News and Trends / cannabis industry

Which Big Consumer Product Companies Really Are Entering the Cannabis Industry?

Not all of hype about mammoth companies staking corners in the cannabis market is accurate but the trend is clear.
Which Big Consumer Product Companies Really Are Entering the Cannabis Industry?
Image credit: Lagunitas | Heineken
Guest Writer
Director of Research, Brightfield Group
4 min read
Opinions expressed by Green Entrepreneur contributors are their own.

There have been rumors and warnings of large CPG (consumer packaged goods) companies jumping into the industry and crushing all the little guys since I started working in the cannabis industry in 2015. It seemed it would happen in 2017, after California voters legalized recreational cannabis, but the appointment of rabidly anti-cannabis Jeff Sessions as Attorney General cooled interest in the industry.

That has all changed in 2018. After much waiting and monitoring, we are seeing some mainstream companies publicly dive in. Constellation’s $3.8 billion investment in Canopy Growth is essentially shouting from the rooftops that alcohol companies were officially getting into the cannabis mix. MolsonCoors, Heineken and -- if rumors are true -- soon Diageo are making key investments and alliances to carve out their place within the cannabis industry. Instead of being stigmatized for entering this space, alcohol companies not carving out their place in cannabis are quickly being viewed as behind the curve, not forward-looking or ripe to be disrupted.

Related: Hangover-Proof Beer Infused With THC and CBDs? Cheers!

There has been a rush to paint some other large companies with the same brush over the past few weeks. The media went crazy with headlines and rumors about Coca-Cola entering the cannabis space, positioning it as a similar move to Constellation’s. These articles missed a key point: Coke doesn’t care about marijuana, it cares about CBD.  CBD -- cannibidiol -- is the non-psychoactive chemical within the Cannabis sativa plant known for relieving pain, anxiety and other conditions. CBD-infused beverages are not "sin products" like beer and spirits, but rather can be positioned akin to a Vitamin Water, 5-hour energy shot or smartwater.

CBD does not have to be derived from marijuana. If the current farm bill with its provisions for legalizing hemp is passed, Coca-Cola could infuse drinks with CBD derived from hemp. This subtle distinction is a monumental shift in terms of available markets, regulations and ability to scale. Hemp-derived CBD could be sold by large companies across state lines. The inputs could be grown domestically in many states or imported from abroad. Products could be sold on the shelves of grocery stores, liquor stores and on-trade establishments leveraging Coca-Cola’s existing distribution network.

Related: Coca-Cola Is 'In Talks' to Make Marijuana-Infused Drinks

With a warming international attitude towards CBD, it could rapidly scaled into a global operation. In contrast, legalization of recreational cannabis is much further out around the world and may take a decade or more.

Other headlines have suggested beauty giant Estée Lauder is jumping into the cannabis industry as well, with a cannabis-infused beauty line Hello, Calm from Origins. Don’t believe the hype here. Beauty products including CBD as a functional ingredient have gained a lot of traction over the past year. CBD for beauty and skin care is an area we expect to explode once hemp is fully descheduled, but the Origins product includes only hemp seed oil (hemp and marijuana both hail from the genus cannabis sativa) which has been used in products at the Body Shop and others for decades. The only real difference is they are marketing it as cannabis, which is a clever way of testing the waters without violating any federal laws. We expect mainstream beauty and skincare companies will enter the cannabis or CBD spaces in coming years but Origins has not done that, even though they may be gauging perceptions for future moves.

With recreational cannabis markets opening in Canada, and CBD popping up everywhere from natural grocery stores to doctors’ offices to Groupon, the large CPG companies are officially starting to jump in. The game has officially changed for cannabis entrepreneurs who have been in the industry for years -- the big boys are ready to play. Are CBD entrepreneurs ready? Are you positioned for acquisition or partnership? Or are you positioned to get crushed when consolidation accelerates?

 For all the CPG companies sitting on the sidelines, watching and waiting -- jump soon or it will be too late.  

By Javier Hasse
From retailers to growers, producers, and suppliers, there’s a seemingly never-ending list of startup opportunities in this emerging market. In Start Your Own Cannabis Business, marijuana, biotech, and entrepreneurship reporter Javier Hasse introduces forward-thinking entrepreneurs like you to the industry and shares hard-earned tips and success stories from pioneers and visionaries in the marijuana industry.
Learn More

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