Molson announces it's developing non-alcoholic drinks infused with cannabis

Molson announces it's developing non-alcoholic drinks infused with cannabis

According to a Wednesday morning press release, the two companies have agreed to form a new joint venture "to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization", which is planned for October 17.

Molson Coors will have a 57.5% stake in the firm and three board eats whilst Hydropothecary will hold the remaining stake and two board seats.

Hydropothecary would own the rest.

In a statement, Molson Coors President and CEO Frederic Landtmeters said the companies will aim to be a "market leader in offering Canadian consumers new experiences with quality, reliable and consistent non-alcoholic, cannabis-infused beverages".

The joint venture is subject to various approvals conditions and is scheduled to close before September 30.

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 US this year.

"There is a paradigm shift underway and cannabis has the potential to provide answers to the alcoholic drinks industry's existential questions", said Spiros Malandrakis, head of alcoholic drinks at Euromonitor International.

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The regulatory framework around edible and drinkable cannabis products likely won't be in place until 2019, said Molson Coors.

It's the latest sign that beer makers and alcohol brands are pushing into the cannabis industry.

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.

Beer and alcohol companies are circling Canadian marijuana companies amid falling beer consumption and concerns that the buzzy and soon-to-be legal drug could take a further bite out of booze sales.

The Hydropothecary Corporation works in the medical cannabis space in Canada, and while it now operates with 300,000 sq ft of production capacity a 1,000,000 sq ft expansion is set to be complete by the end of the year. Its stock rose about seven per cent to $5.30 in morning trading on the Toronto Stock Exchange after the deal was announced. According to Yahoo Finance, HEXO closed the day at $4.83 a share, up $0.48 (+11.03%).

Revenues for the period ended June 30 slipped to almost US$3.1 billion, slightly below expectations. That was up from US$367.1 million or $1.70 per share in the second quarter of 2017.

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