Pot stocks went wild last week after reports surfaced suggesting yet another large-scale liquor company is seeking to invest in the exploding legal cannabis industry. According to anonymous sources and first reported by BNN Bloomberg, U.K.-based alcohol giant Diageo PLC (the behemoth behind Smirnoff vodka, Captain Morgan rum, and Crown Royal whiskey) is in talks with at least three large Canadian cannabis producers and close to cutting a deal.
Cronos Group, Canopy Growth, Aurora, and Tilray all saw huge gains which analysts believe will sustain due to the societal shift that mainstream money wants a slice of the multi-billion dollar cannabis pie.
The news comes on the heels of the announcement by alcohol giant Constellation Brands that it would be putting another $4 billion into Canopy Growth, the largest single investment in a cannabis company to date (Constellation acquired nearly ten percent of Canopy in late 2017). The deal sent shockwaves through the cannabis industry as it indicated a monumental shift in the willingness of Big Money play ball.
“Deep in the footnotes within this $4 billion story is hidden a $100 billion story,” explained Cassandra Farrington, CEO of Marijuana Business Daily, at the recent MjBizConINT'L in Toronto. “The groups that advised and are funding this deal are Goldman Sachs and Bank of America. The fact that those two very large, very conservative financial institutions have stepped in is a huge indicator of what's to come.”
Big Alcohol has begun to exhibit a “if you can't beat 'em, join 'em” mentality in its approach to cannabis, after decades of opposition. It makes sense, consider beer and wine sales are down significantly across the board, especially in states where marijuana has been legalized for adult-use. Molson Coors Brewing Company announced plans to partner with Canadian cannabis producer HEXO to bring THC-infused beverages to the thirsty masses.
“If you’re the CEO of an alcohol and beverage company, and if you go a shareholders meeting or a staff meeting, I guarantee the first question you get is going to be: ‘What is our cannabis strategy?’” Canopy Growth CEO Bruce Linton said in an interview with MarketWatch. “I think the world has changed dramatically.”
“There's safety in numbers to some degree,” Farrington adds. “When a few people start investing in cannabis, and others start seeing a path there, that's when they feel more comfortable - following a path as opposed to blazing one. We now have a couple of groups that have stepped up and are blazing that path, and I am very hopeful we will see a lot of people quickly following.”
David Kani is a California based trial lawyer, author, and social commentator. Connect with David at [hidden email] or to book David to speak at your event, please contact [hidden email].