Jefferies Echoes Cramer’s Views on the Cannabis Beverage Market

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Feb. 27 2019, Published 6:39 p.m. ET

Recurring theme

Jim Cramer has mentioned that alcoholic beverage companies are at risk due to growth in the cannabis sector (MJ).

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Jefferies echoed Cramer’s view

On February 25, another investment firm initiated its coverage on cannabis stocks including Aurora Cannabis (ACB), CannTrust, Canopy Growth (WEED), Green Organic Dutchmen (TGODF), and Emerald Health (EMHTF). Jefferies stated that existing alcohol companies could be at risk due to growth in the cannabis market. Jefferies echoed Cramer’s view on the future of alcoholic beverage companies.

The underlying assumption is that conventional alcoholic beverage consumers would switch to the cannabis-infused beverage. The assumption might seem like a stretch and might not happen in the short term. A gradual shift in the consumer trend towards cannabis-infused drinks could chip away the market for alcoholic beverage players.

There are several other hurdles for the infused-beverage market to cross before it takes on the alcoholic beverage market. In a market like the US, cannabis is still illegal at a federal level, which pushes the prospects for infused drinks into the future. In Canada, infused beverages aren’t legal despite recreational cannabis getting a nod a the federal level.

Next, we’ll discuss what Cramer didn’t mention about Canopy Growth.

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