Big Alcohol, Big Tobacco Giants Invested in Marijuana
Both Big Alcohol and Big Tobacco giants are investing in the marijuana market as global sales for cannabis increase, providing more proof of the inter-links of addiction industries.
Sales in the global marijuana industry are increasing. After registering $10.9 billion in global sales in 2018, according to Arcview Market Research and BDS Analytics, worldwide licensed marijuana store sales should top $40 billion by 2024. That’s a compound annual growth rate of over 24%. Evidently Big Alcohol and Big Tobacco want their piece of the profits.
Among major corporate giants that have invested in marijuana are,
- Constellation brands,
- Molson Coors Brewing,
- Anheuser-Busch InBev (AB InBev).
Constellation brands produce the Corona and Modelo beer lines. They joined with marijuana market through three separate equity investments into Canopy Growth, the largest marijuana stock in the world by market capitalization.
- In October 2017, Constellation invested $190 million for what was a nearly 10% stake in Canopy.
- In June 2018, it gobbled up a third of a CAD600 million convertible note offering from Canopy Growth.
- In August the same year, Constellation announced a $4 billion equity stake in Canopy, which closed in November 2018.
At present, Constellation has a 37% stake in the largest marijuana stock in the world, and it could boost its ownership to as high as 56% if it exercises warrants that it holds as part of its most recent equity investment.
Altria, formerly known as Philip Morris, produces the cigarette brand Marlboro among other products and owns a 35% stake in vaping device maker Juul. Altria has also deep institutional links to the world’s largest beer producer AB InBev.
Altria entered the marijuana market with its $1.8 billion equity investment in Cronos Group which closed in March this year. Altria’s investment gives the company a 45% nondiluted stake in Cronos and warrants it received could allow Altria to up its stake in Cronos Group to 55%, if exercised.
Molson Coors Brewing
This company owns the Molson and Coors lines of beer, as well as the Blue Moon, Keystone, and Miller brands.
Last August, Molson Coors announced that it would form a joint venture with Quebec-based HEXO, which is now known as Truss. The joint venture expects to have a line of cannabis-infused beverages on dispensary shelves as soon as derivative products are allowed for sale in December 2019. Molson Coors holds a 57.5% stake of the joint venture.
Anheuser-Busch InBev (AB InBev)
AB InBev produces the Budweiser brand and Stella Artois among others, and controls about every third beer bottle sold in the world.
AB InBev formed a $100 million joint venture with Canadian grower Tilray that’ll see each company provide $50 million in funding. The duo will research and develop a line of nonalcoholic cannabis-infused beverages for the Canadian market.
Profit at what cost?
Meanwhile, a growing body of research is proving the magnitude of harmful health effects of marijuana. These include:
- Increased risk of injury and death,
- Increased risk for cancer, respiratory disease.
- Specific harmful effects are for mental health including risk of developing schizophrenia, other psychoses, and social anxiety disorders.
While there might be therapeutic benefits found for cannabinoids to treat chronic pain in adults, smoking marijuana or the pot products found for commercial sale do not posses such benefits and are currently going largely unregulated. Harms of cannabis for developing brains of adolescents are staggering and yet it is freely accessible in legalized states/ countries for use by anyone. It is quickly becoming the next Big Tobacco of the world.