Thinking of quitting drinking (alcohol) but wary of the impact on your social life when you start ordering tonic waters? Concerned about the detrimental long-term effects of alcohol on your liver and the morning-after hangover? Tired of having to take an hour-long spin class just to burn off the calories from the drinks you consumed last night? Well, Canopy Growth (NYSE:CGC) has the solution for you.
The $1 trillion alcoholic beverage industry is just one of the many that CGC is looking to incorporate cannabis into. They have spent over two years developing cannabis-based beverages to enter this market with compelling selling points: no calories, no hangovers, and it’s compatible with other beverages. The ideal outcome is to create an all-natural beverage that resembles a transparent liquor — you wouldn’t notice the difference next to, say, a bottle of Grey Goose vodka.
See, Canopy Growth wants you to think of cannabis as a disruptive ingredient. Dry cannabis may have been the starting point, but it is just the tip of the iceberg. The future looks extremely vast and profitable.
Betting on CGC Stock as the Future of Cannabis
It can be easy to write off cannabis as just hippies smoking weed in a meadow, but the potential application across industries is clear to CGC management. That’s part of the reason they struck the much-publicized $4 billion agreement with Constellation Brands (NYSE:STZ).
The proceeds of the investment allow the Canada-based company to expand across geographies and product lines. CGC is already operating in over a dozen countries on five continents with 10 production facilities in Canada, and they own 30%-plus share of SKUs available in the Canadian Recreational Marijuana market, but there is still a lot of money on the table. In particular, Europe & South America are attractive target markets which, if successfully executed, would jolt CGC stock upwards.
Canopy’s Market Opportunity
CGC management indicates that the potential global market disruption could be $500 billion. From athletic drinks to animal health to pain relief to alcoholic beverages, they see an opportunity for cannabis.
They are already the Canadian medical market leader and have a robust ongoing research program. To date, CGC has over 140 patent applications filed, with 32 approved and more under development. These patents range from consumer products like cannabis-based beverage production, to healthcare like cannabis-based medical treatments, and cannabis plant genetics.
CGC sees the importance of protecting their intellectual property, which is a savvy way to deepen their moat in consumer products and healthcare.
The Future of CGC Stock
For a growth stock like CGC, expansion is a requirement. Their ability to raise capital and deploy it effectively is worth noting. Just this year they have announced multiple partnerships and M&A deals — for instance, they acquired AgriNextUSA to speed their entry into the U.S. hemp market.
CGC also announced in March that Martha Stewart would be joining the company as an adviser on hemp-derived CBD products. This may at first strike investors as an odd choice. After all, marijuana is on a different level than Christmas candles and sole meunière. It shows how forward thinking management is. They know that part of increasing sales in changing the general perception of this substance that has been illegal up until recently (and still is in some states).
Martha Stewart and her brand will help CGC go mainstream. She knows Middle America and will be a valuable pool of knowledge for marketing products toward both people and pets.
As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.
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