Market Overview

Should The Liquor Industry Be Worried About Legal Cannabis?

Marijuana legalization may already be putting pressure on alcohol companies.

The maker of Jack Daniels, Brown-Forman (NYSE: BF-A) (NYSE: BF-B), released its annual report on Thursday, which included a laundry list of risks -- among them, recreational marijuana.

“Consumer preferences and purchases may shift due to a host of factors, many of which are difficult to predict," it noted, "including… the potential legalization of marijuana use on a more widespread basis within the United States.”

Recreational marijuana use is currently permitted in Colorado and Washington, while at least 22 states have legalized cannabis for medical use.

Related: Cannabis Investors Preparing For Industry Data From WeedStock

Cannabis stock specialist Alan Brochstein believes alcohol firms have reason to worry.

“Big Alcohol is watching marijuana legalization closely," he told Benzinga, "and it's very likely that these companies are highly concerned. Cannabis legalization is likely to lead to a substitution effect.”

Some think marijuana legalization, however, will have tremendous synergies with alcohol companies.

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“This is similar to record companies when the internet came out," said Mike Zapolin, CEO of the marijuana company Zappy. "If they had embraced it and marketed around synergies, they would be loving the outcome.”

Synergies between alcohol and marijuana could boost both industries to new heights, according to Zapolin.

Industry changes are what investors are lining up to hear about at the WeedStock Conference in Denver later this month. Brochstein and CEOs of some of the most recognized marijuana firms will discuss topics investors should hear before placing funds into cannabis companies.

At last check, no other publicly traded entities had a disclosure of Brown-Forman's nature -- but that's not to say others are at risk. Along with other beverage firms, pharmaceutical companies are being widely discussed as potential victims of increased marijuana use.

Benzinga has contacted Brown-Forman for comment and is awaiting reply.

Spots for WeedStock are very limited-- investors in the cannabis industry should register as soon as possible. Benzinga readers can get $200 off a three-day pass with coupon code "BENZINGAWEEDSTOCK".

Posted-In: Alan Brochstein cannabis cannabis industry Jack DanielsNews Events Top Stories General Best of Benzinga

 

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