beer cheers
Beer companies large and small have been in hot pursuit of a flurry of deals in the marijuana industry.
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  • Big beer companies are looking to develop marijuana-infused beverages as a way to revitalize their businesses.
  • Constellation Brands, the third-largest beer company in the US, this week invested $4 billion in Canopy Growth, a Canadian marijuana cultivator, to develop marijuana-infused beverages and other products.
  • And Lagunitas, Heineken’s California-based brand, recently developed a hoppy, THC-infused sparkling water.And Molson Coors recently entered a joint venture to produce marijuana-infused beer for the Canadian market, among other deals.
  • Investors are excited about the prospect of creating a whole new class of marijuana consumers, though some questions still remain.

Big beer companies want in on the exploding legal-marijuana market.

Beer and liquor giants like Molson Coors, Heineken, and Constellation Brands — the company behind Corona — have pursued a flurry of deals to develop marijuana-infused drinks that they hope will give them a slice of the rapidly expanding pie.

Constellation, the third-largest beer company in the US, this week paid $4 billion for a 38% stake of Canopy Growth, a Canadian marijuana cultivator, to develop marijuana-infused beverages and other products. It’s the largest corporate investment in a marijuana cultivator to date.

A handful of smaller firms and startups are seeking to build out products lines as well, either by developing their own brews or through strategic acquisitions.

“It’s the next big evolution of the cannabis market,” Keith Dolo, the CEO of consumer cannabis company Sproutly, said in a recent interview.

Two Roots Brewing
An ad for Two Roots Brewing on the company’s website.
Two Roots

With declining beer sales, a pivot to pot

Beer companies are dealing with a new reality: Young people are ditching the hoppy beverage in droves.

Molson Coors saw beer sales slump for the fourth straight quarter, and Heineken’s sales slipped in the first half of this year.

Marijuana may be a part of the beer industry’s challenge.

Binge-drinking rates have fallen sharply in states with legal marijuana, according to Vivien Azer, a cannabis industry analyst at the investment bank Cowen. Azer expects expanded access to marijuana to hurt beer and liquor sales, particularly among young people.

Marijuana is legal in nine states, and Canada is set to legalize the drug for adults later this year, though edibles and infused beverages likely won’t be legal until mid-2019, according to Matt Bottomley, an analyst at investment bank Canaccord Genuity.

Consumers are set to spend $32 billion globally on recreational marijuana in the next four years, according to a report from ArcView Market Research and BDS Analytics.

It’s no wonder that a number of beer giants are looking to rapidly expand their footprint in the marijuana industry. Constellation paid $191 million in October for a 10% stake in Canopy Growth. The beer giant upped its investment to $4 billion on Wednesday in a sign that it’s bullish on the market for marijuana-infused beverages.

And Molson Coors Canada recently entered a joint venture with Hexo, a publicly listed Canadian cannabis cultivator, to produce marijuana-infused drinks for the Canadian market, stoking investor excitement.

Not to be outdone, Heineken’s fast-growing Lagunitas brand has developed what the company calls a hoppy sparkling water infused with THC — the active ingredient in marijuana — for the California market.

A few smaller companies — including Sproutly, Cannabiniers, which is rolling out its Two Roots brand of marijuana-infused beers, and Province Brands— are racing…