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Jim Cramer: I wanna welcome everyone back. What a great crowd. A lot of great questions in the last panel, we've got questions all day. I hope you're enjoying lunch. I'm very excited about this session because I think this may be the greatest opportunity of, I know of my lifetime to make money, but there are more pitfalls in this than the web. And in the web you end up having three or four winners, there may not be that many in this. I wanna introduce Bill Newlands who's president and chief operating officer of Constellation Brands brands STZ, frequent [00:00:30] Constellation Brands of frequent guests on Mad Money and frequent guest of [inaudible 00:00:34] in Brooklyn. Cause we sell so much morello and Corona.

And then we have Bruce Linton, CEO of Canopy growth. You might have just seen yesterday on Mad Money. We got a lot to talk about, this is gonna be very exciting and a panel and I think a fast moving panel. I wish we had more time, I said, I already complained about that but we gotta get going. This is serious business. We're gonna unpack the trends, both in alcohol which in [00:01:00] Constellation Brands's world is still growing like mad. But of course, cannabis. But to get things going, let's have a look at the creative side of Canopy. And this was put forward in their annual general meeting. Go ahead.

Video: What's [00:01:30] the code again? Bruce, same as last month. 420. Should we change that sometime? No. So I've been to [00:02:00] Saudi Arabia, I wanna get too crank, you know what I mean? We have hundreds of thousands of those guys. Are you ready for takeoff, baby? Yes sir. [00:02:30] Well, [00:03:00] away we go. Hey Vic, how are we doing on the count? 99,996, 99,997, 999, [00:03:30] oh no. Dude. I lost count. No. We're gonna have to start again. No. Flight 420, you're clear for takeoff. VS 420, ready to push off. The clones transferred to Columbia. See you in the sky. Oh, man. You know what time it is? It's 420, baby. Columbia, you all gotta wait. We'll get back. Bruce where is the shipment? I don't know.

Jim Cramer: [00:04:00] Alright. Bruce, why don't you just describe to us what we just saw and who those people were, because I thought this was funny but at the same time I recognize that this is really, a really kind of a, again, a metaphor of what this industry, what's happening?

Bruce Linton: Alright, so in Canada we have a lot of regulations, right? If there's a rule missing we just ask for it and they make a new one, or an additional one. And the rule say's [00:04:30] for a premise where you grow cannabis, you can't have a single plant in it until the whole place is securitized and there's a method by which you can keep track of the plants. And so, when we got that in February and then again in April for our site in British Columbia, which the first one we moved plants to is one point three million square feet of greenhouse. And then the second site is one point seven million square feet of green house. And the cool thing about that size of a greenhouse is you can actually see the curvature of the earth inside the green house. It's a true story.

And [00:05:00] so, when we needed to move the plants over, we had to take them in two shipments. And what we wanted to do was create an image and a PR around it. So we had Snoop go in. But the other actors you may not know are internationally renowned from Greenhouse Seeds from DNA and so what we did is we tried to make this feel like it's actually a really credible narrative to the people who are inside cannabis. And to the people who are socially aware and say, "Snoop's interesting." Because what it did is it brought a while lot of people from Europe and the U.S. along to understand our brand. [00:05:30] And so, when they see that, they go, "oh, that's Dawn. Oh, that'," and so all the people who are moving the plants are highly known cannabis people.

And so it's a really important thing, right, you wanna open the door, lay the carpet out and say, come on over, quit buying form the other guy and buy from the legal guy.

Jim Cramer: Okay, so what you guys may not know is that. Well, I was very skeptical about this industry. Very skeptical. I gave Bruce a hard time when it was going. But, Rob say's, who is [00:06:00] the CEO of Constellation Brands, basically took me aside and took me to the wood chip which is good, when he thinks I'm wrong, and he is the best at what he does in the consumer package good cycle. And he said, "Jim, you don't realize how big this is. You gotta start realizing. We're making this investment. It's really huge. And if you don't understand it, you're gonna miss one of the biggest things ever and we're gonna make a ton of money." And so, Bill, why don't you tell us why you partnered with Canopy, because I want [00:06:30] these guys to tell the story so it isn't just me saying buy Canopy which, you know, I've been saying forever, and buy Constellation Brands, which I've been saying forever. How did you come to partner?

Bill Newlands: Well, we were skeptical too. To be honest with you. And a year and a half ago we do what we do with all of our business, which is we think from the consumer side. We did a massive study about where is the consumer today, and where are they going, and what's different? And the thing that stood out for us is that today's consumer is looking for total mood [00:07:00] modulation. Now, and right. Exactly.

Jim Cramer: It think that's a spectacular thing-

Bill Newlands: We laughed at that too, I must say. But when you think about it, and about what people do in their lives. You know, you get up early, you've got an early show. I'm sure you have a cup of coffee, right?

Jim Cramer: Absolutely, first things first-

Bill Newlands: And it has caffeine in it?

Jim Cramer: Absolutely.

Bill Newlands: Right, cause that gets you up and ready for your show.

Jim Cramer: It's my routine.

Bill Newlands: And then, of course, he's got a big interview at 10:00, so you probably have a little anxiety if the markets off for the day and what do you say. So you might have a little thought about how [00:07:30] you modulate that, and then, you know, the day goes on and by the time you're done with at the end of the day, you're ready to relax. So, you might have a glass of wine or some tequila-

Jim Cramer: No I, actually, you know what I drink, I'll go to my bar and I'll either have a Victoria or I'll have corona or pacifico and that's how I, before I go into the house, my wife doesn't get angry at me cause I've had a, or I've had some of your best tequila which, you know, I love.

Bill Newlands: Absolutely, you're quite a fan.

Jim Cramer: Yes I am.

Bill Newlands: But what we realized is that [00:08:00] cannabis was going to be a potential player in that whole space. And as Bruce will tell you, I'm sure in a few minutes, the things that cannabis can do can help solve a lot of things. And, you know, I'll tell you, the first time we had this whole discussion in the board room, we were probably skeptical as well. So, you know, the first thing we did was we took the 10 % stake in Canopy. We looked carefully at all the players and we said, Bruce has got A) good management, [00:08:30] B) market share, a lot of thinking, good medical understanding, a lot of PhD's who are doing a lot of deep research and getting under the real opportunity that's there in the mood management space. And, we said, "if we are going to play, this is the leading player, and we should be playing with them."

And then over the course, after the first year, we got a chance over that year to understand him, his management team, what, how they were thinking about the market, we did a lot [00:09:00] more consumer work about where the consumers going and we said, you know, this would be a good offensive play for us to make to take a much bigger stake and to create the warchest for them to do whatever they need to do to win the spaces around the world.

Jim Cramer: And yet the street felt that it was defensive, because they felt that when Colorado legalizes, beer goes down. When Oregon [inaudible 00:09:22], beer goes down. But that was not the case.

Bill Newlands: Not at all. In fact, while there is absolutely no evidence that legalization [00:09:30] of cannabis has had any negative effect on alcohol, we really saw it as an offensive move. But I think what happened was some people who were skeptical of that answer or not comfortable with the answer, but we also said, you know a good quarter which we obviously just had, might soften that issue. Which it basically has.

Jim Cramer: That's exactly what it did. So, it worked? Okay, Bruce, October 17th is Pontis. One of the things that you said to me is, "Jim," as [00:10:00] you said in our interview yesterday, "don't be too excited because there's October 18th and 19th," but, what will happen in your mind, both when the stock market and in Canada when it becomes legal?

