basis results reflect $639 million unrealized gain for an increase in fair value of the initial investment in Canopy Growth Corporation; $1.3 billion unrealized gain has been recognized since investment in November 2017," Constellation Brands said in its earnings release.

Canopy Growth shares have climbed more than 285% since November, when Constellation first announced an investment into the company. It followed up its initial stake with plans to invest $4 billion more by the end of the this month. 

On a conference call with Wall Street analysts and reporters on Thursday, CEO Rob Sands re-iterated that the investment in Canopy Growth is an offensive move to innovate in a rapidly changing space, as opposed to a defensive move. 

"We're not a company that's sitting around waiting for some element of our business to turn down or get bad before we take action," he said. "We’re the opposite of that. When it turns bad, turning something around is 900 times harder than it is to play offense from an already very strong position."

When all is said and done, Constellation will own roughly 38% of Canopy Growth, and has warrants available to increase that to a majority stake. Bruce Linton, Canopy Growth's chief executive, explained to Business Insider in July why alcohol brands and cannabis companies were a perfect match.

"We believe people should have a choice in how they wish to improve or alter their socialization," he said.

"Why are you having a beverage on a Friday night? It's about a social lubricant. I think [Constellation] didn't view themselves as a beverage company so much as an entity that provides those occasions with some kind of lift if you will — and that's an easy way to look at cannabis, not as a threat, but as an alternative or additional."

You can read the full interview with Linton here.

Now read:

 

Constellation Brands stock price marijuana
Constellation Brands stock price marijuana

Markets Insider

NOW WATCH: Ray Dalio says the economy looks like 1937 and a downturn is coming in about two years

See Also:

SEE ALSO: The 'world's biggest legal-pot dealer' talks about taking his company public and the future of weed (CGC)