Coors Is Worried Its Customers May Buy Cannabis Instead

In states where marijuana has been legalized, alcohol sales have started to slide. Big alcohol companies admit they are keeping an eye out for this new competition for recreational dollars.

The latest to make a comment is Molson Coors Brewing Company (TAP) whose history goes back to the state of Colorado, ground zero for legalized recreational marijuana. In the company’s 10K filed yesterday it stated, “Although the ultimate impact is currently unknown, the emergence of legal cannabis in certain U.S. states and Canada may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer. As a result, a shift in consumer preferences away from our products or beer or a decline in the consumption of our products could result in a material adverse effect on our business and financial results.”

The company even noted during its conference call that 21 to 24-year-olds have “primarily walked away from beer.”

In 2017, cannabis sales topped alcohol sales in the ski town of Aspen, CO. There are now more dispensaries in the town than there are liquor stores.

At a Bloomberg event, it was reported that Alexandre Ricard, who runs the Beefeater gin and Havana rum maker Pernod Ricard (PDRDY), said his company was “watching it closely” when asked whether he was monitoring the cannabis sector.

Constellation Brands (STZ) seems to be the only alcohol company so far that is fighting its competition by buying in. Last fall, the company which is known for its Corona beer brand bought a 9.9% stake in Canadian cannabis company Canopy Growth.

“Canopy Growth has a seasoned leadership team that understands the legal, regulatory and economic landscape for an emerging market that is predicted to become a significant consumer category in the future,” said Constellation Brands CEO Rob Sands in a statement. “Our company’s success is the result of our focus on identifying early-stage consumer trends, and this is another step in that direction.”

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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