Winning approval to expand access of recreational marijuana may be easy, but governing it is certainly harder. Folks in Denver now very much in the weeds of negotiating measure passed by voters last fall to allow businesses to apply for permits that would allow personal cannabis use on their premises. It highlights both broader regulatory similarities to alcohol policy and underlying questions about the interactions between cannabis and alcohol. Ballot initiative passed in Nov with 53.6% approval creates 4-yr pilot program for new social-use permits. Those permits would require businesses to set-off designated areas where only 21+ adults could enter and use their own marijuana, according to Denver Post report. But group charged with recommending more specific rules for these permits to city officials is having a tough time finding consensus, as it’s filled with folks who fought on both sides of debate over last fall’s ballot initiative. Complicating matters: Colorado Liquor Enforcement Division issued rule barring any businesses with a liquor license from applying for one of these permits. Then early last month, leader of campaign in favor of permits, a marijuana entrepreneur and other initiative backers filed suit against state challenging CLED’s rule.

The complications are many and tangled even before considering suit, but boil down to fairly expected disagreements. Committee (and community) members who fought initiative want stricter limits on permits and largely don’t like suit filed against the state. Those who fought for initiative concerned “that too many changes could make the new law unrecognizable to voters,” as Post wrote. Key to suit and further disagreements: entertainment and music venues in the city. “The intent of the initiative was clearly to keep places like entertainment and music venues in mind,” committee member and one of plaintiffs in suit, Emmett Reistroffer of Denver Relief Consulting told the paper. Folks already smoke in those spots. But they also have liquor licenses. “This doesn’t necessarily mean they are going to be serving liquor at the same time as cannabis,” he noted, as “they could have a special event for cannabis.” Permit rules for the city could spell out that kind of limitation. But that’s off the table with CLED rule, he argues.

Of course, uncertainty about how White House and new administration will continue to approach legalized recreational cannabis complicates matters for the city even further, as Post notes. And uncertainty may be the name of the game for some time. Because although it’s already happening, “no one knows the best way to tax or regulate cannabis,” as RAND Drug Policy Research Center’s Dr. Beau Kilmer wrote for essay in recent edition of New England Journal of Medicine. In his view, that suggests “creating flexible rules would make it easier to make midcourse corrections and incorporate new research and other insights into policies.” That’s clearly way Denver’s approaching this issue. But process of getting there and fallout once it does will involve plenty more time pushing through thickets.

With the winds at its back, Constellation is upping its mktg game again in 2017, increasing overall spend, bringing more TV and digital thruout its portfolio, increasing focus on innovations, and looking for more sponsorship oppys, co highlighted at its annual distrib meeting this week.  Indeed, all brand families will receive 40+ weeks of TV ads.  Co now feels that innovation will play “a very critical role going forward for us,” after focusing more on operational side of biz these last couple yrs, said CMO Jim Sabia.  Constellation is now “allowed to innovate,” and is “not going to wait for our brands to slow down,” but rather “test and learn new ideas from a position of strength.”  And sponsorship piece is still “pretty new,” Jim acknowledged.  In past yr, co’s become exclusive import sponsor for LA Rams, Barclays Center, Texas Longhorns and Chicago White Sox and it’s “looking” for “more and more opportunities to do this.”

Modelo Media Spend +30%; Building on “Fighting Spirit” Campaign; New Chelada Flavor That includes building upon natl Modelo TV campaign with handful of new spots featuring various Hispanic Americans that embody the “fighting spirit” as well as a product/ingredients-focused 15-second spot that features Modelo Especial and Modelo Negra separately.  Modelo brewmaster, an astronaut, former pro-football tight end Tony Gonzalez and a US army vet featured in ads at different times thruout the yr.  Brand will get additional 6 weeks of TV, so ads will air from Mar - Dec.  Then too, co will add new Tamarindo Picante Chelada, launch new Modelo Especial 18pk bottles in Aug, and 3pks of 24oz cans of Chelada this year.  Altogether, Constellation’s upping media spend by 30% for its fast growing brand.  While current goal is to surpass 100 mil cases, co believes 100 mil “will turn into 150 million” and there’s “no reason it would stop from there,” said brand vp Ann Legan. 

