The fast-growing legal cannabis industry is attracting interest from many other market sectors in recent years. In addition to capital investments from the tech sector, the wine industry has become especially prominent in the cannabis market, looking to unlock new revenue streams by partnering with cannabis firms in the United States and Canada. Of particular note is interest in the recreational cannabis sector, which is poised for significant growth in the coming years.
Wine Industry Interest
Once seen as the “enemy” of the cannabis industry due to fierce competition for customers, alcohol producers have expressed a deep desire to join forces with cannabis producers and retailers. For marijuana businesses, wine companies represent a number of unique business opportunities, including that of added legitimacy. It is not only the winemakers themselves that have begun to pursue entry into the cannabis market, but a wide range of wine-centric business operations and professional staff, including:
- Compliance specialists
- Packaging and labeling concerns
- Marketing firms
- Legal professionals
- Finance specialists
On its surface, this potential partnership between marijuana and wine companies seems unusual, but it begins to make sense when one realizes that the two markets are very similar in many ways, especially in legal compliance, marketing, and financing. For members of the wine industry, entrance into the marijuana market is a logical step and an easy transition for those firms that recognize the similarities in operations and in customer base.
Spurring Partnerships Between Wine and Cannabis
The interest coming in from wine-centric businesses is a relatively new phenomenon. In 2016, a discussion session at that year’s Wine Industry Network expo featured the topic of marijuana legalization and how that might affect wine sales. Analysts noted that the session was overwhelmingly popular with event attendees, and encouraged the Network to carry on the conversation in another one-day conference.
In August, 2107, the Wine Industry Network hosted a symposium in Santa Rosa, California. It brought together experts from the wine and marijuana industries and covered topics like regulatory compliance, tourism, cultivation, licensing, and many other aspects that the two business sectors shared. Like the session at the 2016 industry conference, the 2017 symposium was met with enthusiasm by business owners, industry personnel, and ancillary operations, packing the meeting rooms of the event.
Industry analysts from both sectors agreed that cannabis has become more palatable to established wine and spirits firms due to the fact that a promised threat by the federal government to crack down on legal cannabis businesses has not yet caused issues. On the state level, marijuana has gained legality; 29 states and the District of Columbia have legislated legal medical marijuana, while nine states and D.C. have also passed recreational cannabis legalization laws.
Technology and Operations Outreach to the Cannabis Industry
As mentioned earlier, both the wine and cannabis industries share many similarities. Both must adhere to strict regulatory compliance. Both depend on the successful cultivation and harvest of living plant material to manufacture their end products. And, both have a particular focus on hygiene and contamination control in their cultivation and production operations. Because of these similarities, there is significant overlap in many aspects of operations, with technology and packaging/labeling operations representing the potential for unique partnerships between industries.
Companies that manufacture contamination control solutions have found that the same technology can be applied to cannabis production facilities. An ozone-generation system that was developed for the wine, food, and pharmaceuticals sectors has found a home in cannabis production, particularly in companies that produce edibles and oral tinctures, two segments of the marijuana industry that are highly-regulated in terms of food safety standards. Cleanliness and cross-contamination protection technologies developed for agricultural concerns are also a ready match for cannabis cultivation; with much of commercial cannabis produced in indoor grow facilities, the spread of pathogens or molds can wipe out entire harvests. Cannabis operations depend on clean, healthy facilities to ensure success, and they have adopted technologies with the help of companies that had served the wine industry for decades.
In packaging and labeling operations, overlap between the wine industry and the nascent marijuana market presents new opportunities. A study conducted by the wine industry suggested that up to 70% of all wine purchases were influenced by the design and appearance of bottle labeling. Wine labeling specialists know that labels give companies the opportunity to educated consumers on the specific characteristics of the wine and its crafting. This is also the case in the cannabis industry, where there may be hundreds of different marijuana strains and cannabis-infused products to choose from. Marijuana markets looking to differentiate themselves from competitors know that visual marketing in the form of stylish and informative labels can spell the difference between failure and success.
Wine labeling operations must also adhere to established standards, and the same factors apply in several cannabis-legal states, where all labeling must contain specific information for consumers. Marijuana producers and retailers see wine labeling as a path forward, applying the lessons learned by the wine industry over decades and ushering in new partnerships between that industry and the cannabis market.
Wine vs. Cannabis: Friend or Foe?
Not all wine business players are sharing excitement about potential partnerships with cannabis producers. While many wine industry veterans see the cannabis industry as an allied market ready for exploration and partnership, others approach the cannabis industry with trepidation. Federal regulations and the specter of federal crackdowns have had a chilling effect on some partnerships.
Distrust among cannabis businesses is the most prominent factor influencing partnerships between industries. Due to the sensitive nature of cannabis production and the strict regulations surrounding its cultivation, retail, and distribution, many marijuana firms are reluctant to trust outsiders. Once they have learned more about wine industry operations, however, trust is built and both sectors can enter into lucrative partnerships. Industry analysts note that the similarities between markets are just too sweet to ignore. If both sectors understand that by forging partnerships, the combined forces can expect new revenue streams and a more engaged customer base.