Should The Alcohol Industry Be Worried About The Legalizing Of Pot?

Brown-Forman Corporation (NYSE: BF-B) (NYSE: BF-A), the parent company behind the Jack Daniels brand similarly cautioned investors in a 10k filing that the potential legalization of marijuana across the United States is a factor that could adversely impact demand for its beverages.

Related Link: Reads For The Weed-Kend: Marijuana Roadside Testing, Pregnancy And Depression

According to The Intercept, Boston Beer and Brown-Forman aren't alone in its thinking. For instance, an affiliate who represents 16 beer-distribution companies in Massachusetts gave $25,000 to an anti-pot organization. The Arizona Wine and Spirits Wholesale Association of Arizona also gave $10,000 to a group that opposes the legalization of marijuana.

Valid Concern

The Intercept suggested alcohol companies have reason to be concerned, but data so far are in their favor. For instance, the publication cited Daniel Rees, an economics professor at the University of Colorado – Denver, who argues that consumers will substitute marijuana for alcohol.

However, tax revenue in the state dating back to 2012 when marijuana was legalized shows consumers are buying alcohol at almost the same rate today as they were four years ago.

Brown-Forman's CEO Paul Varga offered a somewhat cautious but not yet worried tone when he told investors back in August 2014 that the legalization of marijuana is a "big threat" and he is "paying attention to it."

Nevertheless, Varga added, "I wouldn't say I'm losing sleep over the legalization of marijuana."

Full ratings data available on Benzinga Pro.