Bruce Linton: So, I wan in London two weeks ago and if you go to every meeting in London everyone talks about Brexit. If you come to Canada, everyone talks about Marijuana. It's true. Our national paper today, I showed these guys, the business section had two [00:10:30] pages that did not have stories about marijuana. It is a thing. So I think what's gonna happen on the 17th, it's gonna be a big first step and it'll be a wobbly first step because they have to take it and then over the next nine months we're going to make more products, more stores, and it's just gonna go along. And so, I think maybe the stocks will go up, down, sideways, hard to know.

But if you look at what it means is it means that there's a normal planet which is reasonably boring called Canada which is actually going to quit ignoring cannabis. And it's going to federally govern it for two [00:11:00] purposes. One is for medical research, intellectual property creation and globalization of that asset based from Canada. And then it's gonna take the recreational platform, layer it over it, and turn this into a tax income stream that goes to the state governments, two thirds of it, and one third to the federal government, which means you're gonna be competing with the government if you're a bad guy.

And the governments don't let bad guys win very often when money's involved. And so, the notion that it's not gonna lead to a rapid transition where it becomes very difficult to become an illicit producer, I think is gonna be a big surprise for a lot of people. [00:11:30] And so, when you start doing that right, what's gonna happen is trusted brands are gonna develop, and it's not gonna be because the buds are a certain trust equation, it's because they come in and the first thing they buy they're gonna be getting a proper education, a proper transaction, and when they come back the product formats are gonna evolve.

So when you go October 18th, next year, the stores are probably going to have something that looks a little bit like that beverage in the container down there. And, it's gonna be very interesting because it will have gone [00:12:00] through a medical process. Because when we talk about mood modification, what you're really saying is that Friday night, when you're done with work and you wanna take a bit off your shoulders. You want to reduce the anxiety of the week. Well, that sounds like a clinical trial for a product that is anxiety reducing, so you take your medical learning and you apply it to your recreational product. And you take your recreational products, and you keep moving up.

And so this is the kind of thing where I think what's gonna happen in Canada is where it's gonna be a bit like the space program where, you know, my running shoes right now contain stuff that was involved [00:12:30] in NASA but now just makes me have a better tennis shoe. The medical program is gonna feed the rec program, the rec program is gonna keep cycling up and it's gonna be global IP. Global brands.

Jim Cramer: But now the, there is absolutely, I think a peak in frenzied development. All the different cannabis stocks, literally next week, which is one of the reasons I wanted to do the panel today. But Bruce, you've been, you went to New bridge, you know the telecommunication space that went up and down [00:13:00] you understand the dot conversations, you have also said, I mean, people say listen it's not like the dot com. And then other people say it is like the dot com. Actually, I think you've got the most intellectually rigorous work which is it could be like the dot com. There's a couple winners and then there's a lot of losers.

Bruce Linton: A hundred percent. And, you know, where the winners and losers are gonna be sorted out is growing cannabis is gonna be important but selling cannabis is gonna be the measure over the next year. And so in Canada they have established throughout the different states, who is going to fill the warehouses. And they've asked us, in all of [00:13:30] them, to provide some. So in all of the announced areas we have 36 % of the warehouse space allocated to our product. So if you grow a lot of cannabis and don't have distribution, that turns into inventory. If you don't have an off take for your inventory, it turns into a place where I will, in a predatory manner, attack and price your inventory way down so you can get a little cash to stay alive a little longer.

So why would I buy the asset where we can actually acquire the inventory later, cheaper, if they don't have distribution? And so, I think you're gonna see this idea, you know, we talked a little bit before of like, everybody wants us to [00:14:00] consolidate everything. We don't need to. It's gonna disintegrate. So you're gonna have a definition of winners and losers, based on distribution, and then when you have distribution you have cash flow so you can raise more capital we can leverage up their five billion. We can do way more research, get way more intellectual property, and we've been filing like crazy. So I would expect, sometime in the non-distant future, that research turns into medical claims.

And all of a sudden we're not talking about a pot plant or a gram, we're talking milligrams and how it becomes an effective outcome against sleep, for example.

Jim Cramer: Save that for the medical segment [00:14:30] because I wanna ask Bill, you're consumer package goods company, you are traditional even though I know that you're at the avant guard of the traditional. How will you two guys, and your two companies, work together? Because there's still different cultures.

Bill Newlands: Well, one of the things we did with this second major investment that's about to close, is we said, "we're going all in through Canopy." And I think that's the difference. We all, to some degree we set it up in the beginning as [00:15:00] almost competitive. Because we said we would work on beverage, because that's our experience, and Bruce and his team would work on a whole series of other things. And then we said, you know what, that's probably the wrong way to do it. The right way to do it would be entirely through Canopy and make sure Canopy is the worldwide leader in the cannabis space. So, we will be relatively hands of. I mean we obviously think we can bring some great brand building capabilities, good consumer understanding, you know, [00:15:30] a number of us have worked in startups so we've got some of those scars. But, you know, largely this is going to be through Canopy. [inaudible 00:15:37].

Bruce Linton: But that culture thing, honestly, I wouldn't have taken a dime from them if I wouldn't think we'd get along great. Because, if you're an entrepreneur, either people are giving their energy or they're taking energy. And if they're taking energy, you got zero seconds to tolerate that. You gotta have people that are bringing you way more value than you take away and it's not money. And so we hung out with these guys and the first investment was [00:16:00] a hard one cause you're kind of getting, the second one it was like super easy. It was so obvious. We gotta get along, we're gonna kill everybody, let's go.

Bill Newlands: People asked us, people.

Jim Cramer: Nice, that's not a lot of thinking, right? Let's go.

Bill Newlands: People asked us the same question, was it a tough investment to put five billion in Canadian into this company? We said, no. Not at all. The first investment was a lot of headache, because we had to have all those debates and arguments that you were referring to earlier before we made the decision. Second one was a [00:16:30] piece of cake.

Bruce Linton: First one took us 11 months of interacting, right?

Bill Newlands: Yeah.

Bruce Linton: It did take that long. Okay.

Jim Cramer: Now, Rob Stance the CEO of consultation said to me, "Jim, you don't understand. We're really in the business, this is to make a lot of money." And I was tying to figure out other companies that are your size. You've got Campbell soup grows one percent, 11.4 billion market cap. You have Clorox grows two percent, 23 billion dollar market [00:17:00] capt. [inaudible 00:17:01] minus one percent growth, 60 billion dollar market cap. I know your team and your team is deeply focused on double digit growth. The only other consumer package goods company, in the world that has double digit growth, will this company augment that growth from day one?

Bill Newlands: In our view it will. Our view is this, in the next 10 plus years, is gonna be a 200 billion dollar business, worldwide. And, some would argue and I think you might be one, [00:17:30] that that's understating the case.

Bruce Linton: Yes. I have decided it is-

Bill Newlands: I know you do.

Jim Cramer: I'm moving over here with him.

Bill Newlands: Frankly, I hope you're right.

Jim Cramer: Wait, let me say how I came up with it, alright. This is really important because, where's Deb [inaudible 00:17:41]?

Deb: Right here. Oh, dammit.

Jim Cramer: Hey Deb. Deb been working with me for years, she's got a great panel coming up, and she had me interview a guy named Brian Alt hied. And Brian runs a company, organic Dutchmen, it's the whole foods of cannabis, and he happened to be before two decades [00:18:00] with Proctor & Gamble. And Proctor & Gamble he ended up being the CFO of central Europe. And I said 200 billion. And he goes, what matters is the disruption. We're gonna disrupt 500 billion dollars. Tell us how, what is the kinds of industries that you see disrupted?

