Constellation Brands (NYSE:STZ) announced its first-quarter earnings results last Friday, and they were better than Wall Street's expectations. The alcoholic beverage maker's results were dragged down, though, by its investment in cannabis producer Canopy Growth (NYSE:CGC). Without the Canopy investment, Constellation would have posted a nice profit. With Canopy, the company reported a $245 million loss in the quarter.

You might think that Constellation Brands' executives would have some negative comments about Canopy Growth. And they did. But they also expressed a lot of optimism about their cannabis partner. Here are five important things they had to say about Canopy Growth during their Q1 conference call.

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Image source: Getty Images.

1. They are "not pleased" with Canopy's latest results

No, CEO Bill Newlands didn't call Canopy Growth a cannabis albatross hanging around his company's neck. However, he did say that Constellation was "not pleased with Canopy's recent reported year-end results." Canopy posted a huge net loss in fiscal 2019 Q4, along with a quarter-over-quarter decline in Canadian recreational and medical cannabis sales, and lower international medical cannabis sales.

About the only truly good news from Canopy's Q4 results was that its total revenue increased. But that increase resulted primarily from the acquisition of German vaporizer device maker Storz & Bickel.  

2. They're positive on Canopy's acquisition deals

Constellation CFO David Klein said that "we're very happy with [Canopy's] investment in Storz & Bickel." He noted the positive impact from this acquisition in Canopy's latest results, but Constellation sounded even more positive about Canopy's deal to acquire U.S.-based cannabis operator Acreage Holdings.

Newlands brought up Canopy's agreement to buy Acreage in his introductory comments in the earnings call, saying, "We're excited about this opportunity, as it provides a path for Canopy to have a leading position in the U.S. upon federal cannabis reform." He added that the transaction extends the duration of Constellation's Canopy warrants, a plus that he said "provides long-term financial flexibility for cash deployment to our shareholders."

3. They expect around $1 billion in annualized revenue from Canopy soon

Despite Canopy's weaker-than-expected sales in its fiscal Q4, Constellation remains confident in the cannabis producer's long-term potential. In fact, Newlands said that his company continues to expect that Canopy will deliver an annualized top-line run rate of around $1 billion by the end of its next fiscal year, which ends on March 31, 2020.

In Canopy's Q4 conference call, co-CEO Bruce Linton stated that he thinks the $1 billion annualized revenue rate is achievable as well. There are variables that could impact hitting this goal, though, including how quickly retail stores open in Canadian provinces (especially Ontario) and how smoothly the launch goes for cannabis edibles and other derivative products.

4. They support Canopy's move into the U.S. hemp CBD market

While Constellation looks forward to working with Canopy to introduce new higher-margin form factors -- including vapes, beverages, and edibles -- in Canada later this year, the company also eagerly anticipates Canopy's entrance into the U.S. hemp cannabidiol (CBD) market. Canopy is building a large-scale hemp production center in New York state. Newlands echoed the comments from Bruce Linton in Canopy's Q4 conference call that Canopy will market CBD products in the U.S. by the end of 2019.

In his remarks about Canopy's entrance into the U.S. hemp CBD market, Constellation's Klein said, "We think that's a good place for them to focus their money and resources to really take advantage of what could be a very large and profitable market in the U.S." adding that his company is "really happy with how they're positioning themselves there."

5. They remain "very bullish"

Could Constellation regret its decision to invest over $4 billion in Canopy Growth? Its executives say they don't.

Newlands stated that Constellation "remain[s] happy with our investment in the cannabis space and its long-term potential." Klein seconded this, saying, "We still are very bullish on our Canopy investment, and we're very happy we made the investment when we did into this space."

While Canopy is hurting Constellation's bottom line right now, it's a leader in the global cannabis market. And that market is likely to grow exponentially over the next decade. Also, Constellation has recognized a pre-tax net gain of $1.6 billion since its first investment in Canopy in November 2017. That's a pretty good return so far -- and likely a key reason Constellation continues to be happy overall with Canopy Growth.