Beer Brewers: Tomorrow’s Pot Plays

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For the makers of Coors and Bud, the months of reckoning arrived last year. The stocks of both companies hit record peaks in September and October 2016, then rolled over.

Why then?

One, because there were marijuana initiatives on nine state ballots, and it looked increasingly clear voters would approve. (All nine measures were ratified by voters in the November elections.)

Two, there’s a reputed link — although not everyone agrees — that when pot consumption goes up, beer drinking goes down. In a late 2016 report, analysts at Cowen & Co. made note of the handful of states at the time where pot was already legalized:

“With all three of these states now having fully implemented a [marijuana] retail infrastructure, the underperformance of beer in these markets has worsened over the course of 2016.”

The Pot-Investing Party

It’s worth noting that there’s plenty of evidence to dispute the Cowen report. As Forbes noted recently, Colorado’s beer tax receipts didn’t go down — they actually rose 4.5% in 2016.

And it’s not as if Cowen doesn’t have an axe to grind — it provides investment banking services to Canada’s Canopy Growth.

But either way, beer companies appear eager to join the pot-investing party, preparing for a future day when cannabis might be legalized at the federal level (Canada will be considering national legalization in 2018) and the way is clear to introduce “cannabis-infused” beverages into the beer aisle of your local grocery or liquor store.

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Michael Molman 1 year ago Contributor's comment

Weed is clearly a huge investment opportunity, personally I feel like the business would make a better investment for big tobacco then for beer makers.