Bruce Linton: Right. So, I love the word disruption right? My tweed shirt has a T in it and one of our designers turned it from tweed into disruption with the same T because we're [00:18:30] trying to hit from pharmaceutical, right? If you're not sleeping well, our first human trial that we're starting is a sleep trial. And it's not CBD and it's not THC, it's a mixture, and it's a delivery mechanism, we filed 39 pattens against it. That turns out to be a many 10s of billion dollar segment. And then you start taking the stereotypes of the plant. Some give you the munchies, hilarious right? You stop and you want chicken after you've had it. Well, not hilarious if you're in oncology treatment and you have no appetite. So if you can harness that.

And you start going down the list. Categories. When we get to the geriatric care [00:19:00] environment the final three to five years of your life, your kids say well we're gonna take you out of the two story put you into a common living bungalow. And you won't cook all the food all the time, it will be super nice, they have a piano, it's great. Well, the problem is it's not your house, it's not your food, and, so you end up with anxiety, poor sleep, poor appetite, and diminished mobility because you're older. Why are we giving these people opioids, benzodiazepines, all kinds of tranquilizers when you're gonna still be old?

And so I think that whole category of care is going to be massively disrupted. And you just start working [00:19:30] down the whole thing, you start looking at things like, you know, arthritis, rheumatoid arthritis, all of the derivatives of that that start to be things like, you know, fibro myalgia. There's a massive cohort of things we could disrupt there. We're not gonna cure the problem, but we're gonna make the symptoms much less. And then you start working your way down and you say well, does that work on animals too? You bet. Canines.So if you've got an old dog, and you're old. Well, you know, one guys got two legs and the other's got four but after that, there's a lot more commonalities than differences.

And so if you start thinking about how disruptive could it be to that segment. Huge. [00:20:00] And then if you come around to alcohol, and you say, well, it could be disruptive if we make a beverage with no calories that has a really rap it on set, meaning you drink it and you get a feedback kind of like wine. If it's clear. And, it taste good. So that could go there. And then you start working through, and you say, okay, I got these categories here, why do I not stop at and say when you do sports. Sports recovery should be an anti-inflammatory response. And so, why isn't there gonna [00:20:30] be a beverage that is absolutely disruptive of things like Gatorade?

and all of a sudden you start adding those categories together and they feed back and forth because the science feeds the others, and that is a huge five hundred billion dollar segment of business.

Jim Cramer: now bill, were you, I know you watch the morning show [inaudible 00:20:48]. We're you surprised how adamant Hugh Johnson, CFO of PepsiCo was when I mentioned that he thought about cannabis?

Bill Newlands: Well, I, again. I'm sure he has [00:21:00] his reasons. Personally we would say it short sighted. You know, we all probably, if you said 10 years ago, would we be right here having this discussion today? We'd all probably said, no. You wouldn't have been. So, but, the market's moving, the consumer perception is moving, you know. In our judgment, this is going to happen. This is going to be legal, in most countries that matter around the world, in a relatively short period of time. And will that be disruptive as [00:21:30] Bruce say's to many other categories and businesses, including probably his own? We would argue it probably will be.

Jim Cramer: Well, one of the things that, I actually. My staff is fast at Mad Money staff, fascinated about this and my sound guy said, "could you ask Rob whether it's gonna come in drink? Whether it's gonna come in edible? I mean, how am I gonna get it? Is it like I belly up to the bar and I order a cannabis?" And id didn't get really to flush that out with Rob because we were talking about the beer company too. Will we? [00:22:00] How will we get it? You know, let's first in Canada, and then ultimately after it's legalized in the United States, how am I gonna get it? What am I gonna order?

Bill Newlands: Well, I'll let you do the specific on it. But here's what I would say. You're going to have a consumer product, which means you're going to have brands that matter, and those brands are gonna have authenticity, and comfort for people. You know, most of you in this room probably wouldn't be comfortable buying something from a Rastafarian. You would think, there's gonna be something the matter here. On the other hand, Bruce [00:22:30] doesn't come off that way. And I would argue this will be a branded proposition in whatever form that takes. And we've done some studies on what forms that will be and I'll let him get into that.

Jim Cramer: Well can you talk about your different color brands. Because I think what's really important, people have to understand, and I think a lot of people don't because it's illegal and you may not know it. But, you're going to have, there are different properties of cannabis and you have got something that's the best brand of each.

Bruce Linton: Yeah, so and brands matter in two markets. People want outcomes in both. But in medical, [00:23:00] what we've done, is we've figured out well we have to be able to educate a doctor in five minutes so they can sit with a patient in one minute and transfer them to the knowledge so they understand why, when, where. And so we went with a thing called Spectrum, and we use it globally as our medical brand, and it's a coloration grid that say's when we run a clinical trial against spectrum blue it's a one to one relationship between CBD and THC. And if it causes 70 % of the people in this room to have a comprehensive deep good sleep, for six hours, we didn't now talk about what cannabinoid were in there, we didn't talk about whether [00:23:30] it was a hard pill. Whether it was a strip, whether it was an immolation.

And so, with a spectrum, what we do is we take problems and combinations of cannabinoids, and target our research to get rid of the stereotypical answer which is there's not scientific evidence. Like, who was gonna run the clinical trial? An organized crime member? There's no chance there was gonna be evidence when it's illegal. And so what the platform opportunity is to take the education and turn it into outcomes, turn those into branded physical products with intellectual property [00:24:00] and the mechanism delivery with the combination of cannabinoids is very protect able. Then you go to the party, and that's where tweed fits in.

So tweed is a nice fabric or it is a welcome mat that Snoop thought was the best brand and the sector he wanted to be around. Then under that you start delivering, if it's a category head, right? Tweed say's welcome to the party, we can have sub-brands based on whether it's a beverage, or it's a gel cap. And the reason people make gummy bears and chocolate bars and all these things in a lot of places, if you have crappy poor ingredients, you can hide a lot in chocolate. [00:24:30] You can mask a lot with a gummy bear. And so what you're gonna start to find is people say that is not an appropriate form factor and they want a gel cap that maybe down the side has the signature of tweed.

You might even want to think about how do I make it so it's really hard for people to pirate. And then people will buy that over and over because if they like playing golf with at two point five milligram tweed gel cap, that's what they like doing?

Bill Newlands: Hold on, that will help me? [inaudible 00:24:53]-

Jim Cramer: That might make me actually play gold, cause if you're guessing 18 holes with me is, actually you'd want to have those with me, [00:25:00] because you'd be like, "I'm stuck with you for 18 holes? God help me."

Bruce Linton: But so that's where the brands go, but I think the notion of branding bud is really premature. What you're doing is your creating headings. And so when this beverage comes out, you'll be able to get it. Over time rules will define, is this a cannabis lounge. And people talk about smoking it, why would you smoke it when you don't need to? If the outcome can be achieved without the combustion, you know, there fussing about the rules of where you can smoke cannabis. I think within a couple of years, that will be a minor category [00:25:30] of a very high priced product where people will like the ceremony, they'll wanna show you look how purple it is and how it smells. But the majority of it isn't gonna have anything to do with combustion. At all.

And it won't be relevant, it'll be, which kind of bar do you want to go to? Which kind of drink do you wanna have when you're in a bar? What kind of party do you want to have as, look at that.

