Alcohol Firms Eyeing Cannabis Industry
CANADA- “Alcohol companies should be watching their backs.” The warning from Torsten Kuenzlen, a former executive for The Coca-Cola Co. and Molson Coors, and current CEO of Sundial Growers, a privately owned Canadian cannabis company, voiced last month. In his opinion, legal cannabis has an obvious competitive advantage over alcohol products.
“All alcohol is consumed only as a liquid. Cannabis meets more consumer needs and motivations in the way that it’s consumed,” Kuenzlen said, adding that it’s a matter of time before cannabis companies start buying alcohol makers.” When you look at the size of the opportunity, the profit pool for cannabis is as big as the entire alcohol industry in three to five years.”
“Interestingly, all alcohol is consumed only as a liquid. Cannabis has the advantage over alcohol in that it meets more consumer needs and motivations in the way that it’s consumed. Alcohol companies need to think about how to turn that into an opportunity rather than a threat. […] There are needs and motivations of consumers that are similar between alcohol and cannabis. But cannabis accesses motivation and needs that alcohol can’t go after.
When asked about possible mergers between cannabis companies and alcohol companies Kuenzlen replied “There can be no doubt. We know that virtually all alcohol companies are very carefully looking at the cannabis space and looking to partner in some shape or form. Those shapes can be anything from innovation alliances with pharma and nutraceuticals – and all the way to partial ownership. […] Today, alcohol companies are buying cannabis companies. We will see a time when cannabis companies start buying alcohol companies. Definitely within the next three to five years.[…] In terms of building global brands, we believe we can build the Absolut Vodka or Coca-Cola equivalent of cannabis. When you fast-forward 10 years, consumers will be able to be anywhere in the world, and they will be able to buy a brand that has the consistent experience they expect."
When asked if Sundial was looking to partner with any companies he answered “We know that all of the big companies are looking at cannabis, so obviously we’re talking to many of them. What form that takes, would we partner with somebody, and for what reason? To be determined.[…] You can expect that we will enter strategic partnerships in alcohol, pharma, cosmetics, food and beverage? All of those are possibilities
and opportunities."
Keunzlen was asked if he foresaw legalization in the United States and replied in kind. “In my mind, it’s a question of when, not if, federal legalization will come south of the border (the U.S). So the opportunities to build great brands, innovation and capabilities north of the border for the day it becomes federally legal in the states is a monster opportunity for Canada."
Future Global Cannabis Supplier?
COLUMBIA – Tens of thousands of Colombians died in the U.S.-backed war on drugs. But after an official about-face on marijuana, Colombia is looking to exchange gun-toting traffickers for corporate backers in a bid to become the Saudi Arabia of legal pot.The new industry is budding here on the outskirts of Medellin, where Pablo Escobar moved marijuana in the 1970s before becoming the “King of Cocaine.” Fifteen years after his death in a last stand with the law, cannabis plants are budding in the emerald hills outside the city, this time with the
government’s approval.
“You are looking at history,” beamed Camilo Ospina, the chief innovation officer for PharmaCielo Colombia Holdings, gesturing to a sprawling greenhouse of pungent cannabis plants. His company is one of a rapidly growing number of corporations seeking to leverage the “made in Colombia” label in a new age of legalization.
“Our advantage is that the Colombian brand already has a mystique,” he said. “We want to intensify that, so that the Colombian cannabis you already know – the Punto Rojo, the Colombian Gold – is the cannabis you want to buy.”
Colombia is still a hotbed of illegal drugs: A report last year from the U.S. Drug Enforcement Agency showed Colombia as the source of 92 percent of cocaine seized on U.S. soil. And after 18 years and $10 billion spent on Plan Colombia, the U.S.-funded effort to counter cartels and coca farmers, cocaine production here is at all-time highs.
Yet when it comes to marijuana, Colombia is taking a new path: If you can’t beat ’em, regulate ’em.
In 2016, the country passed a landmark law legalizing medical marijuana for both domestic use and export, laying the groundwork for the new industry. The government started handing out the first licenses to grow, process and export medicinal cannabis in September, approving 33 companies so far. Legal growers such as Canadian-owned PharmaCielo are now raising test crops for upcoming product lines, with the first commercial sales and exports slated for the coming weeks
and months.
Becoming the world’s supplier of legal cannabis won’t be easy. The biggest potential market, the United States, remains closed off, even with states that have legalized use banning cannabis imports. Yet a growing group of other countries, including Germany, Peru, Italy and Croatia, are seen as fast-developing export markets for medical marijuana.
Currently, Canada and the Netherlands have started to meet that demand, with several companies already exporting domestically cultivated crops.
But Colombia, officials here say, is the logical place for the industry’s future.
With a climate well suited to the surprisingly fragile cannabis plant, the country supplied most of the illicit marijuana consumed in the United States during the 1970s and ’80s, until Mexico dethroned them. As more countries approve some form of legalization, Colombia is bent on reclaiming its global dominance, although through export licenses and customs procedures instead of surreptitious shipments in the
dark of night.
In 1986, Colombia decriminalized small-scale growth for personal use, allowing the cultivation of up to 20 plants. President Juan Manuel Santos pressed for medicinal legalization on a commercial scale as early as 2012 and hailed the 2016 legislation as a major leap of progress.
Some form of medical marijuana is now legal in more than a dozen nations – with recreational legalization close in Canada, and a reality in Uruguay and U.S. states including California. But it remains illegal in most places.
“Convincing foreign governments to allow imports” will probably be the biggest challenge for growers, said Bethany Gomez, research director for Chicago-based Brightfield Group, a market research firm.
Still, the global trade in legal pot is growing, with some experts predicting the market could be worth $31.6 billion by 2021.
To keep things on the up and up, the new regulations for commercial marijuana here strictly limit access to legal farms and impose measures – including genetic testing – to prevent illegally grown cannabis from filtering into the legal market.
Some companies, such as FCM Global, have gone a step further: opting to grow only weaker cannabis strains while refraining from the stronger ones popular with recreational users.
