Retail

Beer Makers Cozy Up To Legal Retail Cannabis

It’s hard to tell from the PYMNTS New Orleans bureau (where crawfish have given way to punishing sub-tropical heat), but U.S. consumers are drinking less beer. That, in turn, reportedly provides another opportunity for the emerging and growing legal cannabis retail sector.

Legal cannabis retail has yet to find its firm footing — too many ongoing payment challenges to say that — but beer companies are taking notice of the possibilities, at least according to a report Thursday (June 6) from NBC News. It said that “beer makers are pouring money into cannabis companies, both in an effort to diversify product lines and to catch the explosive growth occurring in the cannabis industry.”

Beer Woes

While the couple of decades has brought an explosion of craft beer options in the U.S. — we all know that person who waxes poetic about hops, roasting and IBUs — “beer sales have been on the decline in recent years, recording a 1 percent drop by volume in 2017 and 2018, according to the Brewers Association, a trade group for small and independent brewers.” The culprit? More interest in wine and spirits, along with less interest overall in drinking (another thing that some people are trying to blame millennial consumers for, by the way, even if that storyline has some significant holes, as PYMNTS has covered).

Yet the growth of the legal cannabis retail industry demonstrates that many consumers will, or might soon, shift their intoxication methods. That report said that one study “showed that in counties in states where cannabis is legal for medical use, monthly alcohol sales dropped 13 percent.” And beer companies don’t want to miss out, at least according to that NBC report. If you can’t beat them, then join them, right?

“Molson Coors, which entered into a joint venture with Canadian cannabis company Hexo to produce CBD-infused beverages … plans to launch a portfolio of cannabis-infused beverages this fall in Canada, where cannabis is legal for both recreational and medicinal purposes,” the report stated. As well, “Constellation Brands, the $34 billion company behind Corona and Modelo beers, invested $4 billion into the Canadian cannabis company Canopy Growth last year to produce cannabis-infused beverages in Canada.”

Pot Appeal

The legal cannabis industry is so new that it is finding at least initial traction not only from beer makers but other parts of the retail world.

Take luxury retail, for instance. Legal cannabis sales are going upscale. Evidence of that came earlier this year from Barneys New York.

The retailer said it is launching The High End, a luxury cannabis lifestyle and wellness concept shop. The High End will open in Barneys New York’s Beverly Hills flagship in March, with plans to expand to additional locations in the near future. Barneys has entered into an exclusive partnership with upscale cannabis company Beboe to introduce customers to the brand’s offerings, including its vaporizer pens and pastilles, as well as CBD products. The shop will also feature a selection of rare items made just for the store across home, beauty and jewelry lines. Select accessories will be made available on Barneys.com.

Payments Knot

But payments stands as the big issue for legal cannabis. Certain states may have legalized the product, but federal law still considers the drug illegal, which makes financial institutions, card networks and payment service providers reluctant to serve the industry lest they face anti-money laundering and other legal risks. Federal lawmakers are working to remedy that, but for now, cannabis remains a cash-dominated industry.

Still, this new development centered around beer makers provides even more evidence of the growing appeal of legal cannabis.

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The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

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