Spirits company Constellation Brands announced Wednesday it will significantly boost its investment in Canada's Canopy Growth in a big bet on the growth of cannabis-based products.
Constellation, whose products include popular beer brands Corona and Modelo, will hold a 38 percent stake in Canopy Growth under a deal that provides the Canadian company with $4 billion for investment, said a joint press release.
The investment is the "largest to date in the cannabis space" and comes as some 30 countries pursue medical marijuana "while also rapidly laying the global foundation needed for new recreational cannabis markets," the companies said.
The investment significantly boosts the 9.9 percent stake in Canopy Growth acquired by Constellation in October 2017.
"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," said Rob Sands, chief executive of Constellation.
"We look forward to supporting Canopy as they extend their recognized global leadership position in the medical and recreational cannabis space."
In the US, 29 of the 50 states have legalized marijuana for medical use, while eight states, including California, have legalized the drug for recreation use.
Canada is set to legalize cannabis on October 17 after both houses of Parliament voted in to make the drug available for recreational use.
Beer giant Molson Coors announced August 1 it was teaming up with Canadian medical marijuana grower The Hydropothecary Corporation to develop cannabis-infused non-alcoholic beverages.
Canopy Growth was founded in 2013 and has a presence in 11 countries. In May, it began trading on the New York Stock Exchange in addition to the Toronto Stock Exchange.
"Our business can now make the strategic investments required to accelerate our market position globally,” said Bruce Linton,co-chief executive of Canopy Growth.
Shares of Canopy Growth shot up 26 percent to $31.01 in early trading in New York, while Constellation dropped 5.0 percent to $210.65.