Constellation Brands' (STZ 0.14%) $190 million investment in Canopy Growth (CGC -4.82%) in 2017 for a 10% stake in the marijuana producer altered the landscape for the legal weed industry. Because it was the first major company to put money into pot, it bestowed much-needed legitimacy on the industry.

Yet as Canopy Growth stumbles over yet another seemingly unforced error, investors may begin questioning whether Constellation wasted the $4 billion it eventually poured into the pot producer, and so far, the record isn't very encouraging.

Beverages with marijuana leaves.

Image source: Getty Images.

Lurching forward

Canopy Growth's latest snafu is its delay in introducing its so-called Cannabis 2.0 lineup of marijuana-infused beverages. Instead of the January 2020 launch date it originally promised, Canopy pushed it back to some indefinite time in the future to give it the chance to scale up its production facility.

"In order to deliver products that meet our customer's high standards we are electing to revise the launch date while we work through the final details," CEO David Klein said in a statement.

Considering Constellation is one of the premier beer and wine distributors in the U.S. and its investment in Canopy was predicated not on how much dried cannabis flower or leaf the pot grower could sell but on the drinks it could produce, being ready to hit the ground running when it got the green light should have been a priority.

Canopy submitted its application for a beverage facility last June, and Canada's regulations for Cannabis 2.0 went into effect in October. Canada Health issued Canopy a license in November and the marijuana producer announced the following month it was launching its beverages in January. And then it said it wasn't.

While Canopy says the delay shouldn't have a material impact on its revenue this year, suggesting it may not be too big of a deal over the long term, it is ceding the early ground to other companies that are prepared to move forward with cannabis-infused beverages of their own.  For example, Truss Beverages, the joint venture of HEXO and Molson Coors, and Fluent Beverage, the partnership between Tilray and Anheuser-Busch, also have a full lineup of drinks ready to go.

Overpromise, underdeliver

If this were Canopy's only blunder, it would be easy to excuse, but the marijuana producer seems to regularly trip itself up.

Last quarter Canopy reported that sales tumbled 15% year over year to CA$76.6 million because it misjudged demand in the cannabis oils market and had to recognize CA$32.7 million in adjustments due to a large number of returns.

It has also overpaid for acquisitions, and it operated with seemingly little oversight from the board of directors, who allowed former co-CEO Bruce Linton to freely distribute the company's cash hoard so that its balance has been nearly halved to CA$2.7 billion. While Linton was eventually ousted and a Constellation executive installed in his place, Canopy remains a loss-generating operation with no end in sight.

The recent placement of another Constellation executive on Canopy's board implies the beverage company might want a few more adults in the room to stop the hemorrhaging, but it also suggests a good part of Canopy's future will be in beverages.

A glass half empty

That's good if cannabis-infused drinks are as big as some hope, but like oils and dried flower and leaf demand, this may be a more underwhelming figure than expected. Although some analysts see them growing to $1.4 billion by 2023, where they are legal to buy in the U.S. they haven't moved the needle, accounting for about 6% of the entire edibles market. There may be a market for them, but demand may not be so great after all.

It's too early to say that Constellation has wasted its money on Canopy Growth. After all, it may simply have been a defensive move to be part of an industry that's seen as potentially undermining alcohol sales.

Yet it's also apparent that whatever benefit Constellation hoped it would derive from its investment in marijuana won't be generating any positive returns for some time to come.