Bill Newlands: And so you asked where we can work together with that one. The woman that handles our flavoring capability in the company, I view as best of class. I watched her before I joined [00:26:00] the company, she's unbelievable. So, she can help Canopy have a wonderful tasting beverage, as an example. And, you know, that again will give you the confidence that I'm gonna enjoy it when I'm gonna have and I will repeat. Which as you know in consumer products repeat is a big factor.

Bruce Linton: Well and leverage, right. We will have a bottling line. We will have no idea how to create a bottling line cause they will make it for us. And when you meet with Marlyn-

Bill Newlands: We've done a bit of that.

Bruce Linton: They got them everywhere, but when you meet with Marlyn, she's [00:26:30] really great and she thinks bout everything from the bubble structure through what-

Bill Newlands: So the taste, the feel, how it feels in your mouth-

Bruce Linton: The taste, so we figured out how to make two types of extractions that would fit into that mold. Now the question is how many ways do you wanna present it? Because what you think about is what's the socially normal way to consume an intoxicant? It's to share it. It's to have a bottle of wine and you pour some in a glass. And so, we wanna make sure that why [00:27:00] not make things as socially normal as possible? It's less friction and more adoption. And so that's kind of the stuff, you know, I was over in the UK marketing a week and a half ago. And all the big accounts. So what's gonna happen on stock is I think we're about two thirds retail, 75 % retail right now. But I think what's gonna happen is the institutional ones are gonna start saying, now it's my time to buy.

And what they like is the idea that they buy consultation and they buy us, because inside of consultation you get basically [00:27:30] almost free exposure to 30 something percent of our company.

Jim Cramer: And I've been saying that and no one's listening. It's unbelievable to me that no one gets that.

Bruce Linton: Well, as soon as we close the deal, and everybody knew about it. The first thing that I did was I made my second personal biggest, my second biggest personal holdings consultation stock. Why did I do that? Cause to me it was super obvious, right? If we kill it I get to work on both accounts.

Jim Cramer: Definitely. Right, so one of the things that Rob said to me this week, and I gotta [00:28:00] flush this out, he said, "Jim. Why don't you take the, check the congressional legislation, why don't you check the farm bill?" I get the farm bill, to me, I don't know what they're doing but because senator Mitch McConnell, the senates farm bill is great for what could be the precursor where we're coming at, right?

Bill Newlands: Yes. And if the farm bill goes through as they're thinking about it, it will make hemp, take hemp off schedule one. Which therefore would allot that to be done with CBD. And, that's, again, one step in the process and the step forward [00:28:30] because, you know, as we've said, we're not doing anything until we have a solid legal position.

Jim Cramer: And you're also, I wanna make everyone aware of this, Rob was the first to tell me we're very careful. We know that the ATF doesn't want it. We know that the attorney general, because I said oh geez, how about the justice department? And he goes, "no, that's why we're not, you're not trying to sneak it in here." And I think that that's really important.

Bruce Linton: Well we love hemp as a door opener. And just so people get it, we [00:29:00] are, they would not be investing the first round with us or the second if we didn't look and follow for every row. And that resulted last week on Tuesday or Wednesday, I can't remember which day, we announced that we're the first company to be approved under the DEA to send cannabis from Canada into the U.S. and then our partner in the U.S. can do research with that cannabis which may enlighten outcomes which may allow adoption of regulatory frameworks that are based on evidence. On hemp-

Jim Cramer: And you have to understand, until this, university of Mississippi [00:29:30] was the only place that it was not a class one felony to have marijuana. This was huge.

Bruce Linton: Yeah, it's huge because it's not just field grown cannabis, this is GMP meaning good manufacturing practices, produced product. So that when you hand it, it's a pharmaceutical piece of material that they can actually do real repeatable studies with. And so, that was a big deal. We love hemp, because hemp is a very inexpensive way to get CBD which means you have to make great products with great brands, otherwise, you know, you're ingredients are almost free. [00:30:00] You gotta turn this into science and outcomes. And so we're pretty progressive on that program.

Jim Cramer: Speak to me about the international? Because a lot of people feel that the great thing about Constellation Brands, we know it's the United States, they've got dell and corona rights. I think international is going to be much bigger. While we wait for the U.S. there's a lot of countries that are a lot more progressive so therefore more open. What are you guys thinking about the international side of partnering with them?

Bill Newlands: Well, our view is the international piece. So let's go back to the 200 billion and we can argue about whether it's low. We think half of that will [00:30:30] be outside of the U.S. in the longer run. And, you know, market after market is getting more involved either in medical use or in recreational use. So, we think that's going to be at least the size of what the U.S. will ultimately be. It's going to be a big play. And this was part of the reason that we thought Canopy had done more work with more governments about how to introduce product into countries around the world than anybody else. Which again, was part of why the choice of Canopy. [00:31:00] They were just that far ahead of the game.

Jim Cramer: Now, why were you not more concerned about any sort of blow back say from religious right, from hard line republicans about what it might mean to a Magellan quote consultation to pair up with these guys?

Bill Newlands: Well, I will admit that the first day that the announcement was made, a year ago, we all sat with our deep breath waiting to the market to open, and then we exhaled. Cause it wasn't a problem. [00:31:30] But-

Jim Cramer: You know, it's funny that you knew. Everybody else was scared that that day would be the worse day of that companies history.

Bill Newlands: We, you know, we weren't sure. You just weren't sure. But, 60 some odd percent of consumers in this country, today, want to see marijuana legal. And so, you also have the consumer dynamic going in that direction. You have a bill that Schumer and the gentlemen from Colorado are jointly sponsoring to get it off schedule one. So, you have a surprising [00:32:00] amount of bi-partisanship and I know that words a little tough these days, but you do have a bit of bi-partisanship on that particular topic and consumer sentiment is with it.

Jim Cramer: Right. Now I want to, just so you know how far along we are but also how myopic we are, what happened when, what happened Bruce the day that you went to ring the bell in your stock sheets for Canopy?

Bruce Linton: Let's wind back a little bit. So we contacted the New York stock exchange [00:32:30] because these guys are listed on it, and we said, "would you like to have the privilege of having your first marijuana company on the New York stock exchange?" And they promptly said, no chance, no way. So, we hung up the phone. I said to the CFO, we chat a bit, what if somebody's who's on the New York stock exchange bought us? Would that company have to leave the New York stock exchange? Tim calls him back. They're like, "let us get back to you." So, why we're on the New York stock exchange. And we're like, this is exciting, we're gonna ring the bell. No, you're not gonna touch the bell.

Jim Cramer: Literally. [00:33:00] They did not let them press that button.

Bruce Linton: No, so not even a little bell where you get to ding it by the, no bell for the marijuana guys. And so, you know, you just go with the flow on these things. But maybe back to the international thing because it's very easy to not notice everything that's happening around us outside around the world. When I started this thing about six years ago, there were a couple of countries thinking about it and Canada was moving the fastest. There are now 30 countries on the planet [00:33:30] that have a federal regulation program in place or being approved to run how cannabis works. And they're big places. They're Germany. They're almost all in Europe. They're Brazil, they're Columbia, they're Chile. And you're not gonna see cannabis moving all over the place, probably, because there's this thing called the United Nations Narcotic Control Act.

And it was written in the 60s and then again in the 70s and again in the 80s. And you can't move cannabis around for a party. No way is that possible. And it's really hard to move it around for medical because every country that gets it has to request [00:34:00] each shipment. So every time we send to Germany, 10 % of our sales last quarter were Germany, for each shipment we have to say, the German government has to say to the Canadian government, "can we have some?" And us as the underlying company on both sides puts it up through that process. If Germany quits saying I want any, that stops. And they will, because they will have picked companies like us to grow in Germany.

