Legal hemp business will be able to take away about $55 billion annually from alcohol and tobacco companies

The transition of alcohol and tobacco companies to the hemp business is already a necessity for them and one of the main forms of protection against loss of significant shares of profits, as well as the creation of opportunities for growth points, given the rapid development of the global cannabis industry.

Global alcohol and tobacco players could incur annual losses of $55 billion when a legal cannabis industry is established in the economically developed North American countries. This is the reason why the above highly liquid sectors of the economies are actively working towards investing various resources in rapidly growing cannabis markets.

According to the Toronto investment bank Altacorp Capital's report, the transition of alcohol and tobacco companies to the hemp business is already a necessity for them and one of the main forms of protection against the loss of significant shares of profits, as well as the creation of opportunities for growth points, given the rapid development of the global cannabis industry. According to Altacorp Managing Director David Kideckel, alcohol and tobacco will eventually become part of the emerging global industries, where cannabis will be the driving force. Global players in the alcohol and tobacco markets will enter the modern cannabis sector through acquisitions or partnerships with existing firms specializing in growing and processing cannabis. In turn, the rapidly growing hemp economy will have access to corporate infrastructure, best practices and the huge opportunities (product distribution, product development or technology development, etc.) that global players in the alcohol and tobacco sectors can offer

According to North American market analysts, the hemp sector of the economy will soon include the heavyweights of the FMCG market, as they are currently clarifying the situation for themselves after the changes in the regulations of the U.S. and Canada. The hemp business is being watched very closely by representatives of the soft drink markets, food and health supplements, personal care products, and cosmetics and pharmaceutical companies.

In particular, Constellation Brands was the first alcoholic beverage giant in the world to invest heavily in a hemp company with an industry record of $3.8 billion in Ontario-based Canopy Growth; Altria Group, one of the world's leading tobacco companies, invested $2.4 billion in the Canadian manufacturer Cronos Group. Less extensive deals were made, including between Belgian brewery AB InBev and Tilray, American Molson Coors Brewing Co and The Hydropothecary Corp, a subsidiary of Swiss pharmaceutical giant Novartis AG and British Columbia-based Tilray, among others

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The main conclusions of Toronto investment bank Altacorp Capital specialists, which are presented in the report prepared for the management:

• the Canadian recreational cannabis market alone will reach $9.1 billion in annual sales by 2025, with an additional $1 billion in sales of related equipment

• the slowdown in Canadian cannabis growth will be due to an imperfect regulatory framework that impedes the widespread spread of cannabis products throughout the country, the absence of a huge range of cannabis products of interest to the market, as well as the current restrictions on branding and marketing of products made from a variety of hemp ingredients;

• the first overproduction crises could shake the cannabis market in Canada as early as 2020, when most of the country's licensed producers are implementing projects in the field of cannabinoid therapy initiated by them; 

• most of the margin will be earned by firms focused on intellectual property development, brand and recipe development, unique technologies and increasing the share of retail sales channels.