BIG CANNABIS
The cannabis industry is continuously evolving and is becoming increasingly similar to other product areas. Brands are beginning to matter as the larger cannabis entities are purchasing dispensaries and growing areas. Advocates of legal marijuana have spent decades fighting a slow battle for making marijuana consumption legal and to give it a mainstream acceptance. And now with the recreational use of marijuana being legalized in Canada and as many as fifteen states in the United States, big businesses have started swooping in on the opportunity. Distribution can play a big part in dictating how the industry evolves. Marijuana is largely distributed through pharmacies in Europe. But in the United States, it is more arbitrary. You can get medical cannabis primarily through dispensaries, while the recreational model can be availed by direct-to-consumer model and items with cannabidiol (CBD), which is a non-psychoactive compound in cannabis can be found at many gas stations and convenience stores.
The retail cannabis industry is on an increasing pace, and it is projected that the sales of medical and recreational marijuana will surpass $30 billion by 2023. The financial structure of the cannabis industry is also shifting at a high speed, with more private companies being incorporated into the cannabis business. This is happening because cannabis investors are looking to get higher returns on investment. The competition is fierce is in the cannabis industry. Customer expectations and changing demographics is hugely responsible for this. Other factors such as new product mix, social acceptance and consumption also play a part in it.
Many big corporations have started becoming a part of the cannabis industry in recent times. Industries like medicine, wellness and beauty, veterinary products, agriculture, alcohol, non-alcoholic beverages, tobacco, etc. are looking to seize opportunities to enter the $32 billion industry.
One of the best examples of big companies is the entry of Altria (parent company of cigarette brands such a Marlboro and Parliament), one of the biggest tobacco companies in the world, which is on its way to also becoming one of the world’s biggest and most influential cannabis companies. Altria entered the industry in 2019 with a very public splash of $1.8 billion investment in recreational cannabis. Altria has acknowledged the fact that tobacco consumption is on a decline and has sought to diversify its offerings. Since entering the industry, the company has been trying to claim a long-term stake in the marijuana industry very quietly. The company has filed patent applications for new cannabis technologies.
A venture wing of Imperial Brands, the largest cigar producer in the world (which also produces Kool and Winston cigarettes) has participated in an investment round for Oxford Cannabinoid Technologies. Casa Verde, a company owned by Snoop Dogg is already an investor in this venture. Tobacco retailer and distributor Pyxus International Inc (previously known as Alliance One International) have acquired majority stakes in two Canadian weed producers- Goldleaf Pharm and Canada’s Island Garden.
Very recently Molson Coors Beverages Co. launched its first U.S. CBD drink in the state of Colorado. They partnered with Hydropothecary, a weed producer, to create this infused beer. Laugnitas beer owned by Heineken have developed their own THC-infused beer called Hi-Fi Hops. Constellation Brands Inc, the company that is behind beer brands Corona & Modelo have invested an amount of $4 billion in major cannabis producer Canopy Growth Corp.