For Beer And Cigarette Giants, Grass Is Greener At Christmas

With billions already spent, this could be the dawning of the Age of Big Pot
Proponents of legal marijuana spent decades fighting a slow battle for mainstream acceptance
. Now, with recreational use legal in Canada and many states in the United States, big business is suddenly swooping in. Altria, the maker of Marlboro and other cigarettes, last week paid $1.8 billion for almost half of the Cronos group, a cannabis company in Toronto.
In August, Constellation Brands, which owns Corona and other beers, paid $4 billion for a major stake in Canopy Growth, another Canadian marijuana company. That month, Molson Coors, another brewer, formed a joint venture with a cannabis company in Quebec.
“There’s always been the expectation that big business was going to come in; we’ve been hear- ing rumours about ‘Marlboro Greens’ for decades now,” said Bethany Gomez, director of research at the Brightfield Group, a cannabis market research company. “Now we’re past the point of no return.”
The arrival of big corporations portends sweeping changes for an industry that until recently operated in the shadows. As billions of dollars pour into product development, marketing, and manufacturing, these companies will be looking to create big brand with the markets share to match. Brightfield estimates that global cannabis sales will reach more than $31 billion in 2021, up from less than $8 billion last year.
But while large-scale investments suggest that the mainstream acceptance of marijuana has reached a significant tipping point, longtime cannabis advocates are worried that the idealistic entrepreneurs who made this moment possible may get left behind.
Despite the flurry of deal making, the market for legal cannabis prod- ucts remains fragmented. Canada legalized the sale of marijuana flow- ers and oils this year, but edible products and drinks made with mariju- ana concentrates are not yet legal.
In the United States, several states have legalized recreational con- sumption, though it remains illegal at a federal level. That patchwork of regulation is keeping several big companies that are interested in the industry on the sidelines for now.
In September, Target.com began selling products that contained CBD, a non-psychoactive cannabis derivative. But within days, the company changed its mind and removed the products.
James Quincey, the chief executive of Coca-Cola, said the company was not yet entering the market. “It needs to be legal, it needs to be safe and it needs to be consumable,” he said on CNBC on Tuesday. “It’s not there yet.”
But earlier in the year, Coca-Cola representatives acknowledged that the company was watching the industry closely. They’re not the only ones.
Diageo, the spirits conglomerate, was widely rumoured to be on the verge of striking a deal with a Canadian cannabis company in au- gust, but nothing has yet been announced. And Walmart Canada acknowledged that it, too, was looking into the industry, but had no plans to start selling products containing CBD or THC, marijuana’s psychoactive component. Nonetheless, boosters say the cannabis industry will attract more attention from big corporations here.
As big companies enter the industry, experts believe they may step up lobbying efforts to make marijuana legal on a federal level in the United States, though so far the big companies have made no such moves. “We look forward to Altria and Constellation getting more involved in efforts to change federal laws,” said Mr. Smith.
But big companies are unlikely to make major moves in the American market until recreational use of THC products is legal at a feder- al level. And while this year’s multibillion-dollar farm bill included a provision that made CBD a federally legal substance, the Trump administration has shown little interest in supporting national legalization. As attorney general, Jeff Sessions stepped up enforcement against marijuana crimes. Trump has said that he would support a bill that would leave the decision about legalization to the states.
Even if big companies do invest heavily in the cannabis industry, small producers of marijuana products that have emerged in recent years will most likely still have plenty of rooms to grow.
Source: Relaxnomiks

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