Here are the main industries investing in marijuana

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June 28, 2019 6:33pm NYSE:MJ

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From Scott McGovern: Some of the biggest companies in the world are poised to profit from legalization. Meet the biggest non-weed companies investing in cannabis.

With legalization in full-swing in six states and new legislation in the works, investing in cannabis has officially gone mainstream. And today, some of the most established industries in the world are turning their attention toward cannabis as investors, product developers, and more.

These three major industries are investing in cannabis and could exert long-term influence on the market.

The Alcohol Industry Is Investing in Cannabis

According to a study looking at data from 90 alcohol stores between 2006 and 2015, medical marijuana legalization negatively affects alcohol sales.

The study found that alcohol sales drop close to 15% in states with legal medical marijuana.

Beer Companies and Distributors Turn Towards Weed

Prominent alcohol corporations were some of the first to start investing in cannabis. So far, several major brands have invested in legal weed:

  • Molson Coors Brewing Co. TAP 1.14% partnered with Hydropothecary, a weed producer, to create an infused beer. Molson Coors expects to launch its beverage in 2019.
  • Constellation Brands Inc STZ 4.7%, the beer company behind Corona and Modelo,invested $4 billion in major producer Canopy Growth Corp CGC 0.91% in 2018.
  • Heineken HEINY 1.29%-owned beer Lagunitas has already developed their own THC-infused beer called Hi-Fi Hops.
  • Initially, Nevada legislation gave alcohol wholesalers a monopoly over distribution. However, this clause was disputed and rejected by the Nevada Supreme Court.

Pharmaceutical Companies Look To CBD

Many of the world’s biggest pharmaceutical producers are investing in cannabis and hemp today.

  • Epidiolex, a cannabis medicine created by GW Pharmaceuticals PLC- ADR GWPH 1.3%, became the first FDA-approved CBD medicine in 2018.
  • GW Pharmaceuticals isn’t the only pharmaceutical company investigating cannabis medicine. AbbVie Inc ABBV 3.87%, another major drug company, has created synthetic cannabinoid medication Marinol.

Other, smaller pharmaceutical companies are also working on forms of cannabis medicine.

Today, major pharmaceutical companies Pfizer Inc PFE 0.24%Sanofi SA SNY 0.27%Bristol-Myers Squibb Co BMY 0.54%, among others hold patents related to marijuana, though they have yet to publicize how they’re researching or investing in cannabis.

Big Tobacco Invests In Major Producers

Tobacco companies, which have experienced a consistent dip in cigarette sales in the United  States, are also investing in cannabis.

  • Altria Group Inc MO 1.11%, the company behind Marlboro, Virginia Slims, Parliament cigarettes made a $1.8 billion investment in Cronos Group Inc. CRON.
  • The venture arm of Imperial Brands, the world’s largest cigar producer that also produces Kool and Winston cigarettes, participated in an investment round for Oxford Cannabinoid Technologies. Snoop Dogg’s Casa Verde also invested in the same venture.
  • Tobacco retailer and distributor Alliance One International, now Pyxus International Inc PYX 3.13% recently gained majority stakes in two Canadian weed producers: Goldleaf Pharm and Canada’s Island Garden.

Stagnating Industries Are Investing In Cannabis

The three biggest industries investing in cannabis have struggled in recent years.

  • The U.S. beer market share fell from 56 percent in 1999 to less than 48 percent in 2014.
  • Though the hard alcohol industry is doing well nation-wide, alcohol sales fell close to 15 percent in states with legal medical cannabis.
  • Prescription drug sales fall sharply in states with medical legalization, as shown by a recent study.
  • Cigarette smoking was at its lowest in 2018, according to data from the Centers for Disease Control and Prevention (CDC). In total, cigarette smoking is down 67 percent since 1965.

By contrast, medical and recreational cannabis sales are predicted to increase by over twenty percent in 2019.

The ETFMG Alternative Harvest ETF (MJ) was unchanged in after-hours trading Friday. Year-to-date, MJ has declined -2.60%, versus a 10.62% rise in the benchmark S&P 500 index during the same period.

MJ currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #56 of 86 ETFs in the Global Equities ETFs category.

This article is brought to you courtesy of Benzinga.

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