Every election cycle it seems there’s another state that has legalizing marijuana on the ballot. As more states legalize recreational cannabinoids, legislators and alcohol producers are tussling over cannabis-infused alcohol.
Recreational cannabis is currently legal in 10 states and the District of Columbia, while a further 13 states have decriminalized possession. California ranks as the largest legal market, where the market research firm BDS Analytics reported that $2.51 billion worth of cannabis was sold in 2018.
When legalized marijuana started to gain popularity, some wine and spirits producers feared it would hurt alcohol sales. However, others have found that they can take advantage of new laws and are finding ways that cannabis can complement their wine sales. Let’s take a look.
Large producers buy stock
The saying “when you can’t beat them, join them” applies here.
Constellation Brands, one of the leading and largest alcohol producers, invested $3.8 billion in Canopy Growth, a Canadian cannabis producer. Constellation actually started selling off some of its wine brands to begin focusing on beer and marijuana products.
Constellation plans to use its investment to expand into the nearly 30 countries pursuing a federal medical cannabis program.
“When Canopy did the original deal with Constellation, that set off a domino effect of others looking to do beverage deals, so it wouldn’t surprise me if this also sets off another round of companies looking for investment outside the LP (licensed producer) sphere, whether it’s beverage, pharma or tobacco,” Matt Maurer of Toronto-based Torkin Manes’ cannabis law group told Marijuana Business Daily.
While Constellation did double down on its investment, the products have yet to make a positive impact on their sales.
And the fears of cannabis affecting spirits sales have been largely unfounded to this point. According to a study by the Distilled Spirits Council, distilled spirits sales have not been negatively impacted in the three states that have legalized recreational marijuana retail sales the longest.
Traditionally, when traveling to the California wine region, tourists were looking to taste wine.
Now, the cannabis industry is pairing with wine tours to offer a double-dose of fun. Tourists can take party buses between wineries and dispensaries. The driver is sealed off from passengers who may want to smoke on the bus.
Marijuana Business Factbook estimates the economic impact of legal marijuana will increase 223% from 2017 to 2022.
Some brands are taking things one step further and combining the wine and cannabis into one drink.
On its website, the founders write, “In 2018 the prohibition of cannabis in California ended, and we had a big idea. (It turns out cannabis and alcohol cannot be sold in the same building and definitely not in the same product.) That was when we decided to make the wine, remove the alcohol and replace it with THC. Our final product is a beautiful alcohol-removed cannabis-infused Sauvignon Blanc. It does not taste or smell like cannabis, but instead a crisp, clean California Blanc.”
They claim to have infused just enough THC to mimic the feeling of a typical glass of wine.
How your brand can capitalize on the cannabis trend
How cannabis will affect the wine and spirits industry is yet to truly be seen. Brands such as Constellation have yet to see an increase in sales from its acquisition of cannabis products. Laws are still changing state-by-state on what’s allowed in regards to alcohol and cannabis together.
The main takeaway for brands is to tread carefully when moving forward in this area, as a lot of the industry is still being figured out.
If you really think you brand pairs well with cannabis fans, consider pairing up with a cannabis tour. Make your winery or tasting room a stop on the tour.
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