And it's a non tariff barrier method by which you create jobs and jurisdictions that have them because the best place to grow cannabis is a derelict building with high unemployment around it, with tons of utilities. It's called east Germany. [00:34:30] It's called central Denmark. It's called every part in every country. So why would you export that economic instrument when you can create employment? And so I think what you're gonna find is this becomes a lot more like intellectual property rather than exportation. And so, what you outta see is a stack of value that you go to the country and they say, "oh God I'd love you to come here." Because you're gonna do what you did in Smith falls. We took a derelict chocolate factory and a derelict greenhouse and began creating 200 jobs.

Jim Cramer: An old Hershey factory it was.

Bruce Linton: It was Hershey. And so I think you gotta look at this at policy [00:35:00] before pot. Because the policy will be driving economic outcomes for the areas that they want it.

Jim Cramer: Well, this is fascinating because, is Ben Culver there yet?

Bruce Linton: He is, I saw him earlier.

Jim Cramer: Ben? From green thumb? Hey Ben. One of the things that I'm sure Ben will address this, my friend Bill Grubber is a professor at [inaudible 00:35:19]. Invested in Green Thumb and were you guys are building, have your greenhouse there's huge, terrible unemployment. And this is and you're also [00:35:30] committed to hiring people who were considered to be, that you couldn't hire before. You know, we talk about people get out of prison who are, who went into prison for say pot, of all things. And I just think that what you're just saying, and I really wanna make this point cause it's really incredible.

We may, there may be a belief in this country, by some people, that this should be illegal, that it's gateway, we can talk about that or not, but the important thing is I haven't heard of an industry that can put a lot of people to work who may not be as skilled, [00:36:00] and instantly in places where there tends to be terrible unemployment, even in a country where there is, where unemployment is very not really robust. And it is, in many ways, the answer for taxation. I mean, all these things are societally positive and against that, what do we have. We have what, what do people say to you about what you're gonna get hooked on this or something?

Bill Newlands: Well, you know, let's go right to your point that everybody asks, is this affecting your alcohol business? Do you think in [00:36:30] the state of California people are not smoking pot and have been using pot for years and years and years?

Jim Cramer: Great point.

Bill Newlands: I mean, it's just below the table. So what this has done, what Bruce said a minute ago, this is bringing it out into the open and it then become as taxable scenario which, and it can be regulated in a more serious manner, and then we understand regulation. We deal with it everyday. So, what, and so what this does, I think, is this begins to open up a whole new avenue in which to [00:37:00] play.

Jim Cramer: Now, let's talk about, say the 200 billion. Let's use that. I know that my friend Tim Semore, whom I also believe is here, Tim's close to Green Organic Dutchmen, the reason why the fellow from pro-who worked at proctor was very, was talk-oh, there's Tim. Hey Tim, how are you? The reason why he was so bullish about the disruption, and remember, he didn't say we're gonna it's gonna be 200 billion more, he was talking about 500 billion disruptive in the areas that are currently in. Talk about [00:37:30] the gradations. How much is going to be edible? How much do you think is gonna be drink? How much is gonna be tea? How much is gonna be water? How much is gonna be coffee? What are you internally, at your board, talk about in the different levels?

Bill Newlands: Sure. The key elements as far as our studies have been, is that vape is gonna be an important part.

Jim Cramer: Vape. Okay.

Bill Newlands: Vape will be important. Bevarage is gonna be important. And then edible. And edible could take on numerous forms. It could take the form of a gel cap as you said earlier, [00:38:00] it could take the form of a gummy situation. We, you know, our preference that has a bad connotation, we're probably less interested in that. But, there's going to be a number of ways that people consume. I think the exact layout of that is really tough to say because we're in a different stage. What it isn't going to be is what probably all of us think it is, which is rolling a joint and lighting up. That's what it won't be. And, you know, as Bruce said a minute ago, I think if you're able to provide a consumer with [00:38:30] a beverage that has no calories, that gives you a mood alteration. That is gonna be interesting to a lot of people.

Jim Cramer: One of the things that you, that anyone's been, anyone been to Boulder or Oregon where it's really much more, Oregon's the most free. Okay. What it is is that Oregon has actual storefronts. My daughter lives in Ashlen, there's a bunch of stores on her block. But when you go to Boulder, even as progressive as Boulder is, you're still going to these little dispensaries. Rob told me that we are eventually gonna have a, [00:39:00] not a cash economy, but a actual credit economy which means if we go to a seven eleven, if we go to a wa-wa, if you're filling up, you go to one of these to a convenience store, or a gas station, you're gonna see it.

Bill Newlands: Likely, I think you will. In the same way that you see a bottle of wine or that you see a bottle of beer. Or various other highs. I think you will over time.

Jim Cramer: Now, tell me about what the police chief are saying. There are people who are concerned, I know [00:39:30] breathalyzer, how do we know that they're not impaired under cannabis and what do you do about that conundrum?

Bruce Linton: One of the most senior officials in Canada had a great answer to it. There's about and eight billion or nine billion dollar economy right now. If you think nobody's driving impaired by cannabis, you're naive. And so what we're trying to do is get in front of it by educate why not. And to they actually do now have a breathalyzers, if you will, blood tests. Saliva.

Jim Cramer: They do.

Bruce Linton: So they have methods by which, but what's gonna happen is it's gonna be like, [00:40:00] roadside sobriety tests. Because what they don't have is they don't have a judicial precedent to say when is impairment? How much? So what they're gonna have to do is figure out what impairment is and then turn that back into a level that you have in you. And so that will roll out over the next year or two or three. But, you gotta start. Right? They should have been doing this 10 years ago. There's no doubt that it's happening, they should be doing it for opioids.

Jim Cramer: But Bill, you picked the, a lot of us were really shocked at the size of the investment. And [00:40:30] what Rob has taught me, and I'm sorry to keep mention him, Rob is on the show a lot. What he taught me is that you really want to make it to be game set match. That you put enough in that it's really gonna be very difficult to catch your company?

Bill Newlands: Well that was the intent. And, you're prior question about which areas are gonna be important. What we wanted to do was to have the war chest for Bruce and his team to say, if the answer is beverage, the he's prepared and will have the war chest to invest in whatever [00:41:00] country that needs to happen around the world. In whatever form that took. And our view is, given their position, you know, so we of course look at it as a financial play in edition to being a long term play. And, you know, our view was if they just get the market share of their existing business in Canada, it will be a decent, not great, but decent financial return. And if the rest of the world goes in any way shape or form it's gonna be a home run.

Jim Cramer: I know I often felt [00:41:30] that the market cap x your company is way, look, your company is a big percentage of the market cap of the group. But what's really interesting is your percentage, people say, "Jim, you're dreaming about that," I said, the amount of cash you have on the balance sheet versus your market cap versus the opportunity makes it so that you're much cheaper than any other consumer package company at follow up.

Bill Newlands: Yes, this closes at the end of October. It's some cash over, but a third of our share price is cash. And if you got a company that's [00:42:00] got about a 30 % market share in medical, has 36 % of the warehouses allocated in Canada, and is the most active in so far, as it appears to be successful internationally, that doesn't strike me as a crazy bet. It strikes me as where we actually try and present ourselves as a value stock in the marijuana space, as a bit of an odd discussion. But, that's kind of how I think it is.

