Molson Coors Brewing Co. Just Told Shareholders They are Scared of the Cannabis Industry

Legalization of Marijuana May Eat into Their Profit Margins

Molson Coors Brewing Co. (NYSE: TAP) filed their 10-K this week to update their shareholders on the beer company’s financial integrity. In the report the giant beer company expressed a real concern over the impacts of the cannabis industry in both Canada and in the United States to their business.

They are not the first alcohol company to express concerns over the legalization of cannabis. Constellation Brands went so far as to purchase almost 10% of Canopy Growth Corporation (TO: WEED) last year. With marijuana readily available to consumers, they may potentially spend part of their discretionary capital on the psychoactive plant instead of on alcohol

“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,” officials wrote in the filing. “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.”

It’s too early to determine legal cannabis’ impact on beer sales volumes, Colin Wheeler, a Molson Coors spokesman, told The Cannabist.

“As the legal landscape changes in Canada and evolves in the U.S., we are working actively to understand the impacts on our business, if any, and the range of appropriate responses in the interests of our company and our stakeholders.

Estimates are that the cannabis industry was worth about $9 billion in the United States last year. Those numbers did not include California which started offering recreational marijuana sales on January, 1st. It does not include all of Canada or of Massachusetts which are on track to start offering cannabis sales starting sometime this summer. What will the alcohol giants do to compensate for the loss of revenue from the growth of the cannabis industry?


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Richard Lowe

Richard Lowe is a 14-year veteran of the financial sector with licenses as a commodity broker (Series 3) and investment advisor representative (IAR Series 65). Along with a focus on raising capital for the firms he was employed with, he also wrote and edited much of the content published by them. He holds a BA in Journalism from the University of Massachusetts. He has been a longtime advocate for marijuana legalization due to the social injustices associated with marijuana prohibition and the strong potential for the medicinal benefits of cannabis.

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