THOUGHT PIECE the carling team

Should Brewers Be Worried About Legal Pot?

Paleobotanists at Stanford University in the States reckon to have discovered evidence of early brewing some 13,000 years ago by examining starch residues in mortars uncovered near Mount Carmel in Israel. The production of alcohol for either ritualistic or simply relaxation purposes is indeed an ancient craft. Other early brews included all sorts of bitter herbs used to balance the sweet fullness of the fermentation. Many of these herbs like bog myrtle, henbane and valerian had psychoactive properties and with the alcohol no doubt helped to numb the effects of the abject hardship suffered by most of our ancestors.

The hop has been used in brewing for a millennium, while not being psychoactive, it does confer bitterness as well as useful preservative properties. Herbs or ‘gruit’ is perhaps making a small come back with James Clay importing a series of five beers from Belgium’s Gruut City Brewing although the brewer is reticent about which flavourings are actually used. Closer to home, Williams Bros at Alloa has been making Fraoch, a beer where the hops are helped out with heather, bog myrtle and ginger, for years. Its Alba uses pine needles while spruce tips have been a popular flavouring in North America (Alaskan Spruce IPA and Yards Brewing’s Poor Richard’s Tavern Spruce) for centuries where it was said to counter the effects of scurvy.

Cannabis and hops are genetic cousins and with such a heritage of using other botanical additions perhaps it is not surprising that pot and beer could be teamed up but why should there be such an urgent rush into buying marijuana suppliers amongst the global brewers?

In October Canada made recreational marijuana officially legal following a similar move in Uruguay in 2017. South Africa also allows private use provided you have grown the stuff yourself. In Canada it went on sale at licensed dispensaries and sales are expected to soar with some estimates as high as C$5bn. Its use in edibles and beverages is expected to follow in 2019. In the States, recreational use of cannabis is currently legal in nine states, it is decriminalised in a further 13 and a total of 31 allow medicinal use. The pace of the drug’s legalisation has quickened in recent months. BDS Analytics values America’s cannabis industry at over $9bn in 2017 and predicts it will swell to $24bn by 2021. Globally, sales are forecast to hit $32bn by 2022.

North American brewers seem to be keen to get a slice of the action with Constellation Brands (importers of Corona and thus the USA’s third largest brewer) taking a 38% stake in Canopy Growth (worth around $4bn) which will use the investment to build more greenhouses in British Columbia. Number two – Molson Coors announced a joint venture with Quebec-based Hydropothecary Corporation with the brewer holding 58% of the equity. While number 1 – A-B InBev says it is monitoring the situation closely but has no plans in that direction at the moment. Bloomberg has reported that Diageo is sniffing around three possible suppliers and Coca-Cola is ‘in talks’ with Aurora Cannabis to co-develop beverages. Keith Villa, the creator of Blue Moon for Coors has set up Ceria which expects to release a THC-infused, non-alcoholic beer shortly and Cannabiniers, a Nevada based startup is rolling out a similar line of cannabis-infused beers. Most brewers will ferment a wort made from malted barley and then strip out the alcohol but Province Brands in Toronto has patented a procedure to extract carbohydrate from the stems, stalks and roots of the marijuana plant itself.

Meanwhile Heineken, through its Californian craft subsidiary Lagunitas, has launched Hi-Fi Hops, a cannabis-infused, non-alcoholic beverage. There are two types of this sparkling water which tastes of hops and contains THC (tetrahydrocannabinol) and/or CBD (cannabidiol). Unlike THC, CBD is not  psychoactive and is widely and legally used for relaxation and to relieve pain. The silver 5:5 can has 5mg of THC and 5mg of CBD while the purple 10 can has 10mg of THC. Apparently it is a considerable technical challenge to remove the cabbagey cannabis flavours from the additive and to avoid any legal snags of having the process carried out in a brewery, the job is factored out to a firm called CannaCraft.

At the moment, the authorities prohibit the use of THC in anything containing alcohol so that has to be removed or else not there in the first place. Currently these products are non alcoholic and thus zero calorie as well. The company hopes to expand the Hi-Fi lineup with higher dosage drinks, though the regulations for doing so are strict as the package has to resealable, child resistant and you cannot go over 100mg.

BDS found that 72% of cannabis consumers also consume alcohol and are actually more likely to drink than non-cannabis users. However it also found that when consuming cannabis, half of users drink less alcohol. So there are risks to brewers’ revenue in both substitution and complementary usage.

Brewers are unlikely to become marijuana operations with ancillary interests in beer, wine and spirits but pot could become a fourth leg to the business when alcohol sales are largely static and under considerable pressure from the medical lobby. These big boys clearly see the fast-growing marijuana industry as a potential lifeline. Indeed the mature craft market in Oregon (with 266 such brewing operations) which legalised marijuana in 2015 reports a considerable drop in the price of pot and one of the largest brewers, Deschutes has suffered a drop in annual beer sales of 13%.

Brewers fret about selling more beer for consumption with meals, by women and finding a place in the burgeoning low alcohol sector but cannabis might just be more profitable than mopping up the larger craft brewers willing to sell out to Corporateland.

We’ll leave the last word to Dennis Hunter at Cannacraft, “Someday in the future, people will realise that pot is no more dangerous than alcohol.”