Jim Cramer: Now, a lot of people, a lot of the hedge fund guys said, "No, we're actually very committed to it." So it's probably, I mean, some of the smartest minds I deal with were [00:42:30] very adamant that Jim you gotta start talking about this more on Mad Money. We think this is a greats area. And these are rigorous guys. But they also say be prepared that October 17th there are gonna be people who do not understand the concept and they can't short a lot of the other Canadian companies because there's no bar, so to speak, for the hedge fund. And so they might just lean on Canopy and then that's when they're gonna pick your stock up. Because, I have a view that your company's gonna be very institutionally owned four weeks from now.

Bruce Linton: Yeah. [00:43:00] No, what's happened is you run a real company, your borrow cost goes down. And so I'm no longer a 60 % borrow cost, a 30 % borrow cost, I'm single digits. So if they do want to lean on us, which based on how many meetings I get with huge funds everywhere around the globe now. Like this little deal we did where the little advisor was GS and the BofA was helpful and the money thing, that kind of had a whole bunch of people say I can no longer ignore this opportunity. And, so, we're really, I think now, institutionally they're gonna be looking [00:43:30] at, if I gotta move, I'm probably gonna buy that one. And then what else I might do later, we'll see.

Bill Newlands: And that's different from what it was a year ago. You know, a year ago, there was a long discussion about how we were going to be able to fund this.

Jim Cramer: That's absolutely true.

Bill Newlands: Because the banking system is not set up. You made the point earlier, Jim, this is a cash business. There's a friend of mine who had been in the wine business in California who had gotten into cannabis business, he's hired a bunch of people to run around and collect cash. It's [00:44:00] no wonder you don't have some of the underground knocking these people off as they're picking up the cash. I mean, it's a cash business-

Jim Cramer: Well we were recommending brinks. Brinks doesn't necessarily do this, but the other guys do and it's jacked up the price of all the arm requirements.

Bill Newlands: Absolutely.

Bruce Linton: But even in our world, right, we use armored cars to move the product but we could do zero transactions with cash. What you'll find is where it's federally regulated it's entirely traceable transactions. And our auditor, you know, we've had Deloit as an auditor from day one. That's because we do things in a traceable way. And so I think when the institution [00:44:30] are investing they like audited statements, they like to know that the auditor isn't called Larry and Moe's auditing company, they actually like really big ones. And so, we shielded ourselves with the credibility of others. New York stock exchange, Deloit, Constellation Brands, DEA approval. That's what institutions will move into first.

Jim Cramer: Now, when I look at what the legislation says, it talks about really not being able to brand but you've got very solid brands. What does that mean?

Bruce Linton: You cannot advertise. So I, we brand build like crazy. We have billboards [00:45:00] all across Canada. Electronic ones, and it say's hi, like this, hi. Is it gonna be like gelato, can I sample some before I buy? Tweed.com for answers. I did not tell you what it was. I did not use CBD or THC and I did not say you'll be better looking if you buy it. And so, brand billing is a permissible activity. In fact, last week we announced that we were working with Uber, Mad Mothers against Drunk Driving, because mothers against drug driving, and us. And we did this unbelievable public [00:45:30] service announcement which gives you 50 things to do that if you're high and not driving, are fun. And so we try to be is brand building by being, you should go to it. Go to tweed.com and see what the 50 things to do. I think the kaleidoscope might be harmful if you're high. But, the whole point is to be a bit fun, and engaging, but then serious contact.

Jim Cramer: Well that's why I wanted to do the video. It was my choice to do the video. Just because it is the most, there's more guerrilla marketing here [00:46:00] but the fact is that I want people to understand that this is a completely investible industry. If only just because the entire market cap of the industry is 30 billion and you're talking about a 500 billion dollar disruption. That doesn't make sense to me, it just doesn't make sense. Now, when you close the investment, theoretically, I mean, how does it look on your books? Cause it could be what? It could be 50.5, what does it mean to. Let's say someone owns consultation, and they're trying to figure out what they [00:46:30] own when they own consultation after this deal closes?

Bill Newlands: So, we will do equity and earnings because we will have less than a 50 % stake and so it's gonna be 38 with opportunity and warrants to buy up and get a majority stake if we chose to do so, and there's a time frame attached to that. So, what, therefore we will do it as equity and earnings. And that's how it will be reflected as we go forward. And we think in a couple years that's going to be start to be pretty good. What it won't be, is it won't be helpful in the first [00:47:00] year, which is what some of the folks initial said. Who had skepticism about it is it's not an immediacy play.

Jim Cramer: But at the same time, given the fact, and I'm sure you investigated all of these. It's almost like we should be caring about square footage, like you mentioned. What are the other parameters? Square footage, price of how much it costs, scale? What did you guys think about?

Bill Newlands: Scale. No question. It's square footage, it's scale, it's marketing capability, it's business acumen, it's ability to do regulatory things. You know. [00:47:30] No matter what, and everything Bruce has said today involves working with governments. Whether it be state governments eventually in this country or the federal government in this country or Canada or Germany or, you name it, there's governments involved. And regulatory capability therefore is an important one. And one that we shouldn't underestimate and that's what we were extremely impressed of how they'd work with the Canadian government up front?

Bruce Linton: The moat we gotta dig is IP. Because right now people want to talk about the cost of cannabis, the container it's in, and [00:48:00] the public relations cost exceeds the cost of the materials in the container. Right? So that, we've already inverted. It costs less to put, to grow the product that goes in the container than it does for the container than to put it through the processes and get in and out. So we're at the worst place we can be in terms of the product we sell. IP turns that into a much higher value item inside the container, because it gets a medical outcome.

Bill Newlands: And a high margin.

Bruce Linton: Right. High margin. If we make the beverage as a single serving, what do we got? Two and half or three milligrams, maybe two milligrams [00:48:30] of active ingredient in there. You measure that with dimes and pennies. Right, so-

Bill Newlands: The container will likely cost more than the product-

Jim Cramer: That's the same thing as the cereal box.

Bruce Linton: But it is exactly that. And so people giving super fascinated about the cost of growing sugar cain rather than the price of sugar, rather than the price of a cake in which sugar has been used. Everybody's still talking about the sugar cain field. I would say you might wanna move on past that a wee bit.

Jim Cramer: Alright, now how about the other [00:49:00] kinds of delivery mechanisms? I mean, it's coffee's gotta be great. Tea, the world drinks tea. How are you guys approaching that?

Bill Newlands: So, we're looking at all of those. And we believe there will be deliverers in teas and in waters and in a lot of other related things. What we don't think will be the case and we don't think it's a good idea, is that it would be alcohol infused as well.

Jim Cramer: Okay, that's important, a lot of people say to me, are they gonna be selling beer with cannabis?

Bill Newlands: No. Our view is no.

Bruce Linton: Take the alcohol out. [00:49:30] And you can do that. That's easy.

Bill Newlands: You could have something that looks like beer or looks like a wine. But we think that that would be dangerous to put those two together.

Jim Cramer: Now the other beer companies, what, Mulsen is exploring a JV, Bud has said nothing, Heineken nothing. They're just not there, right?

Bill Newlands: Not at this point.

Jim Cramer: And [inaudible 00:49:48], we got a phony story this week saying that they were but they're not?

Bruce Linton: Everybody is coming to Canada and they're all gonna be around in a particular province over the next while looking at [00:50:00] different stores and formats. In the second half of 2019 they're all gonna be trying to figure out who they're dancing with because we're gonna be disrupting different categories but they're all around.

