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UPDATE 1-Constellation jumps into pot with Canopy Growth stake

Published 2017-10-30, 07:25 a/m
© Reuters.  UPDATE 1-Constellation jumps into pot with Canopy Growth stake
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By Gayathree Ganesan

Oct 30 (Reuters) - Constellation Brands Inc (NYSE:STZ) STZ.N has bought a nearly 10 percent stake in Canadian cannabis maker Canopy Growth Corp WEED.TO for about C$245 million ($191 million), the first major wine, beer and spirits producer to invest in legal cannabis.

The deal gives Constellation - which makes Corona beer and Svedka vodka - a footing in an industry that is slowly gaining acceptance, with nearly seven states, including California and Nevada legalizing marijuana for recreational use.

Constellation said it had no immediate plans to sell cannabis products in the U.S. or any other market unless it was legally permissible to do so at both a state and Federal level.

Analysts said a more immediate option for the company could be to develop non-alcoholic cannabis-infused beverages for the Canadian cannabis market. Consultants estimate the Canadian cannabis market to be worth around $5 billion to $10 billion ahead of its expected full legalisation next year. Growth is the biggest licensed producer of medical marijuana in Canada and is traded on the Toronto Stock exchange with a market capitalization of C$2.2 billion.

Constellation said the deal also gives it the option to purchase an additional ownership interest in Canopy in the future. = 1.2823 Canadian dollars)

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