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Legal cannabis — threat or opportunity for the alcoholic drinks industry?

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Recreational cannabis use becomes legal this month in Canada for the first time.

Canada is set to become the first of the G20 countries to fully legalise cannabis for recreational use. On On 17 October 2018. The country will join Uruguay, Georgia and nine states in the US where recreational cannabis is already legal. As the floodgates of legalisation are poised to open, legal cannabis is threatening to become the biggest disruptor of the alcohol industry since Prohibition.

‘Legal Cannabis — Threat or Opportunity for The Alcoholic Drinks Industry?’ is a Wonderworks trend report that covers the key drivers behind growth of legal cannabis and attempts to grasp its potential impact on the alcoholic drinks industry.

The primary use of cannabis is linked with moments of indulgence, relaxation and socialising – some of the key needs that have traditionally been met by beer, wine and spirits. This is the fundamental reason why cannabis can act as a substitute in the marketplace for certain types of alcohol, such as wine or beer.

The good news for the drinks industry is that even though the bulk of cannabis is consumed via smoking, THC and CBD cannabis extracts can be added to drinks of all kinds, opening the door to a new world of flavours and occasions.

The report provides a snapshot of innovative cannabis drinks brands that may give us a glimpse of the future that is potentially approaching faster than one can learn to say ‘tetrahydrocannabinol’. The report also offers Wonderworks’ opinion on what to make of this trend and how should marketers respond.

Key take outs:

  • Cannabis is increasingly gaining public support. Data from US and UK show that support for legal cannabis has never been higher, especially among the youth.
  • Legal Cannabis is coming. The legal status of cannabis around the world is a complex topic but one thing is sure – Western governments are increasingly taking a softer stance.
  • Cannabis can compete with alcoholic drinks. Growing body of evidence show that legal cannabis can compete with alcoholic drinks and cause genuine disruption.
  • Cannabis legislation and product innovation matter. The pioneering legislative work of Washington D.C. and Colorado show that a single legislative decision on cannabis can have swift consequences. Start paying attention to avoid surprises.
  • Understanding why consumers choose cannabis is key to product innovation. The perception of cannabis as a drug used only by social rebels and the lower classes is no longer true. Gain insight into the category needs to unlock large market opportunities.

Drinks brands will need to re-examine the value they provide to defend their growth in legal cannabis markets. Drinks culture is not going away any time soon – but it will need to learn how to coexist with another alternative at the table.

Ivo Majors is a planner at Wonderworks Communications

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