As the nationwide legalization of recreational cannabis in Canada comes closer to becoming a reality, alcohol companies have been seen investing in the growing marijuana market. This is why Constellation Brands, one of the largest alcohol manufacturers in the world, has decided to invest in a larger stake of the Canadian cannabis market. On Wednesday, the company announced that it will invest CAD $5 billion in Canadian marijuana company Canopy Growth to acquire a total of 104.5 million shares in the cannabis company.

This decision comes after Constellation initially invested $191 million in Canopy Growth last October to acquire a 9.9 percent minority stake in the company. This additional investment gives Constellation Brands a 38 percent ownership in the cannabis company. The alcohol company purchased the stock at a price of CAD $48.60 per share, which is a 37.9 percent premium on Canopy’s five day volume weighted average price (VWAP). This acquisition is the largest investment made by an alcohol company in the cannabis market.

Canopy Growth plans on using these funds to bolster their already growing business. The company set a goal to establish themselves in nearly 30 countries that are pursuing a federally permissible cannabis program. As the cannabis market evolves to become a major global industry, Canopy Growth plans to utilize Constellation Brands’ expertise in international growth, acquisitions, finance and large-scale production.

In turn, Constellation Brands will be able to have a hand in a company that cemented itself as an industry leader in Canada’s legal cannabis market. In fact, Canopy Growth already has a presence in the international marijuana market through their subsidiaries Tweed and Spectrum who have a presence in 11 different countries.

“Our business can now make the strategic investments required to accelerate our market position globally,” said Bruce Linton, chairman and co-CEO of Canopy Growth. “Constellation’s concentration of global cannabis activities exclusively through Canopy, coupled with the investment and its expert capabilities in brand-building, marketing, consumer insights and M&A will be a huge benefit as we look to expand our portfolio in Canada, the United States and emerging cannabis markets around the globe. We view this investment in our business as an endorsement of our execution since forming our initial strategic relationship in October 2017.”

As part of their business agreement, Constellation Brands will nominate four directors to be part of Canopy Growth’s Board of Directors. However, the cannabis company will still function under the direction of their existing management team.

Nevertheless, Constellation’s investment gives them access to 139.7 million new warrants, which are a type of security that entitles the holder to buy the underlying stock of the issuing company for a fixed price, that the company can utilize over the next 3 years. About 88.5 million of these warrants are exercisable at a price of CAD $50.40 per share, which is a 43 percent premium to Canopy’s VWAP. Additionally, 51.3 million of these warrants are exercisable at their VWAP. If all their warrants were exercised, Constellation would have a 50 percent ownership in Canopy Growth.

However, Constellation Brands isn’t the only major alcohol company investing in the growing cannabis market. Earlier this month, Molson Coors announced their official partnership with Canadian cannabis company The Hydropothecary Corporation to produce cannabis-infused beverages. Additionally, Heineken has already come out with a THC-infused beverage under their Lagunitas Brewing Company. So it seems that the cannabis sector is gearing up for some major competition after its legalization.

Regardless of this potential competition, Constellation Brands has set up a presence in one of the most established cannabis companies in Canada. Canopy Growth plans on producing various cannabis products in the near future as the legalization of edible cannabis in Canada is expected to happen in 2019.