Marijuana Makes Strides in 2017

Marijuana plant

CHICAGO -- While most convenience retailers believe a lot of time will pass before they can legally sell marijuana in their stores, the past year has seen activity among big corporations that are laying the groundwork for seismic shifts to occur sooner than later.

In reviewing the progress of marijuana as a potential retail category, Nik Modi, managing director for RBC Capital Markets, New York, said major companies are already making significant plays in this area. During a CSP-Swedish Match webinar on Nov. 9, he said Victor, N.Y.-based Constellation Brands—a major beer and alcohol importer—is taking a stake in a leading cannabis company in Canada, a country that is moving to legalize recreational marijuana in 2018.

“In a day where we see convergence in product categories, will we see marijuana in a Corona bottle?” Modi said. “Probably not, but it is interesting.”

Here’s what happened in marijuana news in recent months …

Couche-Tard's bet

Couche-Tard

One of the world’s largest convenience-store chains appears to be jockeying for a spot in the recreational-marijuana supply chain, according to a Canadian Press report. If the initiative is allowed to move forward, the retailer could even set up stores under a new brand for the purpose of selling the controversial product, CSP Daily News has learned.

Lawmakers have signaled the potential for legalized marijuana sales across Canada by July 1, 2018, and the parent company of the Circle K brand of convenience stores, Laval, Quebec-based Alimentation Couche-Tard, has hired a lobbyist to represent its interest in retail marijuana sales, the report said.

The news agency said Couche-Tard hired the Montreal-based PR firm Tact Intelligence-conseil. One of its directors, Marie-Eve Bedard, was once a chief of staff within the Quebec health minister’s office and was named in documents tied to Canada’s marijuana legislation.

C-store first mover

Cannabis

Cannabis Wheaton, a Toronto-based product supplier, inked a deal to sell cannabis at 350 c-stores in western Canada and Quebec. The deal would make Cannabis Wheaton the sole supplier for 10 years. The company didn’t disclose its c-store partner.

Constellation’s investment

Constellation Brands

Constellation Brands, the importer of Corona and Modelo beers, Svedka vodka and Mark West wines, among other alcohol brands, has acquired a 9.9% minority stake in Ontario, Canada-based Canopy Growth Corp., a public company and provider of medicinal cannabis products. The investment is expected to amount to $245 million.

The investment and relationship “is consistent with Constellation Brands’ long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics, while maintaining focus on its core total beverage alcohol business,” the company said. “Constellation has no plans to sell any cannabis products in the U.S. or any other market unless or until it is legally permissible to do so at all government levels.”

State of legalization

Man smoking weed

A 2017 Gallup Poll shows that the majority of Americans support the legalization of marijuana for recreational use, with 64% indicating they’d approve of such measures. Eight states have already legalized recreational marijuana: Alaska, California, Colorado, Massachusetts, Maine, Nevada, Oregon and Washington. Legalized recreational use of pot is helping to account for 100,000 to 150,000 new jobs created by cannabis-related companies, according to Marijuana Business Daily, with the potential to increase those positions to 300,000 by 2020.

Sales projections

Legal sale of marijuana

Sales of legal weed in the North American market grew by 34% to $6.9 billion last year, and it’s expected to grow by 26% annually through 2021, according to The Motley Fool. The numbers do not include the sale of other marijuana products that include edibles and beverages.

Marijuana as a threat

Man smoking marijuana

But marijuana’s growing acceptance across the United States doesn’t necessarily mean good news for c-stores, unless they are allowed to sell the products themselves.

“Wall Street analysts are beginning to consider the growing reach of cannabis as they provide guidance on publicly traded consumer packaged goods (CPG) to manufacturers and retailers,” said Rick Maturo, co-founder of Cannabiz Consumer Group, Inverness, Ill. Maturo believes consumers who begin to buy legally available marijuana may spend less on other CPG products.

“Retailers should view this threat as being as real as that posed by [Seattle-based] Amazon," he said. "If they don’t, they may find themselves with limited product leverage as tens of millions of consumers migrate some of their purchasing away from CPG on their shelves in favor of cannabis.”