How to Weigh Weed ⚖️ Cannabis Measurements Marijuana Scale Chart And Prices

How to Weigh Weed ⚖️ Cannabis Measurements

Cannabis company Canopy Growth’s stock soars 30% as Corona brewer increases stake

Move ‘further solidifies Constellation Brands first mover advantage’ in the cannabis space, says Wells Fargo analyst

U.S.-listed shares of Canada-based Canopy Growth Corp. soared almost 30% Wednesday, after liquor seller Constellation Brands Inc. said it

, or about $4 billion, in the diversified cannabis company.

the brewer of Corona beer and distributor of Robert Mondavi wine, said it will increase its stake in Canopy

 to 38% from about 10% by buying 104.5 million shares at C$48.60 a share, a 51.2% premium to Tuesday’s closing price of C$32.15, and assuming exercise of existing warrants.

The company will also receive additional warrants that if exercised would provide Canopy with an additional C$4.5 billion and give Constellation a stake of more than 50%. Canopy will upon closing have initial proceeds of about $4 billion, making it the biggest investment to date in the cannabis space. Marijuana Scale Chart And Prices

Canopy’s U.S.-listed shares rocketed 30%, which would be their biggest one-day gain since they started trading on the NYSE in May 2018.

Wells Fargo analyst Bonnie Herzog said the news is “very positive” and the right move for Constellation Brands, as it “further solidifies Constellation Brands’ first-mover advantage as many of

“While there could be some cannibalization risk for Constellation Brands beer/alcohol portfolio, we believe the strategic partnership will ultimately be incremental to Constellation Brands’ core business, especially as the deal opens the door to tremendous white space opportunities globally – beyond Constellation Brands’ current U.S. limits with its core brands.“

The liquor company may eventually buy all of Canopy, she added, noting it has already reported a gain of more than $700 million on its initial investment.

Corona parent Constellation Brands has seen $700 million in gains from cannabis investmen

Canopy, meanwhile, is planning to use the proceeds to build or acquire assets needed to create global scale in the nearly 30 countries that are pursuing legal medical cannabis programs and lay the foundation for emerging recreational cannabis markets.

is gearing up for full legalization of the substance

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Uruguay was the first country to legalize cannabis’s production, sale and consumption in 2013. In the U.S., 30 states have approved medical cannabis, while nine states and the District of Columbia have approved it for recreational use.

Tilray’s IPO is creating a buzz, but don’t overspend on marijuana stocks

But the substance is still classified as a Schedule I drug at the federal level, putting it in the same category as heroin, LSD and ecstasy, so participants in the industry are unable to have bank accounts that would be subject to federal supervision and insurance. That has complicated the effort to grow the market, and handed Canada a valuable first-mover advantage.

The first cannabis-derived drug was just approved in the U.S.

Canopy Growth has become one of the biggest listed cannabis companies in the world since its founding in 2013. The company, which grows, markets and researches cannabis products, had revenue of C$77.9 million in the fiscal year ending March 31, up from C$39.9 million the year earlier. The stock has gained 346% in the last 12 months, while the S&P 500

As part of the deal, Constellation will nominate four directors to Canopy’s seven-member board.

“Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner,” said Rob Sands, Chief Executive Officer, Constellation Brands.

The startup burning $1 million a month in hopes of selling $1 billion of pot a year

Canopy is expected to benefit from Constellation Brands’ understanding of consumer trends and changing tastes as well as its access to capital and experience of mergers and acquisitions. The companies won’t try|to sell products in the U.S. until the law has changed, a move that is widely expected but unlikely in the current administration—Attorney General Jeff Sessions is a known opponent of legalization.

Constellation Brands is expecting the deal to be accretive starting in 2021 and said it will cease from engaging in M&A or share buybacks until it has lowered its leverage to 3.5 times to maintain its investment-grade credit rating.

“Although this limits some of STZ’s flexibility, we believe STZ has exceptional upside optionality into the cannabis market as arguably the best positioned global player,” said Wells Fargo’s Herzog.

Other cannabis stocks also rallied Wednesday. Tilray

the first company to conduct a U.S. IPO, was up 16.4%. Cronos Group

 was up 13.3% and Aurora Cannabis Inc.

Constellation’s stock was down 6.0%, and has lost 8.8% in 2018, compared with the S&P 500 index’s

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Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York.

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