Molson enters into joint venture to develop cannabis-infused beverages

Molson Coors Canada the business arm of Molson Coors Brewing Co. says it has entered into a joint venture to develop non-alcoholic cannabis-infused beverages

Gatineau's Hydropothecary, Molson Coors launch cannabis drink project

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.

"And so the joint venture's management will really be free to understand consumer preferences and craft a product offering to respond to them".

Hydropothecary would own the rest.

"Canada is breaking new ground in the cannabis sector", said Molson Coors CEO Frederic Landtmeters in a statement.

As part of the agreement, Hydropothecary is going to issue share-purchase warrants to Molson, and both companies hope to close the deal before the end of September.

Molson Coors's move into the cannabis sector comes after rival Constellation Brands, which makes Corona beer, bought a stake in Canadian pot producer Canopy Growth a year ago.

The brewer is the latest to capitalize on Canada's decision to legalize recreational marijuana later in the year, a market industry watchers say could be worth $5 billion to $10 billion.

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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.

"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.

The new company will combine the proven experience of Canada's leading beers with a new innovator in the fast-growing cannabis market. Constellation Brands, the beer giant behind Corona, paid $191 million for a 9.9% stake in Canopy Growth, a Canadian marijuana producer, in October of past year.

Beer makers may be spurred to pursue deals in the cannabis space as research shows alcohol sales have slumped in USA states where marijuana is legal.

HEXO is based in Gatineau, Que., and now has more than 27,8700 square metres (300,000 square feet) of production capacity with an expansion more than three times that size to be completed by the end of the year. According to Yahoo Finance, HEXO closed the day at $4.83 a share, up $0.48 (+11.03%).

Molson Coors Brewing Co Class B (NYSE:TAP) last posted its quarterly earnings data on Wednesday, August 1st.

Revenues for the period ended June 30 slipped to almost US$3.1 billion, slightly below expectations. The company reported $1.88 earnings per share for the quarter, beating the Thomson Reuters' consensus estimate of $1.83 by $0.05.

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