Declining Profits Bringing Beer Companies Into the Cannabis Industry
Recognizing the growth of the burgeoning cannabis industry is enough to bring a lot of companies, entrepreneurs, and investors into the business sector, but beer sellers have an additional reason to join-decreasing profits. The fact that their decreasing profits may be occurring directly because of legalization has many beer execs deciding that if they can’t beat cannabis, they might as well join the industry. NBC News just reported on how brewers are increasingly moving into the marijuana market, a sector expected to be worth $22.7 billion by 2023, with cannabis-infused beverages worth $600 million:
Molson Coors, which entered into a joint venture with Canadian cannabis company Hexo to produce CBD-infused beverages, expressed concern over the impact of legal cannabis on its products, noting in an annual investment filing that it “may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer.” The joint venture plans to launch a portfolio of cannabis-infused beverages this fall in Canada, where cannabis is legal for both recreational and medicinal purposes.
Constellation Brands, the $34 billion company behind Corona and Modelo beers, invested $4 billion into the Canadian cannabis company Canopy Growth last year to produce cannabis-infused beverages in Canada.
Louis J. Terminello, chair of the hospitality, alcohol and leisure industry group at the Greenspoon Marder law firm, believes that a combination of big dollar investment, the potential for significant tax revenue and shifting public opinion is adding to the legitimacy of the cannabis business, which will likely lead to increased legalization.
Right now, most of the big moves by beer makers into the cannabis industry are occurring in Canada, but we can certainly expect to see similar advanced in the United States when federal prohibition ends. While some may look at the two business sectors as competitors, as cannabis moves mainstream, there’s an increasing chance that they will be joining forces.
Don’t miss the International Cannabis Business Conference in Vancouver, Canada, this September 15th-16th to learn the latest and to network with top investors and entrepreneurs. Discounted, early bird tickets are on sale until August 21st.