Jim Cramer: Well, because the nuttiest thing that I was thinking this week, happened, was that Walmart said that it was gonna be in it. And I said to myself, okay, so Coke doesn't want to be in it, PepsiCo doesn't want to be in it, Bud doesn't want to be in it. So Canopy Constellation Brands's gonna be the only guy who's gonna be able to handle the volume that a Walmart would want.

Bill Newlands: Well this is part of the argument, is scale. And who has scale and, you know, there are 36 % [00:50:30] market share of the available contracts coming out the gate in Canada. It's a perfect example. You know? They're prepared to win.

Bruce Linton: But imagine from a stock perspective, like when we did that second deal, we talked about the fact that your stock might come off a bit and ours would accelerate. And it actually was the perfect outcome, because is your stock were to double-

Bill Newlands: Well you thought so-

Bruce Linton: But if your stock doubled how many CEO's go to the board and say, "we're doing it for sure, right now." And instead, you [00:51:00] gotta say hey, I'm gonna give a Canadian company four or five billion dollars we haven't worked with them before.

Jim Cramer: Took 11 months.

Bruce Linton: The new guy coming in say's I'm gonna give them four or five billion but I'm gonna take eight or 10 billion of my market cap, but it will be good in two or three years. That is a very different argument than Constellation Brands did it in double, we gotta do this for sure. And so what happens now is we got all these guys humming and hawing, setting up committees, trying to figure out how they don't go wrong and we're just accelerating. So that gives us a longer window-

Jim Cramer: And now the stock has kind of went, [00:51:30] oh, we're getting it-

Bruce Linton: Absolutely.

Bill Newlands: And as you know, we generate a lot of cash. So we can very-

Jim Cramer: And the amount of stock you bought back when everyone said that they're gonna have a bad quarter was incredible how much you put to work-

Bill Newlands: That's right. So, we'll be right back to where we were on a debt ratio basis in a year plus. So, you know, from our view, the opportunity for a disruptive investment was well worth taking a year off from doing the things that we've been doing.

Jim Cramer: Alright, now I wanna talk about some of the positive disruptions that people are missing. In your presentation together, [00:52:00] which is there's a great deck. By the way, these are the most, some of the most transparent companies I've ever seen. And think about that. I mean, if there really were, if this were really not a great investment, why would they be so transparent about every aspect of what you guys are doing? I wanna talk about, what's gonna happen to the cigarette industry?

Bruce Linton: For the longest time I said we weren't a disruptor but then we started looking at we actually are a disruptor. Because, anybody in here who smokes, [00:52:30] a lot of people smoke and they pace and they smoke quickly. And it's because they're actually trying to diminish anxiety because they've been typing like crazy or trying to look at your starts. So those people probably would do better if we could deliver to them a method that felt like a cigarette but it wasn't burning anything, it gave a anti-anxiety outcome of the product. Doesn't make you high, just makes you calm. And all of a sudden that cohort say's, "you know what, instead of firing up a cigarette and marching around on the sidewalk going, I'm gonna do this," I'm gonna get a duration of effect that's longer so I can actually [00:53:00] sit there and do this longer, and I'm no longer filling my lungs with smoke.

So I think that's where we start to disrupt it and that we thought was a good idea, so we're working on that in a UK study that we've been developing, hasn't been able to start yet. But we targeted that to cigarettes. And so that's kind of neat, because that's a really good smoker, because those people smoke a lot.

Jim Cramer: Okay, how about opioids?

Bruce Linton: Opioids, we put a lot to work, money to work, with universities because there's two problems with opioids. Being prescribed them when you don't need them. Meaning you got knee surgery you should be getting cannabinoids, not Percocet. And [00:53:30] if you don't get opioids, you're less likely to get addicted. And so there's gonna be a narrowing of where they give them. But then there's also a whole cohort of how do we get them off it? And so, with UBC, we put about two and a half million bucks to work on a study called Opiod Weening. How do we get you an off ramp? And we see that with a lot of our first responders, particularly military, where they jumped out of a plane things got broken, before they left the hospital they were hooked. And now, they start moving to cannabinoids.

So I think you're going to find a narrowing of categories, and off ramps, and what follows the global policy, [00:54:00] right? U.S. number one, Canada two, I think Germany's number three per capita opiod consumption. Let's see who'd looking at good policy? Canada, Germany? So I would follow the opiod train to say, who want's to actually get on cannabinoids?

Jim Cramer: Now, Bill, when I go to the first person, first page of the presentation that he has, it says, "stoner grandma." I mean, did someone on your board say, "we cannot be affiliated with stoner."

Bill Newlands: We certainly had that discussion. [00:54:30] Particularly the first time around. But I'll say this, the number of people who are friends of mine who have come up to me and said, "I'm gonna be your best customer. When is it coming?" It's been literally shocking to me. Shocking.

Jim Cramer: And now, when we were talking about, earlier, about the, this is the, I think, the greatest single treatment, nonaddictive treatment, against swelling in the world. I know that if you could have a Gatorade derivative [00:55:00] that would be fantastic after you work, for those of us who are say, you know, I work out and what happens after? I may have a glass, I have some water, but what does my trainer want me to do? You gotta get the swelling, gotta get the swelling. Water doesn't really work that well. I need some-but I can't take prednisone after a workout which does a good job of reducing swelling, Advil doesn't help, and especially if you start taking it all the time it hurts your stomach lining. Can we get Constellation Brands brands equivalent of Gatorade that has something that would actually help us reduce swelling?

Bill Newlands: [00:55:30] I think the answer is a definite yes.

Jim Cramer: Definite yes.

Bill Newlands: Yes. For all the reasons that Bruce has said earlier, and this is where much of the medical testing, you know. He's got a whole medical arm that does nothing but testing.

Jim Cramer: And I think it's important, I asked him to put together a list of all the different things that you're doing and, you know, it's RA. Look, humera's the biggest drug in history. This is better.

Bruce Linton: Yeah. And you know what we have to know, is good science has to get good answers. Because there is not a [00:56:00] place in California, you don't go, that doesn't have CBD something. And they'll say drink this when you feel better, well how many milligrams? Almost none. How many do I have to drink a day? How many days do I have to drink it for? How many, what should I be putting it on topic, or should I be ingesting it? Should I be inhaling it? And so, good science will get rid of bad claims which will turn into brands that you trust because you actually get what was promised. And so I think that beverage you're describing should disrupt and it should take about a year to get there, but when you do you're dropping a bomb, not a bunch of stupid [00:56:30] little claims that people make and then get distrustful.

Jim Cramer: Well, like in CBS there's a whole isle of icy hots. How do they work verus?

Bruce Linton: Well I don't know, that man is like 11 feet tall that advertises them, so if Shaq say's they work, no but I say if Shaq say's they work I say yes sir, that's probably true. But I think that all of these things are gonna have different times and places and what we're talking about is not a sports injury beverage, we're just talking about you go and play sports. You go for a run. You went for a bike ride. You over did it. [00:57:00] That's the kind of stuff that is a very high volume, regular through put CPG can sit on a shelf stable environment, make's a lot of sense why Walmart would say yes we're looking at that. That is not, this is an outcome beverage, this is not marijuana.

Jim Cramer: And a mood, and now I'm getting these terms that one of you obviously used it for Mad Money because this is a better way to get the story across.

Bill Newlands: Sure. Total mood modulation.

Jim Cramer: Total beverage you guys like to talk about.

Bill Newlands: Yes, exactly. TBA.

