Convenience Store News

MAR 2017

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72 Convenience Store News | MARCH 2017 | WWW.CSNEWS.COM Cigarettes + Cigars + Smokeless + E-Cigs + Other OTP TOBACCO and Oregon. "While these markets have collectively underperformed the overall U.S. beer market over the last two years, the magnitude of the underperformance has increased notably," Azer said. The research shows that mainstream beers are experiencing the biggest drag, while craft is also slowing. Imports look to be the most immune. Moreover, Bloomberg Intelligence's Kenneth Shea recently spoke out on the marijuana industry, saying that legalization of the drug in North America over the next few years could pose a threat to tobacco and alcohol beverage companies because there has been some evidence of a substitution effect. This is even more reason for the convenience store industry to keep a close watch on cannabis trends. THE TRUMP CARD And what about the new administration and its effect on cannabis moving forward? The results of a Jan. 1 report by Marijuana Business Daily, which surveyed "cannabis thought leaders" including consultants, CEOs and three members of Congress, suggest that for the most part, experts all think we will see a continuation of some form of the status quo, according to Editor Chris Walsh. "Maybe there will be some efforts to crack down here and there, but the consensus is that a widespread crack- down will be difficult," he said. Other industry players have gone on record to say they don't think federal legalization of marijuana will move at the same speed as it would have under a Democratic administration. Timothy Taggert, CEO of American Growth Fund Series Two (reportedly the only cannabis mutual fund in the U.S.), believes that under the Trump administra- tion, "at least the medical end of [cannabis] will sur- be just five to seven years down the road for cannabis to be legal in the U.S. Modi cited some state benefits since legalizing mari- juana, such as: • Colorado generated $444 million in tax revenue related to marijuana in 2014 and $60 million through June 2015. • Washington State generated $65 million in mari- juana tax revenue last year. Immediately after the election, Cowen and Co. tobac- co analyst Vivien Azer evaluated cannabis as "an emerg- ing industry" that is "subject to regulatory headwinds." While she noted that more than 50 percent of the popu- lation is in favor of legalization, the fact that only a few states have thus far legalized it for recreational use, and the fact that it remains illegal at the federal level, still makes it "a cautious prospect" in her view. "Looking forward, much work and change still needs to occur in order for this industry to realize its full potential," Azer stated. CORE CATEGORY THREAT Full potential or not, trickle-down changes are starting to take place and affecting core categories in convenience stores. Recent Cowen and Co. research showed that in states where cannabis has been made legal recreationally, the beer mar- ket has been underperforming. More specifically, the equi- ty research com- pany examined Nielsen data on beer cate- gory trends in Colorado, Washington

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