Is Marijuana Legalization A Threat to Craft Beer?

You know something profound is going on when the third largest beer company in the US buys into one of the biggest names in the cannabis biz. And if you think that legalized pot won’t ever affect craft beer sales… you might be kidding yourself.

Last week Constellation Brands sent shockwaves across the beverage industry when they announced that they’d agreed to buy a nearly 10 percent stake in Canopy Growth Corporation, the world’s largest publicly traded cannabis company.

Up to that point, Constellation, which posted a 13% increase in beer sales in its latest quarter, had been living solidly in the beer, wine and spirits world, with an emphasis on BEER. Based out of Victor, New York, the Fortune 500 company is home to huge Mexican brands like Modelo and Corona, and significant craft beer properties like Ballast Point and their most recent acquisition, Florida’s Funky Buddha.

Canopy Growth Corporation, on the other hand, is all about the pot biz and we would have been more encouraged if they had decided to buy into the beer industry…but they didn’t. It was Consellation who spent serious money on one of the earliest commercial players in Canada’s legal cannabis market and that’s telling.

Traded on the Toronto Stock Exchange (TSX) under the symbol ‘WEED’ (how can you not love that?), has a current market valuation of 2.2 billion Canadian dollars.

And with marijuana already approved for recreational use in eight states and the District of Columbia, and a whole second tier of states discussing its possible legalization this year, Canopy Growth clearly looks like the future, at least it does to Constellation Brands.

Constellation Brands President and Chief Executive Officer Rob Sands explains the beverage leader’s decision to get into bed with the Canopy Growth Corporation this way…

“Our company’s success is the result of our focus on identifying early stage consumer trends, and this is another step in that direction.”

Even Business Insider thinks that with beer sales having slumped in recent years, and more states than ever moving towards pot’s legalization, weed could be the solution.

They also think that “it seems probable that other beer giants will get in on the action soon.”

And as we reported earlier this year, Lagunitas, now aa Heineken property, has already begun testing the waters with a marijuana-infused beer in California.

The bottom line is, whether you want to admit it or not, craft beer is a commercial high…a delicious commercial high…but a high nonetheless.

And craft beer is PRIMARILY popular because people enjoy how it makes them feel.

And yes, we get that it can taste delicious as well, but how many of us would continue to embrace craft beer if it didn’t also enhance one’s mood?

So the question of whether pot could directly erode craft beer’s market share is a very real one that’s going to be interesting to watch going forward.

Pot Beer Image Credit: Mitchell Maglio