Brewing buds: Massive beer corporations enter the hashish business

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Medical marijuana attorney and craft beer enthusiast Paul Lewin examines the effects of “big beer” on the cannabis-infused beer landscape.

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The growthOp

Release date:

February 15, 2021 • • February 16, 2021 • • Read for 5 minutes • • Join the conversation “With its ability to source, process, and distribute internationally, Big Beer can afford to wait for cannabis to be fully legalized in all 50 states before expanding its presence in the American infused beverage market.” , writes Paul Lewin. /. Photo by EddieHernandezFotografie / iStock / Getty Images Plus

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The rising tide of legal cannabis trafficking is finally drawing the attention of so-called “big beer” groups, and for good reason. Over the past seven years, home and craft brewers have carved out a niche for themselves by partnering with hemp farms and cannabis terpenes wholesalers to create infused beers – a novel and unique new line of products in a once over-saturated beer market.

Since 2017, Big Beer has slowly started testing the water of the infused beer room with the introduction of a range of preliminary experimental products.

What is a Big Beer unit?

The term “Big Beer” refers to beer brands from large companies with international networks for capital, production and distribution. Examples are MillerCoors, Molson Coors, Constellation Brands, Anheuser-Busch InBev and Heineken.

According to the Brewers Association (BA), an American trading group made up of over 5,000 brewers, suppliers, distributors and retailers, craft brewers differ from big beer in three main factors:

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  • Functional scope: To be considered “small”, a craft brewer must produce 6 million barrels or less of product per calendar year.
  • Brewing processes: In order to be considered a “traditional” brewer, the beers produced must derive their taste from conventional brewing ingredients and fermentation processes.
  • Degree of independence: A craft beer brewer cannot be more than 25 percent owned by a “member of the alcohol industry who is not itself a craft brewer”.

A complicated aspect of the current distinction established by the BA is that big beer companies can – and often do – buy up significant portions of small breweries without ever being classified as big beer. This is especially of concern to legitimate craft brewers whose specific BA classification is designed to protect them from the anti-competitive tactics Big Beer regularly uses against them.

How and why does Big Beer get into the cannabis beer market so late in the game? This post examines four recent Big Beer moves into space, how they are currently holding their own against the competition, and how they are likely to dominate the infused recreational beverage market over the long term.

Lagunitas is experimenting in Californian pharmacies and in novelty markets

The Californian beer brand Lagunitas, which was fully acquired by Heineken in 2017, released its IPA-inspired “Hi-Fi Hops” in June next year. Hi-Fi Hops is an infused mineral water product that is available in two varieties in California pharmacies: 10 milligrams (mg) of THC or five mg of THC and CBD each.

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Lagunitas founder and CEO Tony Magee also created Supercritical Ale, a special version of the company’s cannabis terpene-infused Waldo’s Special Ale. Supercritical Ale was an experimental product marketed every April 20th in honor of the 4/20 holiday for three years. However, the ale has been received with mixed results and is no longer made by Lagunitas at this time.

Constellation Brands is looking for significant growth opportunities in Canada

Constellation Brands, the company behind popular breweries Modelo and Corona, made history when it was the first big beer company to officially invest in the legal cannabis industry. Constellation bought 10 percent of Canada-based Canopy Growth in October 2017. By August 2018, Constellation had pumped well over $ 4 billion into Canadian cannabis producers.

Rob Sands, CEO of Constellation Brands, was quoted in an interview with CNN as approving the investment. According to Sands, Constellation saw “one of the most significant global growth opportunities for the next decade” in legal cannabis.

However, Sands added that Constellation Brands will continue to focus its infused beverage efforts on the Great White North until cannabis is federally legalized in the US – or the legal cannabis industry is given easier access to US financial institutions and public trading opportunities.

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The Japanese Big Beer is testing the US market with the recently acquired New Belgium Brewing

In March 2018, Fort Collins, Colorado-based New Belgium Brewing announced its hemp-infused Hemperor HPA, a pale ale made from hemp seeds.

While New Belgium is cautious about using a non-psychoactive strain of cannabis, it has not been reluctant to support cannabis activism. In July 2018, CEO Steve Fechheimer teamed up with GCH Incorporated, a legal cannabis company founded by country singer Willie Nelson. Together, they have teamed up with the Vote Hemp organization to advocate reform of federal and state law governing the hemp industry and the removal of cannabis from the US Drug Enforcement Administration’s drug planning system.

Japan’s Kirin Holdings acquired New Belgium Brewing in November 2019 and merged it with its internationally renowned subsidiary Kirin Brewery Co., an integrated beverage company. Before it was acquired, New Belgium had grown into one of the largest independent craft breweries in the world.

Molson Coors enters the Canadian beer market with a view to the pioneering US states

In the lead up to Canadian legalization of recreational cannabis in October 2018, Molson Coors was quick to partner with Hydropothecary Corporation, a Quebec-based cannabis company. In his February partnership announcement, Coors stated its goal to “seize opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market after legalization.”

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Coors master brewer Keith Villa, who laid the foundation stone for Big Beer Corporation’s Blue Moon Brewing Company in 1995, is a co-founder of Ceria Beverages. Ceria makes a range of non-alcoholic craft beers that “advertise the same start time as alcohol, but with the alcohol content removed before the THC infusion”.

Ceria is currently selling in Colorado and plans to commercialize its infused product in California pharmacies during 2021.

Play the long game

With its ability to source, process, and distribute internationally, Big Beer can well afford to wait for cannabis to be fully legalized in all 50 states before expanding its presence in the infused beverage market in America. At the same time, Big Beer benefits from retail deliveries to pioneering states like Vermont, Oregon and California.

As the number of states where recreational cannabis is still illegal continues to decline, it is safe to say that craft beer will continue to make up the lion’s share of US beverage sales. Once cannabis is legalized at the federal level and THC is removed from List I under the Controlled Substances Act, that status quo will very likely be affected by a sharp surge in the beer market.

Are Legislators Fighting For Legalization On Capitol Hill?

Last December, the U.S. House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act), a comprehensive legalization act that included the removal of cannabis from the Controlled Substances Act and a way to clear criminal records related to cannabis.

The MORE bill is not the first bill of its kind introduced in parliament in recent years, but it is the first to vote by democratic majorities in the House and Senate. Given the Biden government’s open stance on cannabis, the country could be closer than ever to full legalization in all 50 states.

In the event of full legalization of cannabis in the US, Big Beer’s superior manufacturing, financing, advertising and logistics capabilities would very quickly establish its dominance in the infused beverage market. All in all, only time, customer loyalty, and legislative reform will tell if craft beers can continue to outperform big beer in the cannabis niche.

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