Canada: Molson Coors Brewing to develop cannabis-infused beverages

Molson Coors Canada, the Canadian business unit of North America’s second largest brewer Molson Coors Brewing Co., is starting a joint venture with Hydropothecary Corp., a medical marijuana company based in Gatineau, Quebec.

Molson and Hydropothecary plan to develop non-alcoholic, cannabis-infused beverages for the Canadian market in anticipation of the legalization of recreational marijuana in Canada on Oct. 17. Still, cannabis-infused edibles and beverages are currently not covered by the law but it is expected that the legalization of these products will follow sometime in 2019.

In the US, federal law in most states prohibits beer to be infused directly with marijuana, which forces brewers to find a workaround. Cannabis-infused beverages contain mostly no alcohol but instead cannabinoid constituents like THC, the chemical in cannabis that produces a buzz, and/or CBD (cannabidiol), that has significant medical benefits, but does not make people feel “stoned”. Therefore cannabis-infused beverages promise intoxication without the alcoholic headache, which makes the category interesting to many beverage companies.

The joint company will be a standalone operation, in which Molson Coors Canada will have a 57.5% controlling interest and three board seats, while Hydropothecary, which will be renamed into Hexo Corp., holds the rest with 2 board seats assigned. As part of the deal, Molson Coors will have the right to purchase 11.5 million shares of the new company at a strike price of C$6 ($4.62) a share, which will be issued as warrants by Hydropothecary. The closing of the transaction is targeted to occur before September 30, 2018.

 “While we remain a beer business at our core, we are excited to create a separate new venture with a trusted partner that will be a market leader in offering Canadian consumers new experiences with quality, reliable and consistent non-alcoholic, cannabis-infused beverages,” Frederic Landtmeters, President and CEO of Molson Coors Canada, was cited in a press release.

Molson Coors is already the second large brewer to enter the market for cannabis-infused beverages. In October 2017, Constellation Brands acquired a 9.9% minority share in the $2 billion Canadian medical marijuana company Canopy Growth, with the option of purchasing additional stakes of the world's largest publicly traded cannabis company in the future. (inside.beer, 30.10.2107).

“We’re obviously trying to get first-mover advantage," Constellation’s CEO Rob Sand said at that time. “Our company’s success is the result of our focus on identifying early stage consumer trends, and this is another step in that direction.”

US market leader Anheuser Busch and its parent company AB InBev, however, have no intention to enter the market at this moment. AB InBev’s CEO Carlos Brito said in an interview in June that “Cannabis is still something that we as a company are trying to learn more about. It’s going to be regulated, it’s going to be commercialised. But, it’s still a very restricted business and, in most places, it’s not legal.”

Especially interesting to Molson Coors is the fact that Keith Villa, who retired from MillerCoors, the US unit of Molson Coors, on Jan. 5 after being 22 years with the company (inside.beer, 6.1.2018) and who is said to be the inventor of Coors Brewing’s craft-like beer Blue Moon, has announced to launch his own cannabis-infused drink through his own Colorado-based firm CERIA Beverages. (inside.beer, 29.3.2018). CERIA, the new product, “will be brewed just like an alcoholic craft beer to maintain its beer taste and aroma, but will then be de-alcoholized prior to the infusion of cannabis,” explains Villa. It will be offered in legalized cannabis states by the end of 2018 in at least three strengths – light, regular, and full-bodied – with a variety of sensations.  Consumers must be a minimum age of 21 and use the product responsibly.

 

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