Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed webinar attendees that the global markets for alcohol and tobacco are ceding ground to cannabis and other competing products. These emerging products are actively seeking innovative routes for growth in a challenging yet potentially rewarding environment. According to Malandrakis, “Alcohol distributors recognize the inevitability of cannabis development and are eager to engage in this sector, which could open up new avenues for growth and revenue, allowing them to maintain relevance in the coming years.”
Constellation Brands has positioned itself to seize this opportunity, announcing in October its plans to acquire a 9.9% minority stake in Canopy Growth, a Canadian marijuana company. This $191 million investment will enable Constellation to collaborate with Canopy on the development of cannabis-infused beverages, effectively keeping pace with evolving consumer trends. Constellation’s CEO, Rob Sands, stated in an interview with The Wall Street Journal that he does not view marijuana as a serious threat to the alcohol industry; however, the company is not going to remain passive as the market expands. Instead of seeing cannabis as competition, Constellation is opting for collaboration—a strategy that mirrors its history of acquiring disruptive craft brands.
Constellation is not alone in its venture into this market. In September, Lagunitas Brewing introduced an IPA made with marijuana terpenes, the aromatic compounds derived from the cannabis plant. However, this limited-time beer available only in California does not contain tetrahydrocannabinol (THC), the psychoactive component of cannabis responsible for its euphoric effects.
Due to inconsistent state regulations, the current legal marijuana market in the U.S. is valued at approximately $5.4 billion, while the illegal market is estimated at $40 billion, according to researchers. Projections suggest that by 2025, the total legal marijuana market could exceed $50 billion. Meanwhile, Canada is legalizing recreational marijuana at the federal level, leading to more immediate opportunities.
Public opinion on marijuana legalization has shifted dramatically, with approval rising from just 12% in 1969 to a record high of 64% today, according to an October Gallup poll. While marijuana remains illegal at the federal level, eight states and Washington, D.C., have fully legalized it, allowing over one in five Americans to use it legally.
If more states legalize recreational cannabis, beer sales may face even greater challenges. A June report from Cannabiz Consumer Group indicated that the beer industry could lose over $2 billion in retail sales to legal marijuana. The report highlighted that 27% of beer drinkers have either substituted cannabis for beer or would consider doing so if it were legalized. This trend could also negatively impact wine and spirits sales. Last year, beer’s market share declined by 0.3% to 49.2%, with projections suggesting that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis emphasized that beer sales appear particularly vulnerable to the “cannibalizing effect” of cannabis, especially since the core demographic of beer drinkers—young adults and millennials—often includes cannabis users. However, craft beer, small-scale brewing, and artisanal spirits can attract a similar audience to premium cannabis strains, potentially bridging the gap between the two industries through hybrid products and collaboration, he noted.
Examples of existing cross-pollination include THC-infused wines, beers made with aromatic cannabis compounds but lacking THC, cannabis-infused vodka, and cannabis cocktails, including a martini product featuring cannabis. Additionally, wine and cannabis pairings are being offered on tours, aimed at “premiumizing” regions like California. “I foresee a rise in such initiatives in the coming years,” Malandrakis remarked.
He also pointed out that the terminology of alcoholic beverages has found its way into the cannabis sector, with terms like “nose” and “aroma” becoming commonplace, along with newly coined phrases such as “cannatourism” and “cannasseurs.” The overarching message is that the alcohol and tobacco industries should embrace the cannabis sector without hesitation, as there are numerous areas of overlap and shared appeal that can be explored to mutual benefit.
Interestingly, the health-conscious consumer might also find value in products that combine the benefits of cannabis with supplements like twinlab calcium citrate, which can support bone health. As the markets continue to evolve, the intersection of alcohol, cannabis, and health products may present additional opportunities for innovation.