Marijuana Stocks: Alcohol Giant Heineken’s Entry Could Boost Cannabis Drink Sales
Heineken Marijuana Beer
Alcohol and marijuana were long thought to be headed toward a showdown as more countries across the world legalize weed, with alcohol sales often suffering as a result. But that showdown may never take place because we’ve seen peace bridged between these two industries by way of a new product: marijuana-infused beer.
And with alcohol companies increasing their investment stakes in marijuana stocks, marijuana bulls couldn’t be happier.
One of the latest alcohol producers to join the marijuana industry is Heineken N.V. (OTCMKTS:HEINY, EPA:HEIA), with its “Lagunitas Hi-Fi Hops” beer California sales of the beverage are already underway, with eyes toward expansion.
The Heineken marijuana beer is the product of one of the world’s largest alcohol producers looking to take advantage of the burgeoning pot industry by marrying two vices: alcohol and marijuana.
It’s a strategy that will not only help boost marijuana sales, but also potentially help mitigate some of the damage done to alcohol producers when marijuana is legalized.
As mentioned before, in U.S. states where marijuana is made legal, we have often seen a drop in booze sales.
The Heineken marijuana beer is made with cannabidiol (CBD) and tetrahydrocannabinol (THC). CBD is the extract known for its therapeutic effects, while THC is known for being a psychological stimulant. (Source: “Heineken is betting on a brew made with marijuana instead of alcohol, and it could help give a boost to the struggling beer industry,” Business Insider, August 8, 2018.)
The Heineken marijuana beer is likely among the first in what I imagine will be a large and varied product line as more and more alcohol companies enter the marijuana market.
Marijuana Stocks With Big Alcohol Partnerships
While the Heineken marijuana beer plan is notable for its addition of another multi-billion-dollar company to the legal cannabis industry, it’s not exactly original; we’ve already seen a couple other Big Alcohol companies invest in pot.
More importantly, we’ve seen Big Alcohol partnerships wherein multinational booze sellers have teamed up with marijuana companies in order to produce marijuana-infused beers—often with serious benefits for the marijuana stocks.
The most recent Big Alcohol-marijuana partnership is still hot from the oven. Canopy Growth Corp (NYSE:CGC) received a $3.8-billion investment from Constellation Brands, Inc. (NYSE:STZ).
The alcohol company Constellation Brands is increasing its stake in Canopy Growth after the two companies already joined together in a venture to produce cannabis-infused beverages.
“Over the past year, we’ve come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy’s market-leading capabilities in this space,” said Constellation CEO Rob Sands. (Source: “‘This is rocket fuel’: Constellation Brands spending $5 billion to boost stake in Canopy Growth,” Financial Post, August 15, 2018.)
Constellation will now have a 38% stake in Canopy Growth in what is being described as the biggest investment in the marijuana industry to date.
“This is rocket fuel,” said Canopy CEO Bruce Linton said of the infusion of capital. “We’re going to be way more global.”
And Canopy Growth stockholders couldn’t be happier; the stock price shot up by 30% following the deal. In fact, many other recreational marijuana stocks also saw double-digit gains following the deal.
One of the other massive Big Alcohol-marijuana partnerships took place between Hydropothecary Corp (OTCMKTS:HYYDF (TSE:HEXO) and Molson Coors Brewing Co (NYSE:TAP).
The two companies will form a joint venture with the intent of producing non-alcohol marijuana-infused beverages for consumers.
The move saw Hydropothecary stock shoot up back in early August when it was announced, again showing the massive payoff these deals can have for recreational marijuana stocks.
Marijuana-Infused Beer
The proliferation of these partnerships only means that marijuana-infused beer is here to stay.
The Heineken marijuana beer is one of the first forays into the market with this type of product, a combination which I’ve long heralded as a strong move.
After all, there are many consumers who are likely intrigued by marijuana but turned off by smoking or taking pills. Drinking beer? That’s a vice that our society has long ago not only approved, but often actively endorses.
As such, these companies are creating easier points of entry for consumers who are interested in marijuana but put off by smoking. Edibles offer a similar outlet, but their regulation process is trickier.
While HEINY stock hasn’t seen quite the uptick in its stock value (really, none of the Big Alcohol companies have), what the company and its competitors are banking on is the long-term potential of the marijuana industry. Their hope is that marijuana-infused beverages will attract a diverse new set of consumers and increase existing sales.
On the other hand, marijuana stocks that have been on the receiving end of deals with alcohol companies have seen massive, often double-digit growth in share prices, likely due to their smaller size and potential for higher growth.
Analyst Take
The connection between Big Alcohol and marijuana stocks only continues to grow as time goes on, often with huge benefits for the marijuana industry.
The legal cannabis market needs more institutional investment, and alcohol companies are providing that by way of joint ventures and capital injections.
Heineken is among the latest in what I predict will be a long line of alcohol producers entering the marijuana market in the near future. We can expect to see those numbers grow if the marijuana-infused beer business proves to be as successful as these companies are hoping.
