Molson Coors bets on cannabis industry with Canadian joint venture

Molson Coors Brewing Co. is teaming up with a cannabis firm in Canada as beer corporations look to fend off competitors from North America’s rising marijuana market.

Molson stated Wednesday it’ll type a joint venture with Quebec-based licensed producer The Hydropothecary Corp. to develop nonalcoholic, cannabis-infused drinks for the Canadian market following legalization.

Molson Coors Canada may have a 57.5% controlling curiosity within the joint venture, and Hydropothecary will management the remaining.

It is the newest sign that the beer industry is worried that authorized leisure marijuana will minimize into its income and follows strikes by Constellation Brands, which owns Corona beer, and Heineken.

Alcohol purveyors are shifting from a defensive posture towards the looming wave of cannabis legalization towards a perception that legalization may be a chance for product diversification, stated Alex Shiff, senior marketing consultant for Navigator, a communications agency in Vancouver, British Columbia.

As a part of the settlement, Molson has the choice to take a 5% possession stake within the Quebec cultivator if Hydropothecary’s inventory hits 6 Canadian dollars ($four.61).

Government laws on infused cannabis merchandise, together with drinks and edibles, will turn out to be clear in July 2019 on the earliest.

Khurram Malik, a associate with Toronto-based monetary advisory agency Jacob Capital Management, stated partnering with an organization that has the capability to do analysis and improvement, like Molson, is vital.

“To develop a beverage from scratch which is actually tasty requires a lot of product development muscle, so for an LP to do it on its own would be tricky,” he stated.

Matt Bottomley, an analyst with Toronto-based funding agency Canaccord Genuity, described the partnership as a “perfect fit.”

“You have all these cannabis companies that are really by stifled by regulations,” he stated.

“This deal gives Hydropothecary the ability to leverage Molson’s segmented consumer insights, infrastructure, distribution and marketing muscle.”

Some analysts famous the deal doesn’t contain Molson investing immediately in Hydropothecary.

“I never bought the ‘beer company buys out a whole cannabis LP’ thesis,” Chris Damas, editor of Barrie, Ontario-based BCMI Cannabis Report, wrote in a notice to shoppers. “Why buy the cow and put shareholders at risk when you can milk any IP the JV can produce?”

It’s a sensible transfer, in response to Malik. “A joint venture gives them greater flexibility to work with other people down the road.”

Other cannabis and alcohol corporations have additionally been teaming up.

Canopy Growth, a licensed cannabis producer in Smiths Falls, Ontario, is working with Constellation Brands on cannabis-infused drinks.

Ontario-based MedReleaf – now a part of Aurora Cannabis – teamed up with Toronto’s Amsterdam Brewing Co.. to create a “cannabis-inspired beer.”

In addition, Heineken’s Lagunitas Brewing, a craft beer maker based mostly in California, this week launched a THC-infused glowing water.

Matt Lamers might be reached at [email protected]

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