As Cannabis Goes Legal, Molson Courts Aphria, Aurora
Molson Coors Brewing Co. (NYSE:TAP) the number two beer seller in the United States and Canada is reportedly exploring the possibility of expansion into the legal cannabis market. Spurred on by Canada’s legalization of recreational marijuana, the Denver-based company has discussed plans to enter the cannabis space with up to four companies, according to a report in the Financial Post. Two of Canada’s top three Licensed Producers, Aphria Inc. (TSX:APH) (USOTC:APHQF) and Aurora Cannabis Inc. (TSX:ACB) are at the top of Molson’s list for a possible partnership, with both companies having entered discussions with the beverage-maker over the past six months.
According to reports, the beer company is serious about working with the cannabis industry and is already doing their due diligence on the Canadian market. During an investor presentation in early June, Molson Coors’ Chief Executive Officer Mark Hunter stated: “[w]e have assembled a team in Canada to actively explore the risks and opportunities of entering the cannabis space in that market, where it will be federally legal by this fall.”
It would appear that the interest is mutual, with Aurora Cannabis publicly stating that the company is exploring the possibility. “We’ve said specifically we’re interested in the infused beverage space and we do intend to enter that market,” Cam Battley, Chief Corporate Officer of Aurora Cannabis told the Financial Post.
The Beer Industry Wants in on Cannabis
Of course, Molson is not the first beverage company to show interest in the marijuana sector. Last year Constellation Brands, (NYSE:STZ) the U.S. distributor of Corona and Modelo beer, purchased an almost ten percent stake in Canopy Growth Corp. (TSX:WEED)(NYSE:CGC), a deal that was worth $191 million.
Other companies like The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) are expanding their efforts to produce more marijuana-infused products. Moving at a rapid speed, the Ontario based company launched its beverage division earlier this month and just last week announced an increase in their production capacity.
Even the man who developed the recipe for one of the most popular beers owned by Molson Coors is creating his own cannabis-infused beer. Keith Villa, the brewmaster who developed Blue Moon is designing a beer that will be brewed with marijuana instead of alcohol. According to Fortune, the beer is designed to have the same effects as an alcoholic beverage. Villa’s beer will launch in the Colorado market in the fall with plans to expand to other states where recreational marijuana use is legal.
Pot is Winning Public Perception Over Booze
The legalization of recreational cannabis has had some impact on the alcohol industry, which some argue is the catalyst for their interest in marijuana. In states with legalized marijuana, there has been a significant decline in binge drinking according to a report by Forbes. Citing a report produced by the Wall Street investment firm Cowen & Company, Forbes reports “states where adults 21 and older can walk into a dispensary and purchase a variety of cannabis products, experienced 13 percent less binge drinking than areas of prohibition.”
Part of the appeal of pot is the idea that it is far safer than alcohol, a notion that, for the most part, is true. For example, alcohol has been linked to a number of adverse health conditions including cancer, brain issues, and diabetes. It is responsible for roughly 88,000 deaths annually according to the New York Daily News, playing a huge role in domestic violence incidents and traffic accidents.
By contrast, death linked to marijuana use is non-existent. To overdose on cannabis, a person would have to consume between upwards of 70 grams of THC, according to some reports, which is an enormous, if not outlandish amount of cannabis. And while younger pot smokers may come across issues with heavy cannabis use, in general, marijuana is thought to be the safest drug on the market today.