From lager to leaf: Behind Green Thumb’s bid for Boston Beer merger

A proposed merger between Sam Adams brewer Boston Beer and pot producer Green Thumb could create a future cannabis beverage endeavor as alcohol consumption declines.

In a letter to Boston Beer founder and chairman Jim Koch, the CEO of cannabis operator Green Thumb Industries Ben Kovler asked the beer giant to consider merging with the cannabis producer to create a “powerhouse of brands.” 

The cannabis executive stressed that because young consumers are drinking less alcohol, and the cannabis industry is booming, investing in cannabis would be a beneficial move for Boston Beer in the future.

“The equity combination with a U.S. listing and access to capital sets us both up for a fun future — and one that is bright for America. Our future-back analysis shows Americans with more well-being and less booze,” Kovler said in the letter.

Erwin Henriquez, a cannabis industry analyst at Euromonitor, said the move could be beneficial in the long-term for both companies, but still poses a risk because of the lack of federal legalization of weed.

“There is an obvious appetite to play in the beverage space, especially to capture consumers looking for alcohol alternatives. However, cannabis beverages face big challenges in dispensaries and currently are less than 2% of the channel sales,” Henriquez said. “A partnership in the space could imbue the category with some brand/company recognition that will boost the format’s sales.”

Boston Beer is not a stranger to the cannabis space, first creating a subsidiary to oversee research THC beverages in 2021. In 2022, the brewer debuted a cannabis-infused iced tea brand, TeaPot.

Currently, Green Thumb is not listed on a U.S. stock exchange. The company’s products are available in medicinal and recreational capacities where it is legal. Incredibles, its THC-infused treats brand, has grown its presence in the space, including a collaboration with New York City’s Magnolia Bakery on chocolate bars last year.

Alcohol companies have made strategic investments in the cannabis space over the past decade, following the growth in consumption of THC beverages. But legislative hurdles have prevented many beverage companies from gaining a strong foothold in the space, as the sale of cannabis remains illegal on a federal level. While the Biden administration proposed a rescheduling of cannabis last month, experts believe more regulation remains for THC beverages to achieve a national footprint.

Constellation Brands invested $4 billion in grower Canopy Growth in 2019, but the promise the alcohol giant saw in cannabis drinks failed to materialize, leading to a $1.1 billion writedown on the investment in October 2022. In April, Constellation withdrew further from Canopy, converting its stake in the company to take a passive role.

Other transactions have emerged between alcohol companies looking to offset some struggling assets and cannabis companies looking for new revenue streams. Beer giant AB InBev sold 8 of its craft beer brands, including Shock Top and Redhook Brewery, to pot producer Tilray last year for an undisclosed sum.

Boston Beer did not respond to a request for comment on the proposed merger at press time.