Keep Your Friends Close, and Your Enemies Closer
When Constellation Brands purchased a 9.9% stake in Canopy Growth, I immediately thought of Michael Corleone and his recognizable quote.
True, the cannabis industry hasn’t ordered a hit on the alcohol industry, but it might has well as. According to our recently published The Recreational Cannabis Consumer, 21% of recreational consumers indicate that they have cut back on their hard spirit consumption as a result of the legalization of marijuana for recreational usage in their states. The same holds for beer and wine, at 20% and 18% of consumers reporting cutting their usage, respectively.
While there are reports that the companies are co-developing cannabis-infused drinks for the Canadian market, the purchase does indicate how traditional adult-use companies have to rethink what they produce. Constellation Brands produces alcohol, yes; but in a broader sense it produces beverages for adult consumption. In the former model, there is no room for a partnership with Canopy; in the latter, there clearly is.
In the U.S. market, we still have a ways to go before a company of Constellation size is ready to partner with a cannabis manufacturer, but it’s clear that if and when the U.S. legal scene catches up to Canada, there will be plenty of suitors for cannabis manufacturers. From cigarette companies that have already acknowledged plans to quit cigarette to other alcohol companies, the new friends of cannabis are those who are feeling its threat.