This investment may have smelled funny at first, but now it’s starting to stink.

Shares in the maker of Corona and Modelo beers slid more than 7 per cent after the giant brewer said its investment in marijuana company Canopy Growth booked nearly half a billion dollars in losses in a single quarter.

Constellation Brands — which blew minds on Wall Street last year when it plunked down $4 billion for a 38-percent stake in Canada’s biggest pot grower — also revealed Thursday that it wrote down the value of the investment by $839 million during the latest quarter.

The losses at Canopy — fueled by heavy investments in equipment, product research and marketing — overshadowed a rise in Constellation’s full-year adjusted earnings and a surprisingly strong quarterly adjusted profit that was driven by beer sales.

While Constellation had been banking on the proposed legalization of recreational weed across several countries, company executives admitted Thursday they were not pleased with Canopy’s losses.

In August, Canopy said it would need another three to five years to turn profitable.

Including losses of $484.4 million related to Canopy, Constellation’s net loss was $525.2 million in the quarter ended Aug. 31, compared with a profit of $1.15 billion a year earlier.

Excluding items, Constellation earned $2.72 per share in the quarter ended Aug. 31, above analysts’ estimates of $2.60 per share.

The brewer also cut its fiscal 2020 earnings per share on a reported basis to 55 cents to 75 cents from $4.95 to $5.25, but raised its adjusted profit forecast that excludes the costs related to Canopy investments to $9 to $9.20 from the previous range of $8.65 to $8.95.

Outside of its investment in Canopy, Constellation’s legacy business has been growing steadily as the company builds its Mexican and craft beer portfolio, which has helped it grow sales even as beer demand wanes across the globe.

Sales of beers, its biggest business, rose about 7.4 percent to $1.64 billion in the second quarter.

Net sales rose to $2.34 billion from $2.30 billion, in line with the average analyst estimate, according to IBES data from Refinitiv.

With Reuters