Think about the last time you ran out to the shop for a six-pack or bottle of your favorite wine or spirits.
On the way to the case or shelf, you probably walked right past any one of a dozen or so “marijuana beers,” often with bright green, leafy logos.
Microbrewers who make these “marijuana beers” infuse their creations with hemp. Does it add flavor? Eminently debatable. But the truth is, the “secret ingredient” doesn’t add any extra kick to the beer; the hemp is THC-free.
At least, it used to be. Because earlier this month, we got a look at the world’s first no-quotation-marks-needed marijuana beer.
Where are they making this new adult beverage?
Why, Canada, of course. The country is home to what could be a $6.5 billion legal weed industry, and some very, very interesting things are happening there.
This Just Might Be the Real “Strange Brew”
Some enterprising brewers up in Canada have created what they’re describing as the first-ever beer made directly from “high”-inducing cannabis – and they just started showing it off to the press.
This brew is made from marijuana (not hemp), plus the hops and yeast you’d expect to find.
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Unlike traditional beer, this new brew is devoid of alcohol. Instead, it produces a “high” equivalent to a single traditional brew’s intoxication.
The beer’s creator, Toronto, Canada-based Province Brands, has been working on the product since 2016, soon after Canada started on its path toward legalizing recreational marijuana nationwide.
“Canada is already leading the world in creating an industry around medical cannabis, and we expect them to continue to lead the world in trading and industry around adult-use cannabis,” Province co-founder and CEO Dooma Wendschuh told The Guardian.
Now, for all the media attention it’s getting, Province’s marijuana beer is still in development – it’s a long way from Canadian store shelves (and even further from American ones).
It’s a fun story.
But there’s another, even more important marijuana story underway in the food and beverage sector. It’s going to have a huge impact on one of my most favorite pot stocks.
And, unlike marijuana beer, you’re probably not going to read about it anywhere else.
When Big Alcohol Meets Big Weed, Profit Potential Is Explosive
For a long time, big alcohol companies have lobbied hard against cannabis legalization. They see the emerging legal cannabis industry as a competitor.
That wall of opposition, however, may be falling apart.
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On July 12, the Wine & Spirits Wholesalers of America, a national trade association, became the first alcoholic-beverage trade association to stake out a position in favor of U.S. states’ rights to establish legal cannabis markets, albeit with restrictions like those created for alcohol production and consumption.
This bold stance may seem risky at first glance, but it makes good business sense. According to Deloitte, a whopping six out of 10 likely recreational cannabis customers won’t smoke the stuff but instead consume it via novel products like edibles… and beverages.
“Eight years ago, you would have seen 90% of [cannabis] revenue coming from smokable flower,” one cannabis insider I spoke with said, referring to the leafy buds harvested from atop cannabis plants. “Long-term, I think we’ll end up with smoking [accounting for] 10%.”
I take this to mean the beverage industry, which already has a toe in the inviting water, looks like it’s preparing to fully dive in to legal cannabis.
From an investment standpoint, that makes perfect sense.
After all, edibles and other such cannabis products have sky-high profit margins that would attract envy from any industry.
In fact, cannabis-infused products like oils, tinctures, candies, snacks, and drinks can earn profit margins as high as 32%, which is significantly higher than similar consumer goods. Wine and spirits typically earn about 19% net margin, while soft drinks producers earn about 11% on average.
So we know big alcohol and soft drink companies are paying attention here – and several are already making moves into the cannabis industry. I’ve researched a few of promising beverage-cannabis crossover plays for paid-up readers of my Nova-X Report.
But I think every investor can play this emerging trend with a company I’ve talked about before: Constellation Brands Inc. (NYSE: STZ).
This company makes global beverage megabrands – household names like Corona Beer, Robert Mondavi wines, and Svedka vodka, just to name a few.
Constellation is convinced of the profit potential in the new interplay between beverages and cannabis.
In fact, it’s very convinced. Constellation put up $191 million to take a minority stake in one Canada’s biggest, most muscular legal weed players – Canopy Growth Corp. (Nasdaq: CGC).
Now, no alcohol company is going to buy a U.S. cannabis company anytime soon – the risk is too high while marijuana remains illegal on the federal level. But we can expect to see more transactions with Canadian growers as the beverage companies hustle not to fall behind.
These companies know that legal cannabis is coming, just like we do.
And with their experience in dealing with intoxicating substances and extensive legal regulation, alcohol companies are the best positioned to profit from all that legal marijuana.
Mark my words and invest accordingly: Big business will take a commanding lead in the new multibillion-dollar legal cannabis sector. It’s a ride no investor can afford to miss.
Note: Michael makes sure every new subscriber to his Nova-X Report gets a free copy of his Roadmap to Marijuana Millions pot stock research. Click here to learn how to get it.
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