Reads For The Weed-Kend: Beyond Marijuana Stocks, New Opportunities Arise With Legalization

Americans in nine states voted on marijuana laws last week. Citizens in California, Massachusetts, Nevada and Maine decided to legalize the recreational use of marijuana, while constituents in North Dakota, Arkansas, Florida and Montana passed medical marijuana laws – or amendments, in the latter case. The only one of these nine states that voted against marijuana legislation was Arizona.

While at the Federal Level, cannabis remains illegal, and experts have noted that “Donald Trump is no friend of cannabis,” business is blossoming, as bold investors and entrepreneurs look for an opportunity in this blooming industry.

In this article, we will examine some other interesting initiatives in the field.

Constellation High

Constellation Brands, Inc. STZ, one of the alcoholic beverages producers of the US – responsible for Corona beer and Svedka vodka, recently announced it was considering a venture in the legal cannabis industry.

"There are going to be alcoholic beverages that will also contain cannabis,” CEO Rob Sands declared in a recent interview. “Why wouldn't big business, so to speak, be acutely interested in a category of that magnitude? (…) If there's a lot of money involved, it's not going to be left to small mom-and-pops," he added.

“Maybe the whole thing will work out synergistically,” Sands concluded, discussing weed and alcohol consumption and cannibalization.

Could other beverages producers like  Anheuser Busch Inbev SA NV (ADR) BUD, Diageo plc (ADR) DEO, Boston Beer Company Inc SAM or Craft Brew Alliance Inc BREW follow suit?

One Step Ahead

While Constellation Brands considers its options in the marijuana drinks space, Dixie Brands is already making money. This Denver-based company makes not only drinks, but also other marijuana-infused products like chocolates and lotions, and is looking to expand beyond its Colorado market, now that recreational cannabis is legal in other large states like California. However, given the variety of legal frameworks, this is no easy task.

Getting creative, Dixie Brands came with a solution a couple of years ago: finding a licensing partner that produces its products in other states (California, in this case). But, after a year, the approach changed.

“To have total legal, financial and operational control, we decided we would need to control the manufacturing and distribution facilities in any state we expanded to,” co-founder Chuck Smith told the New York Times.

Nonetheless, there were still hurdles to overcome, like laws that require marijuana businesses to be owned by state residents.

“[Mr. Smith] decided that Dixie Brands would own and run anything that did not “touch the plant” and therefore was not subject to local ownership regulations. A local partner would grow and process the marijuana, but only for Dixie Brands, and only under the company’s strict instructions,” the NYT read.

“We were pioneers to begin with seven years ago, and I think we are well positioned to take this leap,” Smith concluded.