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Cannabis is a natural enemy of alcohol and beverage companies know this well.
That's why industry giants like Constellation Brands (NYSE:STZ) and Molson Coors (NYSE:TAP) have been pouring millions into cannabis, as the number of U.S. states where the plant is now legal surpasses those where it's banned.
The world of cannabis is rapidly evolving, and the Benzinga Cannabis Capital Conference, is returning to Miami for its 16th edition. Taking place at the Fontainebleau Miami Beach Hotel in Florida on April 11-12, this conference is the hub where deals get done, money is raised, mergers and acquisitions begin, and companies meet investors and key partners.
Cannabis-infused drinks have the ability to cannibalize the alcohol beverage market by providing an alternative source of a mind-altering social lubricant in the same form factor.
"If you can't beat them, join them," appears to be increasingly becoming the motto for Big Alcohol. Last week, the Wine And Spirits Wholesalers of America, one of alcohol’s largest advocacy and lobbying groups, sent a letter to Congress advocating for the federal regulation of cannabis, by following similar rules to those that regulate alcohol.
Also Read: This CEO Predicts $1B In Cannabis Deals Closing In Just 2 Days: But Where? And How!?
Back in 2017, Constellation Brands became a major shareholder in Canadian cannabis giant Canopy Growth (NASDAQ:CGC) with an investment of $190 million, which opened the door to the two industries merging together. The following year, Constellation, which owns the U.S. rights to Corona beer as well as many other beverages, poured $4 billion more into Canopy.
In 2018, Heineken-owned (OTC:HEINY) beverage brand Lagunitas launched a THC-infused, non-alcoholic cannabis drink, while Pabst debuted a THC seltzer drink.
Other companies continued Constellation's path, looking at mergers with cannabis companies. In 2021, Molson Coors launched a CBD-infused drink for the Canadian market in collaboration with cannabis giant Hexo Corp (NASDAQ:HEXO). The partnership expanded into a CBD drink for the Colorado market in 2021, but their U.S. venture was short-lived, ending in 2022. Truss, the fruit of their Canadian partnership, is still being sold in Canada.
Yet, it isn't only alcohol companies that have been dipping into cannabis in recent years.
In 2018, Tilray Brands (NASDAQ:TLRY), the third-largest cannabis company by market cap —sitting today at $1.5 billion— announced a partnership with Anheuser-Busch Inbev SA (NYSE:BUD) for a joint venture into the creation of a brand called Fluent Beverage Co. AB Inveb, which makes Budweiser, Stella Artois, as well as many others, was slated to invest $50 million, but the partnership dissolved in 2022, leading to a halt in operations for Fluent.
In a recent interview, Carl Merton, CFO at Tilray Brands expressed the importance of diversifying into the alcohol space, and his continued bullish stance into that space.
Earlier this year, Tilray acquired Montauk Brewing Company, a fast-growing brewery in the Metro New York area for over $35 million. In recent years, Aphria (a cannabis company which later became part of Tilray in the industry's largest merger to-date) had spent more than $400 million in purchasing alcohol beverage companies including SweetWater Brewing Co and Breckenridge Distillery.
