After rumors raced through the industry, Ben Kovler, CEO of Chicago-based Green Thumb Industries (GTI) (CSE: GTII) (OTCQX: GTBIF), officially confirmed that he sent a letter to the chairman of  The Boston Beer Company (NYSE: SAMS), Jim Koch, outlining the potential benefits of joining forces.

In the letter, which was made public on X Wednesday, Kovler pitched a vision for the combined company to create a “powerhouse of brands” that would cater to evolving consumer preferences, particularly as younger consumers drink less alcohol. He also noted that the merger would allow GTI to trade on a major U.S. stock exchange; the company currently trades on the U.S. Over-the-Counter markets and the Canadian Securities Exchange.

Kovler proposed that the combined entity would be well-positioned to innovate in established cannabis product formats and pursue further mergers and acquisitions. He also suggested that GTI could make a superior offer to Boston Beer shareholders that other rumored proposals.

The situation wasn’t entirely clear up until now, with a representative for GTI earlier this week stating that the company does not comment on market rumors. Boston Beer It has not publicly commented on the proposal, nor has it responded to Green Market Report’s requests for comment.

Stock prices for Green Thumb Industries posted steady gains since the letter was leaked, going from $11.59 on Tuesday morning to a peak of $12.40 Wednesday morning. Boston Beer’s stock initially declined, however, it reset to just above the price it traded at at close on Tuesday.

As of Wednesday, GTI had a market capitalization of approximately $2.89 billion, while Boston Beer’s market capitalization was around $3.52 billion.

Alcohol companies have already been investing in the cannabis industry, such as Constellation Brands (NYSE: STZ), which made a $4 billion investment in Canadian grower Canopy Growth (NASDAQ: CGC). However, Constellation has recently taken steps to distance itself from the deal after incurring financial losses, which highlights the continued challenges for the cannabis industry.

GTI reported revenue of $1.05 billion in 2023, according to the letter. The company currently operates in 15 U.S. markets, including Illinois, Pennsylvania, and Florida.

Despite growing legalization of marijuana at the state level, cannabis remains illegal under federal law, which restricts the ability of U.S. cannabis companies to list on major exchanges like the New York Stock Exchange and Nasdaq. Many are convinced rescheduling wouldn’t even give up-listing to a major exchange a fighting chance.

A merger between GTI and Boston Beer would likely face significant regulatory challenges, given the patchwork landscape of state and federal laws governing the cannabis and alcohol industries. The deal would also require approval from both companies’ shareholders. Additionally, Boston Beer already has a presence in the cannabis industry with its THC-infused brand TeaPot.

Kovler’s letter touted growth of the U.S. cannabis market and suggested federal legalization is inevitable. He also compared the situation to the end of alcohol prohibition, which fueled the rise of brands like Jim Beam and Jack Daniel’s.

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