Market Insider By Michael Berger 182 Views

Will Canopy Growth Be Able To Take Advantage Of Constellations Massive Mexico Footprint?

During the last month, we have seen an influx in questions that are related to the Mexican cannabis market. After the House passed legislation to legalize recreational cannabis, the Senate will vote on it and we expect it to pass due to the support it has from President…

One of the questions that we have received is related to how Canopy Growth Corporation (WEED.TO) (CGC) is expected to benefit from its relationship with Constellation Brands Inc. (STZ). If the legislation is passed, we expect Canopy Growth to receive help from Constellation Brands since Mexico will be a legal market.

Since Constellation Brands already has a significant presence in Mexico due to its ownership of the Corona beer brand. The multi-national beverage conglomerate already has significant distribution across Mexico and we expect Canopy Growth to benefit from this.

During the last week, several readers reached out to us and wanted to understand why we did not highlight smaller scale Canadian cannabis companies in our previous articles that cover the Mexican cannabis market.

Without highlighting any of these operators, we want our readers need to understand that we prefer companies that meet the following criteria:

  1. Has more than $50 million USD of cash on hand
  2. Has a track record of capitalizing on Canada’s medical and recreational cannabis market
  3. Has a management team that has experience with executing on international markets

We do no own stock in Canopy Growth and are not being paid by the company. We also do not believe that Canopy Growth will be the main beneficiary of the Mexican cannabis industry. We simply prefer companies that have strong balance sheet, existing infrastructure in Mexico, and strategic relationships to expand the business.

Over the next year, we expect to learn more about the smaller scale operators that will benefit from the change in legislation. We expect Canopy Growth to simply benefit from the facilities and relationships that Constellation Brands has in Mexico and will monitor how the story evolves from here.


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