Recreational Marijuana Could Pose Threat to Alcohol Companies
Recreational marijuana legalization is on the ballot today in Arizona, California, Maine, Massachusetts and Nevada. If those five states join the existing five territories — Colorado, Hawaii, Oregon, Washington, and Washington D.C — that have already approved recreational marijuana use, nearly one quarter of the population in the U.S. would have access to fully legalized weed, according to the Tyler Morning Telegraph.
Adrian Sedlin, the CEO of Canndescent, a cannabis cultivator in Southern California, believes the marijuana industry will outperform the alcohol category over the next three decades.
“We’ll be the growth category; they’ll be the mature category,”he told the Texas newspaper. “They’ll plod along at their 2 percent, and we’ll be growing for the next 30 years in the double digits.”
Opposition to recreational marijuana has come from various alcohol wholesalers and distributor groups. Meanwhile, Boston Beer Company and Jack Daniel’s maker Brown-Forman, via regulatory filings, have noted concerns that legalization could pose a threat to future earnings, the Morning Telegraph reported.
Cowen and Company estimates that recreational marijuana use could reach $50 billion in sales by 2026.
“We believe legal cannabis poses a threat to the $200 billion alcoholic beverage industry in the U.S., though perhaps manageable given the rise in dual use,” Vivien Azer, a Cowen analyst who will present at the Dec. 1 Brewbound Session, noted in a recent report.
Meanwhile, voters in North Dakota, Montana, Arkansas and Florida will also vote on measures to legalize or expand access to medical marijuana, according to Voice of America.
Cowen and Company Addresses Trump Presidency Concerns for Constellation
Cowen and Company called shares of Constellation Brands “volatile” heading into Election Day with concerns of a Donald Trump presidency hurting brands such as Modelo, which counts 60 percent of its beers drinkers as Hispanic as well as a third of Corona drinkers.
“With Cowen now giving a 90% probability to a Clinton victory, we look ahead to the potential for continued out-performance for STZ’s beer portfolio, and in particular, the opportunity that male Hispanic millennials will play in fueling that volume growth,” Cowen and Company reported in an e-mail analysis of Constellation Brands.
Cowen and Company also expressed concern on the effect of marijuana legalization on Constellation Brands.
“The beer category looks to face another year of challenged volume growth (with ABI expecting a 1.8% decline),” Cowen reported. “In part, we believe this could reflect rising rates of cannabis consumption, given the rising incidence of cannabis use among men (though it is difficult to substantiate given that a large portion of the cannabis market remains illicit).”
Cowen views this as less of an issue for Constellation should Hispanics and women under-index to cannabis.
Oklahoma Voting on Low-Point Alcohol
The end could finally be near for 3.2 beer. State Question 792 in Oklahoma would allow grocery and convenience stores to sell high-percentage alcohol beer and wine.
The Sooner State is the largest consumer of so-called 3.2 beer (alcohol by weight) — more than 55 percent of the nation’s low-point alcohol is consumed in Oklahoma — and one of the five remaining states in the nation that still restricts the sales of regular-strength beer. The proposal would also allow retailers to refrigerate full-strength beer.
If Oklahoma changes its 3.2 beer law, the reverberations could be felt in Utah — the second-largest consumer of 3.2 beer.
If Oklahoma voters strike down 3.2 beer laws, which polling suggests they will, this could signal the end of low-point alcohol, which accounts for just 1.8 percent of all beer produced in the country, according to Jim Olsen, the president of the Utah Beer Wholesaler’s Association, via Fox 13 in Salt Lake City.
Utah Sen. Jerry Stevenson, who is responsible for examining changes to that state’s liquor laws, told Fox 13 the earliest the Utah Legislature could consider changes would be 2018.
Opponents of the bill, primarily liquor store owners, believe the changes would make it more expensive for consumers to purchase beer.
The Retail Liquor Association of Oklahoma has reportedly promised to sue, should the measure pass, challenging its constitutionality.
“They can’t write something that is fair enough to overcome the hurdle of the 14th Amendment,” Bryan Kerr, president of the Retail Liquor Association, told the Oklahoman. “It’s not a surprise that they would craft something that is going to become unconstitutional.”
However, the Yes on 792 campaign is confident the measure will pass constitutional muster.
“792 is modeled on successful reforms that have taken place in other states,” Alex Weintz, spokesman for the Yes on 792 campaign, said told the Oklahoman. “I’m confident it will withstand a constitutional challenge. We are confident we will win the election, so that’s where our focus is at this time.”
Sunday Sales Referendum in South Carolina
In Orangeburg County, South Carolina, voters will decide whether bars, restaurants, hotels, gas stations and grocery stores will be able to sell beer and wine on Sundays, according to the Times and Democrat.
The proposal also would allow bars, restaurants and hotels to purchase permits to sell individual liquor servings. Orangeburg County leaders say they’re tired of losing out on tourism dollars.
Nineteen cities and 15 counties in South Carolina already allow Sunday beer and wine sales.
Lowering the Drinking Age to 19 for Beer and Wine
A nonbinding ballot question in the Third Hampshire District — comprising Amherst, Pelham and Granby in Massachusetts — is asking if the drinking age should be lowered to 19.
The question reads: “Shall the state representative from this district be instructed to vote in favor of legislation that lowers the drinking age to 19 for wines and malt beverages and maintains the drinking age at 21 for all other alcoholic beverages?”
Matthew Malone, a 48-year-old federal government actuary who lives in Washington, D.C., initiated the ballot question.
Malone, a native of Haverhill and a member of the National Youth Rights Association, reportedly referred to the the current drinking age of 21 as age discrimination against adults who “can legally enter into contracts, marry without their parents’ permission and serve in the United States military,” according to MassLive.com.
If Malone’s question is successful, he’ll push it in other Massachusetts house districts in 2018 and push forward with a statewide ballot initiative in 2020.
Yuengling Takes an Image Hit with Trump Endorsement
Richard Yuengling Jr.’s endorsement of Donald Trump came at a price: It’s hurt his brewery’s perception, according to YouGov BrandIndex, which tracks consumer perception of brands.
Yuegnling’s endorsement came as Trump’s son, Eric, toured the Pottsville, Pennsylvania, brewery. The Reading Eagle reported that Yuengling said: “Our guys are behind your father. We need him in there.”
That didn’t sit well with drinkers. Here’s how the YouGov BrandIndex index works: Scores can range from -100 to 100; zero is neutral.
“On October 25th, when the Reading Eagle story broke, Yuengling’s Buzz score was a positive 5,” YouGov BrandIndex said in a press release. “The New York Times followed up three days later, and triggered a fall to a zero (neutral) score on November 5th. On that same day, the beer sector average Buzz score was 3.
Yuengling’s consumer perception is typically above average in the beer sector, YouGov BrandIndex reported, but the Trump endorsement tanked it with both Democrats and Republicans.
“Looking at perception by political party, consumers affiliated with the Democratic party sent Yuengling’s Buzz score from 5 to -7 this past weekend,” the release said. “Republican consumers, whose scores are normally higher than Democrats for Yuengling, slid from 8 to 4 over the same time period.”