Marijuana has seen some form of legalization in almost half the states (23), but only one of those states, California, has adopted a three-tier distribution model.
CALI REQUIRING MEDICAL DISTRIBS. The state did so last year with the passage of the Medical Marijuana Regulation and Safety Act (MMRSA) - California's first-ever medical marijuana regulations. Included in the MMRSA is a provision, going into effect in 2018, that will require all medical marijuana to pass through a distribution tier before heading to the retailers.
WILL RECREATIONAL FOLLOW SUIT? Now, the question is whether this model will be replicated in the recreational initiative -- the Adult Use of Marijuana Act (AUMA) -- on the ballot this November. Unlike MMRSA, AUMA does not require growers to send products through a distribution tier. "The only licensees not eligible to distribute for themselves are the new, Type 5 large-scale cultivators," under AUMA, per California NORML.
AUMA has a solid shot at passing; the latest polls indicate 60% support for the measure. If California residents give AUMA the nod this November, it is "expected to grow the state's $2.7 billion marijuana market into an industry worth $15 billion or more in five years," per Politico report.
DOMINO EFFECT? AUMA's text isn't set in stone, so if it does make it through, it could eventually reflect the three-tier system like MMRSA does and the general consensus is it will. If/when that happens, it could trigger a domino effect for all states legalizing marijuana.
"The sheer size of California's market (U.S. sales totaled $5.7 billion in 2015), along with pressure from prominent marijuana policy advocates, could influence other states contemplating legalization (there are eight with measures on the ballot this fall) and permanently shape the regulatory landscape nationally," writes Politico.
The "pressure" from marijuana advocates that Politico talks about above is largely attributed to the Marijuana Policy Project (MPP), "the nation's most prominent cannabis reform organization." MPP has "been instrumental in writing many" of the marijuana initiatives across the 23 states that have adopted legalization in some fashion.
WAIT, MPP LIKES ALCOHOL? The organization's founder and director, Rob Kampia, is a staunch proponent of getting alcohol into the game, according to the report. He spearheaded the "Regulate Marijuana Like Alcohol" initiative in Nevada, "which gives preference to 18 alcohol distributors for the first 18 months after it passes." The initiative will appear on the Nevada ballot this November.
DISTRIBUTORS THE BIG BENEFICIARIES. The growing acceptance of marijuana will not excite the entire alcohol industry, Rob admitted, as "the (alcohol) manufacturers might have a little to lose." But alcohol's middle tier "should be interested because they already have a distribution system in place. It's easy enough for them to put marijuana on their trucks," Rob told the publication.
"REAL MONEY" IN DISTRIBUTION. Leslie Bocksor, who is often referred to as "the Warren Buffett" of the marijuana industry, said, the distributors are the ones who stand to benefit the most too. "The real money, 'the on-ramp' to the cannabis industry, is in distribution," he said, advising his clients to invest in that tier.
SOME READY FOR ACTION. People like Ted Simpkins, a former executive of Southern Wine & Spirits, already have the dollar signs in their eyes. As you may recall, Ted set up a marijuana distribution company last year in West Sacramento called RVR, AKA River Wellness or River Collective.
During last year's legislative session, RVR "paid out $134,500 for lobbying of medical marijuana distribution," and laid the groundwork for its business, leasing a 17,237-square-foot storage/distribution warehouse and investing in armored vehicles to carry the weed.
OTHERS READY FOR WAR. For some distributors marijuana holds no allure. The Beer Distributors PAC, a committee that represents 16 wholesalers in Massachusetts, recently donated $25,000 to the Campaign for a Safe and Healthy Massachusetts, per The Intercept. That ranks as the third largest contribution to the state's anti-pot organization, according to the publication.
They're not the only wholesaler group giving money to defeat legalization, The Intercept wrote. In Arizona, where recreational marijuana has a good chance of passing this November, the state's Wine and Spirits Wholesale Association donated $10,000 to a group opposing legalization.
"HUGE COMPETITION" FOR SABMILLER'S CENTRAL AND EUROPEAN ASSETS, SAYS BLOOMBERG
Anheuser-Busch InBev has found suitors for nearly all of the SABMiller units it's decided to dispose of, except for one.
$6 BILLION PRICE TAG. SABMiller's central and eastern European assets, valued at about $6 billion, are still up for the taking and a sales process for the operations is expected to start next month after MegaBrew closes (October 10).
Where those brands will end up is anyone's guess, per recent Bloomberg report.
A WHOLE LOT OF INTEREST. "The competition will be huge," said Duncan Fox, a London-based analyst at Bloomberg Intelligence. "So many names seem to be interested in these assets," added Duncan.
Indeed, there are at least two brewers in the mix and a gang of private equity bidders, per sources familiar with the matter.
ASAHI AND CHINA RESOURCES COMING BACK FOR SECONDS? The two brewers reportedly in the running are China Resources Beer Holdings Co. and Asahi Group holdings. Both brewers have already picked up a divested asset from ABI. Recall, China Resources agreed to buy out SABMiller's 49% stake in the Snow beer venture for $1.6 billion and Asahi picked up the Peroni, Grolsch and Meantime brands for a cool $2.9 billion.
PRIVATE EQUITY IN THE MIX. The financial bidders, according to the sources, include Swiss investment group Jacobs Holding AG, Poland's Kulczyk Investments SA and CVC Capital Partners.
KKR & Co., Advent International Corp. and Mid Europa Partners could also throw out a bid, the sources said.
ONE TRUTH SQUADDER in the chain game pointed out another problem with retailers moving toward doored coolers. "Many retailers support the [open] coolers with small displays at the cooler that assist in merchandising during the day. When you place the door at the cooler that display goes away, so I think your 1-3% decline in sales [for doored coolers] is optimistic at best."
Until tomorrow, Harry
"I say that good painters imitated nature; but that bad ones vomited it." - Miguel de Cervantes
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