Wrigley Bets on The Green Rush

Following on from the news that Molson Coors had entered the cannabis industry in a joint venture with The Hydropothecary Company last week, marijuana investments got another shot in the arm this week upon release of the news that William Wrigley Jr. II, became the latest capitalist to invest in the marijuana industry.

The heir and former CEO of The Wrigley Co. chewing gum giant, he amassed his fortune by selling the family business to Mars in 2008 in a $23 billion cash deal, according to Forbes.

The Round

Wrigley led the $65m funding round in medical marijuana firm Surterra Wellness. Based in Georgia and founded in 2014, it has licenses to operate in Florida and Texas. Surterra operates 10 medical marijuana dispensaries and three delivery distribution centres in Florida, supported by over 300,000 sq. ft of cultivation space. In Texas, the firm is currently growing its first crop of low THC (read hemp) that will be available for delivery throughout the state.

With its new injection of cash from the latest investment round (they have now raised over $100m in total), Surterra plans to expand their production capacity in Florida and will pursue joint ventures with other premium cannabis brands. Surterra also announced that Wrigley will join the company's board as chair.

"When I understood the massive benefits [that medicinal marijuana can have on people's lives], it really changed my mind about the industry. You don't see too many opportunities to have that kind of an impact in an industry that is being created from scratch."
— William Wrigley Jr. II

This is not alcohol's first rodeo

I believe we are starting to see a broader interest in the cannabis industry by mainstream businesses.  And last week's entry into the market by Molson Coors was not the first by an alcohol company.  Last October Constellation Brands entered the game with a $200m investment in Canopy Growth. And just recently, Heineken released their own play into the space, with Hi-Fi Hops, a THC based beer.  Sound strange? Well, it's moving off the shelves, and quickly.

That's because these cans of brew contain zero alcohol. Instead of booze, the beer is made with THC, which is the cannabinoid that gets you high. Hoppy high they call it. MedReleaf (now Aurora Cannabis) is coming to the market with a brew called San Rafael '77 (an ode to the place and year that 420 was given life) and others are following suit. But this honestly feels like it is only the start. Indeed, while the US still operates under a federally illegal environment, no real money is going come to the table. But that could change.

Rob Hunt of ConsultCanna said in an interview last year, that the best marijuana stocks won't even exist until the next decade. Big call? Canopy Growth would have something to say about that. Point is that big tobacco, big pharma and the like are ready to pounce but want to see the legal issues surrounding the drug dissipate, especially in the U.S.

However, illegal or not, the fact remains this is the biggest investment opportunity of our time. This is in some ways as big as tech. It's a whole entire other industry, bigger even than beer, and it's just awakening.  It's awakening and it's hungry, and the industry most under threat…

The alcohol industry is facing the greatest change (and challenge) to its existence since the dawning of prohibition. Some will thrive, some will fail. Only time will tell. The real winners are going to be the ones that understand how to take advantage of the oncoming greenrush. The same can be said for investors.  In its review of its 2017 performance, HSBC admitted that it had underperformed as a result of not being exposed to the cannabis industry.

So welcome to the game William Wrigley Jr II. You're not the first, and you most certainly will not be the last.

And they told you money doesn't grow on trees.

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Mark Bernberg
Mark Bernberg

Mark Bernberg is a long-time cannabis investing enthusiast and founder of The Green Fund, Asia Pacific's preeminent media house, positioned at the forefront of the global cannabis industry.

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