Constellation Cuts Craft Beer Sale Team, Re-Ups On Canopy Cannabis

By Neat Pour Staff |

Is legal marijuana usurping the market for craft beer? Based on Constellation Brands’ moves this week, one might think so. The beverage giant reportedly laid off the majority of their craft beer sales team and then announced that they will be increasing their Canopy Growth, a large, Canadian medical marijuana provider.

As first reported by Beer Street News, as many as 60 members of Constellation’s craft sales team dialed into what they believed to be a “routine conference call” on Wednesday afternoon. However, according to BSN, the employees were laid off during the call.

Constellations craft holdings include Ballast Point, Funky Buddha and Texas-based Four Corners. Moving forward, sales of the craft(y) brews will be handled by Corona Modelo’s “Import Team.”

However, while Constellation was cutting costs on beer, they were spending $4 billion (US) to increase their share of Canadian cannabis giant, Canopy Growth from 9.9% to 38%. Constellation purchased 104.5 million shares directly from Canopy Growth at a price of C$48.60 per share. In addition, Constellation exercised previously held warrants and received new warrants that would allow the company to purchase a 50% share moving forward.

“Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner,” said Rob Sands, Chief Executive Officer, Constellation Brands in a statement. “Over the past year, we’ve come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy’s market-leading capabilities in this space. We look forward to supporting Canopy as they extend their recognized global leadership position in the medical and recreational cannabis space.”

However, not everyone loved the deal. On August 15, the date of the reveal, shares of Constellation’s stock dropped 6.1%, losing $13.54 per share.That $2.6 billion in market cap!

Canopy will remained based in Canopy, but Constellation will gain four seats on the board of directors allowing for close collaboration. A joint release from the companies noted that they plan to expand Constellation’s business selling multiple forms of medical and recreational marijuana to about 30 countries in the future. 

Canopy Chairman and Co-CEO Bruce Linton noted that the United States is amongst the regions targeted for expansion. However, elsewhere in the same statement, the corporation stressed that there will be no endeavors in the country until permissible under federal law.

Canopy Growth is one of the largest marijuana producers in the world, boasting a two billion dollar market cap. The corporation’s holdings include Tweed, a massive Ontario retailer; Spectrum Cannabis, a medical marijuana division; and Bedrocan Canada, the offshoot of a famed Dutch medical THC lab and grower. Canopy trades on the Toronto Stock Exchange (TSX) under the symbol WEED.

Constellation is a giant in the booze industry. Their wine portfolio features dozens of brands including Ravens Wood, The Prisoner, Black Box, Ruffino, and Close du Bois. On the beer end, Constellation owns Modelo, Corona, Pacifico, Tocayo, and Victoria. Paul Masson, High West, Svedka, and Casa Noble are amongst their liquor holdings. Based in Victor, NY, Constellation is an international corporation employing over 9000 people and trading on the New York Stock Exchange (NYSE) under the symbol STZ.

Read Next