Molson Coors Brewing Company Concerned About Impact of Legal Cannabis On Alcohol Sales
PotNetwork recently reported that tobacco companies are not sitting by idly and watching the cannabis industry from the sidelines. Some are being proactive and throwing their hats into the ring. Alcohol companies are in the same boat of potentially watching their revenues shrink as more and more people spurn alcohol for recreational marijuana.
Molson Coors Brewing Company (TAP) is one of them, indicating in its latest 10-K filing with the U.S. Securities and Exchange Commission that the brewing behemoth is concerned about the impact of legal cannabis sales on its business. In the filing, the company framed legal cannabis as a potential "risk factor" which could take market share away from alcohol sales.
The report claimed "Although the ultimate impact is currently unknown, the emergence of legal cannabis in certain U.S. states and Canada may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer… a decline in the consumption of our products could result in a material adverse effect on our business and financial results."
According to The Cannabist, Molson Coors, which has headquarters in both the U.S. and Canada, is only the latest publicly traded company to mention the marijuana industry in its annual financial report. A number of alcohol companies consider legal cannabis as a potential risk factor as the movement toward country-wide legalization has picked up the pace.
Alcohol Buys Into Cannabis
Like tobacco companies, alcohol companies are rightfully concerned about marijuana’s growing popularity as a recreational drug. For example, marijuana now outsells alcohol in Aspen Colorado. Licensed vendors in the ski resort of Aspen took in $11.3 million in cannabis sales last year, compared to $10.5 million for liquor. According to the report in The Independent, it is believed to be the first time legal marijuana sales have surpassed alcohol anywhere in the U.S., but it certainly will not be the last.
Constellation Brands, (NYSE:STZ), for example, the U.S. distributor of Corona beer, bought a 9.9 percent stake in Canada’s most considerable marijuana concern, Canopy Growth Corp. (TSE:WEED).
When Constellation CEO Rob Sands was asked if he felt cannabis was a threat to the alcohol industry, said, "We think that it's highly likely, given what's happened at the state level.” He added, “We’re obviously trying to get first-mover advantage.“
Sands says Constellation Brands plans to produce alcohol-free fruit-based drinks, sodas, and coffees for the Canadian market, but, as of yet, has no plans to sell any cannabis-infused products into the U.S. due to Federal prohibition.
Boston Beer Co. [SAM] and Craft Brew Alliance [BREW] have also expressed concern that legalization of marijuana could cut into their sales. Others are known to be plotting ways to avoid losing market share to marijuana.
Pharma Is Also Worried
Not to be left out, the pharmaceutical industry is pushing back on medical marijuana sales.
Research in recent years has shown that states with medical marijuana laws see a drop in opioid-related deaths. In states with operating medical marijuana dispensaries, patients are more prone to substitute marijuana for opioids, resulting in a reduction in the number of addicts and therefore fewer overdoses.
A recent federally funded research project published by the Journal of Health Economics determined that “Dispensaries – retail outlets that sell marijuana to qualified patients – contribute to the decline in opioid overdose death rates.”
Examination of data from 1999–2010 the report suggests that opioid mortality rates fell by 40 percent more in states with easy access to medical marijuana than in states which simply legalized its use without regulated access.
Getting back to the concerns of big alcohol, Molson Coors spokesperson Colin Wheeler says, "As the legal landscape changes in Canada and evolves in the U.S., we are working actively to understand the impacts on our business, if any, and the range of appropriate responses in the interests of our company and our stakeholders. We'll take our time and get it right, consistent with our values as a company and our commitment to responsibility."