With Canada poised to legalize cannabis, the marijuana business is poised to go mainstream in a big way. And that means big business wants its cut.
Corona beer owner Constellation Brands last week announced that it was taking a $3.81 billion stake in Canada’s Canopy Growth, a company it had previously invested in. There’s a simple reason, according to The Motley Fool:
Of course, this is more than just a moral victory for pot enthusiasts. When legalized, marijuana sales are expected to soar. While estimates tend to vary wildly, as you’d expect from an industry that’s never been legalized in a developed country before, sales of the drug could hit somewhere in the neighborhood of $5 billion. For context, the Canadian weed industry is only generating $200 million a year right now from the sale of domestic medical marijuana and via exports.
This expected surge in sales is the primary reason why Wall Street and investors have pushed the valuations of marijuana stocks through the roof in recent years. But Wall Street and retail investors aren’t the only ones to take note of marijuana’s astounding growth rate.
Not everyone sees the deepening involvement of a beer company in the cannabis business in a positive light. Tim Fernholz, writing in Quartz, makes the case that the advent of Big Marijuana could bring the kind of social cost with it that has been part of Big Tobacco and Big Alcohol.
According to Fernholz:
The political clout of the booze lobby—on alcohol taxes and drunk driving laws, but also in its quasi-cartels—makes public consumption of alcohol worse for society than it could be. Experts, meanwhile, say the public should extend marijuana the same “grudging toleration” it now does tobacco, which no longer has a free hand in marketing its products.
For now, neither do most legal marijuana businesses, which operate under tight scrutiny. As cannabis’ legal status shifts from illicit narcotic to recreational commodity—often under the slogan “regulated like alcohol”—public health experts fear regulators won’t avoid the mistakes made while creating legal markets for alcohol and tobacco.