Corona Spend +11%; Cans, Sports, Limes Highlighted in Ads; Premier & Familiar Corona family’s getting another 11% increase in natl media spend on top of double digit increases over the last 5 yrs, vp of brand mktg, John Alvarado highlighted.  Corona Extra will showcase “lime drop” in one new spot and is “building an entire program around Corona summer vibes” including limited edition summer cans with beach graphic (12oz, 16oz and 24oz).  Indeed, cans doubled from 3% to 6% of total Corona biz, now with 34% ACV distribution.  So co will increase investment in cans to $30 mil this year, up from $25 mil in 2015 and $27 mil last year.  Notably, this year will mark Corona’s “biggest promotion ever behind [American] Football,” adding several new spots with former coach and current broadcaster John Gruden.  And it’ll continue to invest heavily behind boxing as well as soccer and NBA among others.  Corona Light will get two new spots with same “Light Cerveza” tagline for 40 wks and refreshed packaging.  Recall, co’s testing Mich Ultra fighter, Corona Premier, in select mkts and will make 12oz brown bottles of Corona, dubbed Corona Familiar available in 6 and 12pks with yellow/gold and black label.  Corona Premier was put together in just 7 mos after it was conceptualized, with CSO Bill Renspie “pushing us,” Jim Sabia explained.  Co lookin' for Premier to "complement" the portfolio and "advertising is going to be skewed against an older consumer" in attempt to further separate it from Extra and Light. 

Pacifico Launching 12oz Cans; Natl “Aspirations” Starting in 2018 Constellation starting to “think and act differently” about Pacifico in order to capture perceived growth oppy to eventually become next 100 mil case brand.  That’s still a long ways away, but lots to build upon following strong 2016, up 17.6% to almost 8 mil cases (4.5 mil in CA alone, and still up double-digits there).  Pacifico will move into 12oz cans for first time and “feature cans heavily” in 2 new TV spots for 14 states (added TX) that will run for 44 wks thru Dec, ultimately increasing spend by 65%, brand director Matt Escalante shared.  And by 2018, Pacifico will take cans and ads natl.  Indeed, co plans to “push the brand like never before.”  Keep in mind, Pacifico actually highest velocity draft brand within Constellation’s portfolio as well.  And execs several times referenced that Pacifico capable of drawing more general mkt consumers than most of its brands.  

Victoria Bringing Back Gregorio for Natl Spanish TV Campaign; New 32oz Bottle Despite Victoria coming off down year in 2016 after cutting out draft SKUs, “we can turn this into a huge brand,” brand director Greg Gallagher declared.  It sold 2.6 mil cases last year, which is about the same size Modelo was in 1997, he shared.  And “no beer is more authentically Mexican than Victoria,” the original Mexican brew.  So after gaining “momentum” in latter half of last year, and particularly gaining traction in TX (depletions +30%), Victoria will bring back natl Spanish language TV campaign with Gregorio from Mar - Dec and offer new 32oz bottle (already depleted more than 60K cases since Jan launch).

With the winds at its back, Constellation is upping its mktg game again in 2017, increasing overall spend, bringing more TV and digital thruout its portfolio, increasing focus on innovations, and looking for more sponsorship oppys, co highlighted at its annual distrib meeting this week.  Indeed, all brand families will receive 40+ weeks of TV ads.  Co now feels that innovation will play “a very critical role going forward for us,” after focusing more on operational side of biz these last couple yrs, said CMO Jim Sabia.  Constellation is now “allowed to innovate,” and is “not going to wait for our brands to slow down,” but rather “test and learn new ideas from a position of strength.”  And sponsorship piece is still “pretty new,” Jim acknowledged.  In past yr, co’s become exclusive import sponsor for LA Rams, Barclays Center, Texas Longhorns and Chicago White Sox and it’s “looking” for “more and more opportunities to do this.”

Modelo Media Spend +30%; Building on “Fighting Spirit” Campaign; New Chelada Flavor That includes building upon natl Modelo TV campaign with handful of new spots featuring various Hispanic Americans that embody the “fighting spirit” as well as a product/ingredients-focused 15-second spot that features Modelo Especial and Modelo Negra separately.  Modelo brewmaster, an astronaut, former pro-football tight end Tony Gonzalez and a US army vet featured in ads at different times thruout the yr.  Brand will get additional 6 weeks of TV, so ads will air from Mar - Dec.  Then too, co will add new Tamarindo Picante Chelada, launch new Modelo Especial 18pk bottles in Aug, and 3pks of 24oz cans of Chelada this year.  Altogether, Constellation’s upping media spend by 30% for its fast growing brand.  While current goal is to surpass 100 mil cases, co believes 100 mil “will turn into 150 million” and there’s “no reason it would stop from there,” said brand vp Ann Legan. 

