GREATLY INCREASES CHANCES THAT CONGRESS WILL ACT.

in states that had legalized medical marijuana.

“Canada’s going to be just a wonderful test market for the U.S. to see how it all plays out,” said Agnese, referring to the upcoming federal legalization of recreational marijuana use in Canada.

A number of large alcohol companies are already watching cannabis closely.

“Although the ultimate impact is currently unknown, the emergence of legal cannabis in certain U.S. states and Canada may result in a shift of discre- tionary income away from our products or a change in consumer preferences away from beer,” wrote The Molson Coors Brewing Co. in its most recent filing with the U.S. Securities and Exchange Commission. Both Boston Beer and Brown-Forman have likewise said they’re monitoring cannabis competition.

“The question is … once there’s clarity around it becoming legalized, how significantly does the alcohol industry get involved with the cannabis industry? Do they participate through M and A or develop their own infused beverages?” said Agnese.

In the fall, Constellation Brands Inc., which owns brands like Corona, took the plunge, investing $245-million in Canopy Growth Corp. The two companies are now working together to develop cannabis-infused beverages that could be legal in Canada as early as 2019.

“Constellation had a Canadian wine business that they sold recently, and they’re more North American and local-market focused (than companies like Anheuser-Busch). They’re smaller, I think more mobile, and probably better-positioned and able to identify early trends,” said Agnese.

For the big alcohol players waiting for a change in U.S. federal law before investing in cannabis products, the shift could come sooner rather than later, he said.

Counter-intuitive as it sounds, U.S. Attorney General Jeff Sessions’ decision to repeal the previous administration’s Cole Memorandum — which had reduced federal enforcement of cannabis offences — could prove a catalyst for change, said Agnese.

“The revocation increases the possibility that one of the 93 U.S. attorneys will act against an entity in a state that has legalized cannabis. Due to strong bipartisan voter support for cannabis legalization ... we believe any action taken greatly increases the chances that Congress will act to ease cannabis regulations,” Agnese wrote in his note.