Constellation Takes $1.1 Billion Writedown On Canopy InvestmentOctober 11, 2022
Constellation Brands took a $1.1 billion impairment charge on its investment in Canopy Growth in its second quarter ended in August, as the Canada-based cannabis group continues to retrench. The news follows Canopy’s recent announcement that it’s exiting the Canadian retail business.
“While the impairment of our Canopy investment is clearly disappointing, it is not indicative of a significant long-term market opportunity that still exists for the legal cannabis market, particularly in the U.S. where the market was estimated at $25 billion at the end of 2021 and is expected to nearly double in size by 2026 as more states continue to legalize cannabis,” Constellation Brands CEO Bill Newlands told investors last week.
“We continue to believe that Canopy’s focus on premiumizing its cannabis-branded portfolio to improve their performance in Canada is appropriate,” added CFO Garth Hankinson. “And we also remain supportive of Canopy’s efforts in the U.S. to strengthen their emerging CPG brand distribution and build of a competitive THC ecosystem.”
The outlook for cannabis in the U.S. took a significant step forward last week as President Biden pardoned all previous federal convictions for simple cannabis possession, and instructed the Justice and Health & Human Services departments to start a review of how cannabis is classified under federal drug laws.—Daniel MarstellerSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.
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