Corona Spend +11%; Cans, Sports, Limes Highlighted in Ads; Premier & Familiar Corona family’s getting another 11% increase in natl media spend on top of double digit increases over the last 5 yrs, vp of brand mktg, John Alvarado highlighted.  Corona Extra will showcase “lime drop” in one new spot and is “building an entire program around Corona summer vibes” including limited edition summer cans with beach graphic (12oz, 16oz and 24oz).  Indeed, cans doubled from 3% to 6% of total Corona biz, now with 34% ACV distribution.  So co will increase investment in cans to $30 mil this year, up from $25 mil in 2015 and $27 mil last year.  Notably, this year will mark Corona’s “biggest promotion ever behind [American] Football,” adding several new spots with former coach and current broadcaster John Gruden.  And it’ll continue to invest heavily behind boxing as well as soccer and NBA among others.  Corona Light will get two new spots with same “Light Cerveza” tagline for 40 wks and refreshed packaging.  Recall, co’s testing Mich Ultra fighter, Corona Premier, in select mkts and will make 12oz brown bottles of Corona, dubbed Corona Familiar available in 6 and 12pks with yellow/gold and black label.  Corona Premier was put together in just 7 mos after it was conceptualized, with CSO Bill Renspie “pushing us,” Jim Sabia explained.  Co lookin' for Premier to "complement" the portfolio and "advertising is going to be skewed against an older consumer" in attempt to further separate it from Extra and Light. 

Pacifico Launching 12oz Cans; Natl “Aspirations” Starting in 2018 Constellation starting to “think and act differently” about Pacifico in order to capture perceived growth oppy to eventually become next 100 mil case brand.  That’s still a long ways away, but lots to build upon following strong 2016, up 17.6% to almost 8 mil cases (4.5 mil in CA alone, and still up double-digits there).  Pacifico will move into 12oz cans for first time and “feature cans heavily” in 2 new TV spots for 14 states (added TX) that will run for 44 wks thru Dec, ultimately increasing spend by 65%, brand director Matt Escalante shared.  And by 2018, Pacifico will take cans and ads natl.  Indeed, co plans to “push the brand like never before.”  Keep in mind, Pacifico actually highest velocity draft brand within Constellation’s portfolio as well.  And execs several times referenced that Pacifico capable of drawing more general mkt consumers than most of its brands.  

Victoria Bringing Back Gregorio for Natl Spanish TV Campaign; New 32oz Bottle Despite Victoria coming off down year in 2016 after cutting out draft SKUs, “we can turn this into a huge brand,” brand director Greg Gallagher declared.  It sold 2.6 mil cases last year, which is about the same size Modelo was in 1997, he shared.  And “no beer is more authentically Mexican than Victoria,” the original Mexican brew.  So after gaining “momentum” in latter half of last year, and particularly gaining traction in TX (depletions +30%), Victoria will bring back natl Spanish language TV campaign with Gregorio from Mar - Dec and offer new 32oz bottle (already depleted more than 60K cases since Jan launch).

Constellation Brands Beer Division held its distrib conference dubbed Gold Network Summit for East and West this week in Dallas. Constellation expects to grow its beer biz by over 60 mil cases over next 3 yrs, capturing at least half of high end growth of 128 mil cases, prexy Paul Hetterich told distribs.  And the high end (defined as over $25 per case at retail) will soon be over half of beer industry $$.  Constellation betting big that these trends will continue (see below plus more and different details in BMI). Constellation “contributing” 25% of total bev alc growth in IRI, around $600 mil, ceo Rob Sands told distribs.  That’s more than 3x as much growth as #2 contributor Gallo.  Alc bevs are retailers’ “most important and profitable category” so “you can’t make this *#?!  up,” he added.  “You can’t have a better story to tell to retailers.”   

Even while distrib inventory levels “relatively high” at end of Dec 2016, Jan taxpaid shipments by domestic brewers up 260K bbls, 2%, estimates Beer Inst economist Michael Uhrich.  Jan was easy comp: goin’ against a -2% last yr.  And Jan 2017 had one more selling day, Michael pointed out.  On shipments-day adjusted basis, taxpaids down 2.6%, he figures.  Still, up is up and we can use some good news, especially as scans continue soft and industry lost Leap Day in Feb.   

We erred in stating AB will have to pay “stayed” $200K of agreed-upon $400K settlement with Calif ABC over tied house allegations (see this morning’s Express) after 3 yrs.  AB will not have to pay that $200K, as long as commitments met and no further violations by branches or AB.

Also, we have this statement from AB: "In mid-2016 we approached the ABC after an internal review of our equipment leasing in California. We recently reached an agreement that addresses the findings of the review through several commitments, including enhanced employee training and setting up a system to manage the equipment lease process and payments that is independent from our sales operations. We take trade practices compliance very seriously and are pleased to have this matter resolved to allow us to move forward."