Marijuana investments reached a tipping point this week upon release of the news that William Wrigley Jr. II, the former heir to the Wrigley Co. who sold the family business in 2008, became the latest capitalist to invest in the cannabis industry. His participation in a $65 million investment round for Georgia-based medical marijuana company Surterra Wellness follows last week’s announcement by Molson Coors Canada (NYSE:TAP) of their joint venture with The Hydropothecary Corporation (TSX:HEXO), signaling a broader interest in the cannabis industry by mainstream businesses.
Wrigley, who now joins Surterra as Chairman of the Board sought out the medical marijuana sector mainly due to the drug’s ability to help people, according to a statement released on Monday. “We believe in the ability of cannabis to improve quality of life for patients across the country, and we are excited to build a global industry leader for the long term," Wrigley said in a press release announcing the venture.
“This new venture is consistent with our growth strategy…”
A cascade of high-profile investors has entered the industry over the past few years, with everyone from Microsoft (NASDAQ:MSFT), to Peter Thiel’s Founders Fund grabbing a headline or two with their piece of the cannabis sector. And following House Speaker John Boehner’s appointment to the board of Acreage Holdings earlier this year, investments reached a fever-pitch recently with last week’s announcement of a joint venture between Molson Coors Canada and The Hydropothecary Corporation.
In fact, what makes the Molson Coors deal a turning point is not only the company's recognition of the future of cannabis but their recognition that investing in the industry may be the only way to turn around otherwise sinking fortunes. As noted earlier this year, the company realizes that falling beer sales come at a time when the public’s acceptance of cannabis is on the rise.
In other words, Molson Coors Canada’s investment in the cannabis industry was, in many ways, inevitable.
“This new venture is consistent with our growth strategy and our commitment to being First Choice for Consumers and Customers by ensuring that Canadians have access to high-quality products that meet their evolving drinking preferences,” said Frederic Landtmeters, president and CEO of Molson Coors Canada, in a statement announcing the partnership. “While we remain a beer business at our core, we are excited to create a separate new venture with a trusted partner that will be a market leader in offering Canadian consumers new experiences with quality, reliable and consistent non-alcoholic, cannabis-infused beverages.”
“I would see it as a long-term end of a great journey…”
Whether or not Wrigley’s involvement in the cannabis industry was also inevitable, the fact remains that his investment represents a broader trend that some experts have long predicted. As Rob Hunt of ConsultCanna said in an interview last year, the best marijuana stocks won’t even exist until the next decade. Big tobacco, big pharma, and the like are ready to pounce but want to see the legal issues surrounding the drug dissipate, especially in the U.S.
And while many in the industry may embrace the age-old tradition of the successful exit, others admit that the entrance of big business into cannabis represents a seismic shift. As Cannaroyalty Corp. (CSE:CRZ) (OTCQX:CNNRF) CEO Marc Lustig told PotNetwork in an interview in March of this year, while mainstream business represents a net positive for shareholders, it does, inevitably, mean the end of the industry as it stands today.
“People ask me —to some people it's very counterintuitive, but I think it ends up making sense —people ask me what the biggest risk to CannaRoyalty's business is and I say it's federal legalization in the United States,” Lustig told PotNetwork. “That’s because literally the day after that happens it's clear that I could see five different major industries immediately putting very significant capital to work to acquire and effectively just drive out of business any other players in the market.”
“I would see it as a long-term end of a great journey that we've been on,” he continued.
“Canada is breaking new ground in the cannabis sector…”
It remains to be seen whether or not this week is, in fact, a turning point for marijuana; one that sees the industry move from a niche market into the mainstream. “Canada is breaking new ground in the cannabis sector and, as one of the country's leading beverage companies, Molson Coors Canada has a unique opportunity to participate in this exciting and rapidly expanding consumer segment,” said Landtmeters in a statement.
With falling beer sales, it’s an opportunity his company can’t pass up.