Canadian brewers can see the righting on the walls. And they don’t like what the writing says.
The lobbying group that represents the Canadian beer industry is urging the federal government to boost the proposed tax rate much higher. Why? Profits.
For years, the clock has been ticking for national legalization of recreational marijuana for our neighbors to the north. And the ticking is expecting to end sometime in July. The resulting explosion is sure to rock the beer business.
“The potential for legal marijuana to cannibalize beer (in Canada) is much more significant compared to the U.S. because of our higher beer taxes and high prices,” Luke Harford, president of Beer Canada, said during a hearing last week before the Standing Committee on Finance. The committee was accepting testimony over Bill C-74.
Beer Canada, the trade group that represents 51 brewers, including global giants such as Labatt, Molson and Moosehead. The lobbyist organization’s members account for nearly all 90 percent) of domestic beer consumed by Canada’s 10 million beer drinkers.
Harford urged the committee to push for a higher tax rate for cannabis sales. “Domestic brewers are concerned that legal recreational marijuana is going to have a negative impact on beer sales, which on a per-capita basis have already declined by 10 percent in the last 10 years,” he said.
“The implication is clear. Low cannabis taxes will increase cannabis sales, while high beer taxes will decrease beer sales.”
Interestingly, Constellation Brands, an adult-beverage behemoth that owns Corona and Robert Mondavi among more than 100 booze brands, made a $190 million (245 million Canadian) investment in Canopy Growth, one of Canada’s largest cannabis companies.
On The Beer Canada website, espouses these principles:
- Beer can be enjoyed as part of a healthy lifestyle
- Beer is an integral part of Canadian culture and heritage
- Beer is an agricultural food product that generates significant economic dividends
- Beer complements food
- Beer is the alcohol beverage of moderation
Simply remove the word “beer” and replace it with “cannabis.” Except for the last one (cannabis is not an alcoholic beverage, but it is a substance of moderation), it is clear that the beer biz has something to worry about.