Big beer is making big bets on the legal weed market.
The New York Times reported this week that Constellation Brands, the parent company of Corona, as well as Robert Mondavi wine and Svedka vodka, recently invested $4 billion in Canopy Growth, a Canadian weed producer. Last year, Constellation bought a 10 percent stake in the company, but this new infusion of capital, according to the Times, is the largest investment made in the recreational weed industry to date.
The entry of big alcohol brands into the weed market is hardly surprising. Last year, sales of legal weed reached $10 billion, and that's only in the handful of states were it was legal. Meanwhile, growth of the beer market in the U.S. has slowed. So are small farmers shitting their overalls over the news that big business is coming? Not really.
"For a brand that is hoping to get outside of Washington, it's a pretty big deal," says Larry Perrigo, the owner of Seattle Green Buds and Saints Joints. And he means that in a good way. The hope, to Perrigo, is that giant corporations like Constellation will have the lobbying power to push for legalization nationwide, which would help boutique brands like his expand to markets out of state.
With nationwide legalization, Perrigo also hopes the banking industry will open up to cannabis. Currently, most banks refuse to touch weed money, even in Washington state. (There are some exceptions, including Timberland, a Hoquiam-based bank that's been around since 1915.)
So is there danger that billionaires are going to swoop in and take over? According to current state law, you must live in Washington state to get a license to grow weed (there are, however, some workarounds: As long as the license-holder lives in state, all other aspects of the business can be owned and controlled by anyone, including out-of-state corporations). It's certainly possible that billionaires corner the market, but for now, Perrigo isn't too worried. "Maybe I'm being optimistic, but I don't want to compete with Corona," he says. "We're more of a micro brew."
Perrigo's statements were echoed by Bianna Hughes, the founder of The Holden Company, which owns, among others, cannabis brands Western Cultured and Dawg Star.
"I see both good and bad," Hughes said in an email. "It's good because as larger, well-established business teams join the cannabis industry, the more credibility it brings to us all and solidifies national legalization from any backward movement. It also helps break the next layer of caution for potential investors who are curious about bringing capital into cannabis businesses of all sizes."
However, she adds, "It's bad because inevitably you'll have large conglomerates who take out small business owners whose lifelong craft has been cannabis. This is true for all industries but is especially sad since most of the initial cannabis start-up owners made a leap far greater than just starting a business; they risked the injustices of the black market/medical world and the cut-throat journey into legalization. Big beer joining the game in just the beginning of the next wave of small business closures and sell-offs. Some will survive but cannabis is a commodity crop just like beer and wine. There will be craft growers that make it through, but a large portion will go to the Coors and Coronas of cannabis."
Joy Hollingsworth—the co-founder/owner of the Hollingsworth Cannabis Company, a family farm based outside of Seattle—agrees. And, like both Perrigo and Hughes, she thinks this news was inevitable. "Just like every industry that started with small farmers. Capitalism takes over, and that's going to squeeze a lot of mom-and-pop's out. Alcohol, tobacco, pharmaceuticals—they are coming. They know what's up."
Ultimately, Hollingsworth told me, she can't really be mad about the inevitable entry of big business into the legal weed market. "Of course, you want to make money, but for us, it's about helping people. We are in this business because we love it, and the more people who get this medicine, the better. If you have a great product, the money will come. I'm not worried about it."