Molson Coors Canada and HEXO Make A Cannabis-Infused Agreement

04 August, 2018, 05:50 | Author: Brooke Harris
  • The Molson Coors brewery in Montreal.
Canadian Press

The deal is to form a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization. The venture will be structured as a standalone company, with an independent board of directors and management team.

Molson Coors Canada will have a 57.5% controlling interest in the JV, with Hydropothecary having the remaining ownership interest.

Hydropothecary would own the rest.

Molson beer, left, and Coors Light beer in 2017.

The deal is expected to close before September 30, just ahead of the proposed legalization of recreational marijuana in Canada.

Market research firm Euromonitor International estimated that the global market for legal and illegal cannabis is about $150 billion, with legal marijuana sales in Canada projected to total $7.5 million and $10.2 billion in the USA this year.

Industry experts have pointed to the stigma of smoking as one reason companies are developing smoke-free ways to consume cannabis once its recreational use is legal in Canada, as of October 17 this year.

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He said the marijuana industry could fuel alcohol's next growth cycle or instead suffocate an industry already on the defensive.

The new company combines Molson's experience in the beverage industry with HEXO's track record for innovation in the cannabis sector.

Last year, Corona beer-maker Constellation Brands Inc became the first major beer and spirits producer to partner with a Canadian marijuana producer, picking up a almost 10 percent stake in Canopy Growth Corp.

Molson Coors' foray into the Canadian cannabis market comes about nine months after Constellation Brands purchased a 9.9 percent stake in another Canadian cannabis company, Canopy Growth Corporation (WEED), for $191 million. It is illegal to infuse cannabis with any sort of alcoholic beverage, hence the non-alcoholic beverage deal. HEXO is the name of a recreational cannabis brand recently launched by Hydropothecary, as well as the company's current ticker symbol on the Toronto Stock Exchange.

Cannabis beverages and edibles aren't expected to become legal until 2019, but pot firms and booze producers and distributors are looking to get ahead of the curve. According to Yahoo Finance, HEXO closed the day at $4.83 a share, up $0.48 (+11.03%). Deprince Race & Zollo Inc. owned approximately 0.14% of Molson Coors Brewing Co Class B worth $20,590,000 at the end of the most recent quarter.

Hunter added: "We were pleased with the sequential improvements in the second quarter for top and bottom line results".

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