Constellation Brands, the maker of both Corona and Modelo beers, announced Wednesday it will increase its stake in the cannabis industry. The company will contribute an additional $4 billion towards Canopy Growth, Canada’s largest medical marijuana producer. Constellation Brands purchased a nearly 10-percent stake in the company with a $200 million investment in October. The share now increases to 38 percent. The deal allows Constellation the option to buy nearly 140 million additional shares, which if it happens, would see that 38-percent stake nearly double. In addition to the investment, Constellation will nominate four directors to the seven-member Canopy Growth board.

In a statement, Constellation Brands CEO Rob Sands said, “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 think the premium paid as well as the size of [Constellation’s] investment reflects the long-term attractiveness of the global cannabis opportunity.”

Constellation Brands has some big name supporters. “Bar Rescue” host Jon Taffer believes other liquor and alcohol companies will follow the example set by Constellation. In his mind, cannabis could become the fourth leg of the alcohol consumption industry after spirits, beer and wine. Tim Seymour, founder and Chief Investment Officer of Seymour Asset Management, says “the fact that Constellation is willing to spend a 50 percent premium to already extraordinary valuations … and they think this is going to be earnings accretive in 2021 — that tells you all you need to know about the opportunity.”

Canopy Growth CEO Bruce Linton is very confident in the industry. In recent interviews, he has shrugged off concerns from investors and reiterated that the company is not overvalued. In addition, he stressed that Canopy Growth is focused on cannabis as a product versus a commodity. In another interview with CNN, he also said, “by 2020 or 2021, there will be too much cannabis produced. If I’m still selling primarily an ingredient, I have completely dropped the ball. You want to transform it.”

Two of the most promising products that Canopy Growth is looking to produce are cannabis-based beverages and sleep-aids. Heineken-owned Lagunitas Brewing has already announced a cannabis-infused sparkling water that will launch soon in California. Linton hinted that one of Canopy Growth’s future beverages may be much like the Lagunitas product. However, the company has no plans to sell the products in the United States until cannabis is legalized at a federal level.

After the announcement, shares of Canopy Growth surged more than 30 percent in after-hours trading and Constellation’s stock fell by more than 6 percent.

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