The Merging of the Alcohol and Cannabis Industries

With regulations on cannabis beginning to loosen at a rapid rates in the world, and the United States alike, it is apparent that everyone will be trying to get a piece of the pie. Although an individual would think that companies involved in alcohol production would be opposed to the increase of support for cannabis related products, we have found that many of them have already begun to capitalize on the trend. While many alcoholic beverage companies have begun to explore the possibilities of marijuana-infused beverages as well, other companies have taken their investments even further. Constellation Brands $4 Billion investment into Canopy Growth Corporation serves as a monumental indication of what is to come between these two spaces, and how they will coexist in a leveled playing field.

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Official logo for Canopy Growth Corporation (TSX: WEED and NYSE: CGC. As of November 19th, 2018, the company’s stock sells for nearly $33 a share.

Prior to the era of legalization, alcohol companies had little to worry about when it came to marijuana. They naturally owned the competitive advantage over cannabis related companies due to one fact:

Alcohol has been legal in the majority of the world for years. Cannabis is just now recently nationally legal in a few countries; yet that wont last long. 

The alcohol industry enjoyed this exclusivity over cannabis, yet now it does not own the same luxury. Though alcohol has proven to temporarily impair individuals and also cause long-term health effects when consumed improperly, it has enjoyed nationwide legalization regardless. By being a legal entity, it has reaped the benefits of a much more relaxed perception and connotation, even though it’s record of destruction has been recorded along the way. In today’s age, however, cannabis is now creeping into the same space. Companies such as Constellation Brands have already made the conscious decision that rather than try to delay what is inevitable, they will invest in the development of the cannabis industry.

For background information, Constellation Brands is one of the leading international producers and marketers of beer, wine, and spirits. Ranked as the number 3 beer company in the United States, Constellation is the host brand for many iconic beers including Corona, Corona Light, Modelo Especial and Pacifico. Under its premium spirits brands, the company supports SVEDKA Vodka, Casa Noble Tequila, and High West Whiskey. On the other hand, Growth Corporation was one of the early distributors in the Canadian and international marijuana market, which has in turn allowed it to become the largest player in the game. The company is not solely interested in providing consistent access to high quality cannabis products, but is just as invested in educating healthcare professionals and conducting clinical research about cannabis.

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Image depicting the iconic beer brands under host company, Constellation Brands.

Constellation Brands investment gives them a 38% share in Canopy Growth Corp., while also giving them further warrants that could take the stake to over 50% in the near future. The investment will help Canopy solidify its position as an industry leader and gives them the funds to build or acquire new assets. While more than 30 countries, including Argentina, Austria, Brazil, Germany, and South Africa, begin to purse medical cannabis programs, the $4 billion investment will help Canopy to serve those markets. According to Forbes, the money will also help for the company to be more invested in the cannabis edible space. Forbes states that,

“For example, in Colorado, the share of edibles and concentrates went up from 11% and 13% at the beginning of 2014 to 15% and 29% by the end of 2017. Furthermore, in California and Oregon, their combined share exceeds 35%.” – Trefis Team, Great Speculations, 2018

The leading alcohol brand was determined to find a new influx of revenue, as it’s own industry has been suffering. According to Forbes, in US States where medical marijuana has been legalized, there has been a 15% drop in monthly alcohol sales. This figure can prove to be detrimental to the industry at large, but to Constellation in particular. It has already experienced falling revenues in the wine and spirits segments, and predicts a decline in the beer market and the US as well.

This trend will continue to grow as regulation continues to spread across the United States. What company do you think will follow next? Comment and let us know!

Article: What Constellation Brands’ Massive Investment In Canopy Growth Corp. Means For Both Companies

Artist Feature: Snoop Dogg Is More Than Just An OG In The Rap Game

Growing up in Los Angeles, I have always been a fan of Snoop Dogg. Growing up in Long Beach, Snoop Dogg has created timeless music for the West Coast, and has been an active member of the community as well. Coincidentally, I actually have experienced the charitable person that Snoop Dogg is, having played in his youth football league growing up in the city. Though he did not come up in the best situation, having an unstable presence of a father in his life, Snoop Dogg made the most out of what was given.

Growing up, Snoop Dogg, whose real name is Calvin Broadus, ran into the law frequently due to his affiliation with the Rolling 20’s Crip gang in East Long Beach, but I can assure you that he has never been just a “gangster”. Since dropping his debut album, Doggy Style, in 1993, Snoop Dogg has continued to alter his life. Now, the infamous Westcoast rapper has been at the pinnacle of the rap game, and has been active in finding new ways to make money off of what he enjoys: Marijuana.

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The Original Cover Art for Snoop Dogg’s Debut Album “Doggy Style” (1993)

Debuting in 1993, Snoop Dogg is considered one of the original rappers of the Gangster Rap era in the early 90’s. His status as an OG is not cemented solely by his tenure in the rap game at this point, as he is one of the most successful artists to be involved in the business of cannabis as well. Snoop Dogg’s company, named Leafs by Snoop, was launched in November of 2015, and since has gained considerable traction. Using capital that he had accumulated during his music career, the rapper was able to begin selling his own cannabis pens, strain, and other related products.

Though it is known that the artist has been very successful in his cannabis adventures, new developments in his charge have landed him on our blog. There is a great article by Sean Williams of The Motley Fool that speaks to just how much money the artist has been able gather for the cause. Williams points out a major figure that influences Snoop Dogg’s success, and it isn’t simply his status as a superstar. Williams states that,

“Cannabis research firm ArcView recently noted that legal pot sales in North America climbed 33% in 2017 to $9.7 billion, and they’re expected to grow annually by 28% through 2021, hitting $24.5 billion a year in the process. You’d probably struggle to find an industry with more consistent growth prospects.” – Sean Williams, The Motley Fool, 2018

One unique aspect about the cannabis industry is that it is not simply the direct growers that have been able to capitalize of the legalization of marijuana, but the ancillary players as well. Snop Dogg has been on the forefront of capitalizing on what he has always loved to do, and has co-founder a venture capital firm that focuses on investments in the cannabis space. Casa Verde Capital (translated to “green house”) is currently the leading venture capital firm focusing exclusively on the cannabis industry.

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Photo of the Casa Verde Capital Logo. Currently the firm has more than $45 Million in Investments.

Before closing to new investors, Casa Verde Capital had raised $45 million. Its reason for closing to the public was sos it can look for large investments of more than $1 million or up only. The firm plans to follow up with closing that requirement, and making all investments $3 to $5 million instead. TO date the company has made 8 investments in total and plans to continue growing!

Article: Snoop Dogg’s Marijuana Fund is Budding After a $45 Million Capital Raise