BusinessFinance

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?

read more at www.thecannabist.co

Tags
Show More

Related Articles

Leave a Reply

Close
Close