Jim Cramer: Total mood modulation. Look [00:57:30] now, cause October 17th I'm afraid everyone comes in and buys the stocks and October 19th they realize that they may have made a mistake doing it. Now one of the things that I've been trying to, try to figure out put THC in context-

Bill Newlands: Show was going pretty well until that comment-

Jim Cramer: It' is, it' is. Trying to figure out THC as what you think of in that is a lot of THC like 100 proof? I mean, what are you guys thinking about proof?

Bill Newlands: You have put your finger on the one thing that still needs to be done. [00:58:00] Because if any of you have a, get a bottle of wine, you look. Okay, let's see, it's a Chardonnay, it's a 14.5, I know roughly what I can have and I'm gonna be fine. Or, if I'm gonna have a bottle of high west.

Jim Cramer: Right. I know what I'm interested in, right-

Bill Newlands: It's 40 %, you know what you're getting. One of the things that still needs to be done, and this is part of what Bruce was getting at is, you've gotta have a mechanism for the average person to say, this is the amount of consumption I'm having. We don't have that language yet. That language still needs to be done-

Jim Cramer: And I think it's [00:58:30] important because what'll, I'm afraid people will say, "okay, THC that's the same as CBD." You know sativa's the same as indica. And they'll end up not realizing that they're hallucinating when they thought that all they really wanted to do was-

Bill Newlands: Relax-

Jim Cramer: Right, relax. And I'm really worried that that's gonna throw people off.

Bill Newlands: I would argue that that's exactly the reason why branding is gonna be critical. Because what you don't want is the Rastafarian approach that's just what you described. You want something that you have [00:59:00] confidence in and bringing a brand that the average person can feel comfortable. I'm going to get a good response, and I'm going to get it the same every time.

Bruce Linton: What we're finding is, you know, that would be called ABV. Right? Alcohol by volume. People get that. And what's happening is how you create the products effects how much you need in it. And what I mean by that is if you just get some, you would measure it in grams, but if you actually do a good job of translating it you measure it in milligrams. And when you do it right, you need a lot less. To have an effect. [00:59:30] And so what I think we can do is actually create lower total ABVs which means that governments will wanna regulate thel lowest possible umber and if you create that in a way that you Patton or is proprietary, you can start to use mechanisms of creating it and then overlay governance so that the other guys can maybe can't make something very effective through their processes that use that little. And now you have a really good barrier, because you've got a brand, and you got a process, and you got regulations.

Bill Newlands: So I'm gonna butt in and tell you a quick story. One of the things when we first, when Rob and I first [01:00:00] went up to see him before we did the very first deal. The thing that we walked away and said was, he talked about that. He talked about, regulation is actually a good thing. Now how many industries do you say regulations a good thing? Not many, but you talked about that quite articulately about that's going to be important, so that you're producing a definable thing that can be reproduced and people get a consistent play, and the government can be helpful in that. That was a big thing for us-

Bruce Linton: And then other regulators can copy you. So what we [01:00:30] do is we have hosted like 20 countries probably. It was on Friday, I'm walking around, I bump into a South Africans and I've got crews in from England, and the U.S., what happens is is if you get the policy right and the products work and people can point to Canada as the indicator of what they wanna follow, it's remarkable but the Jamaican regulations, operated by the cannabis licensing agency in Jamaica, are extremely similar to Canada. And when you go to Denmark, they're extremely similar. When you go to Australia, they're extremely similar. So if you get the right company [01:01:00] running similar regulations around the globe, you can accelerate through a whole bunch of the learning. And so that is a huge advantage that Canada's creating for us, we just have to keep moving.

Jim Cramer: Now, are you concerned about, and when it comes to medical side, that each dosing is consistent?

Bruce Linton: Yeah, well that was a problem. First you have to get stabilized ingredients which means you can make the same thing forever. Then you start looking at how you dose it and deliver it, I would say that you have to show stability over a year it takes a year. And where we are now is we have, what they call, no objection letters from the regulators for [01:01:30] animals and for humans to begin clinical trials of different types because we've shown that we can get the dosage and the equivalency kind of forever.

Jim Cramer: Okay, I know I just have a couple more minutes time. Bill, do I, do you think that, let's say, once this becomes common par, say you're in Africa, will you just keep the structure you have or would you spin it off? Do you want to keep it embedded within Constellation Brands?

Bill Newlands: Well, you know, Bruce is running a separate public entity [01:02:00] and we think that's the right way to do it. We think what they have done and what they've created is the singularly best way to play it. That's why we, as part of this deal, we're eliminating the group internally that we had initially had, that was going to develop effectively competitive opportunities to what they were doing. And, we realized, all in is a better play. So we think letting them do their bit, and now, we're obviously, we're gonna talk a lot. We hope we [01:02:30] can add some value. Hopefully he feels we can add some value.

Bruce Linton: Yeah.

Bill Newlands: But no question. We think having them be free standing is a good play.

Bruce Linton: And we're a bit bold, so we hosted the board, a week ago Thursday-

Bill Newlands: Yeah, absolutely.

Bruce Linton: And after the, we completely blew them away, by the way. Just completely blew them away. But the point of the exercise was-

Bill Newlands: You should have been on the plane on the way home.

Bruce Linton: The point of the exercise was have them up before we have the five billion at the count to tell them they were perfect partner when they have given me 245. Don't change how you behave cause you gave me more. Second point was to tell them at [01:03:00] the end of the term, our goal is in the next three to five years is to sort of eat you backwards. What I mean by that is I wanna make a bigger business than you are, so effectively we kind of wrap around you. And I didn't think any of them went, that sounded crazy, cause it was at the end of the tour-

Jim Cramer: That's what I, that's exactly what I'm thinking cause in 500 billion, I thought that 200 billion could be equivalent. But I genuinely believe that Canopy will end up being equal, if not larger. Just simply not because beer's getting smaller, but because beer doesn't have the opportunity to, the green, doesn't have the green feel-

Bill Newlands: Right. The upside-

Jim Cramer: [01:03:30] That you guys have. And that's really it.

Bruce Linton: And it hasn't been prohibited for 90 years, it has no absolute absence of real science. Like this is an unbelievable welcome. Prohibition's over in Canada in three or four days. You can research everything.

Bill Newlands: We'd argue if that came to pass, we made a great investment.

Jim Cramer: Let's leave it at that, I want to thank Bruce and Bill for a fabulous discussion.

Prohibition official ends in Canada on Oct. 17, 2018. That's when Canada becomes the second country to legalize recreational marijuana. 

What does that mean for cannabis stocks? Well, it's already been a wild ride.  Tilray (TLRY - Get Report) has been on a rollercoaster ride since Sept. 

Meantime, top executives at hot cannabis company Canopy Growth Corp. (CGC - Get Report) and its blue-chip partner Constellation Brands (STZ - Get Report) say legal-weed products will eventually be at least a $200 billion segment -- and could even disrupt $500 billion of businesses across multiple sectors.

Constellation, which owns alcoholic-drink brands like Corona beer and Robert Mondavi wines, recently paid $4 billion to boost its stake in Canopy Growth to 38%. The company also purchased warrants giving it the option to increase that to a majority stake in the future.

Constellation Chief Operating Officer Bill Newlands and Canopy Growth CEO Bruce Linton sat down for an exclusive interview with TheStreet's founder and Action Alerts Portfolio manager Jim Cramer.

Among the topics:

  • Looking to the Future. Constellation Brands COO says the company realized that cannabis was going to be a potential player in that whole space. They looked carefully at all the players and decided that if they were going to play, They should be playing with the best.

Click here to go Inside Jim Cramer's Boot Camp for Investors.