Molson Coors Enters The Cannabis Game

The big news for the week was undoubtedly Molson Coors Brewing Company's announcement that they had entered into a definitive agreement to form a joint venture with The Hydropothecary Corporation (HEXO) to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalisation. The deal is expected to close before September 30th.

Who are Molson Coors?

Molson Coors Canada is the Canadian business unit of Molson Coors Brewing Company. Headquartered in Toronto, it is North America's oldest brewer and Canada's second largest brewer by volume, selling approximately one-third of the total Canadian beer market in 2017.

Its portfolio consists of leading brands in all major product and price segments, including global priority brands Belgian Moon, Coors Banquet, and Coors Light, regional champion Molson Canadian, and other key owned brands, including Creemore Springs, Granville Island, Molson Dry, Molson Export, Old Style Pilsner, and Rickard's, and strategic distribution partnerships, including those with Heineken.

The joint venture will be structured as a standalone start-up company with its own board of directors and an independent management team. Molson Coors Canada will have a 57.5% controlling interest in the JV, with The Hydropothecary Corp having the remaining ownership interest. The new company will combine the proven beverage experience of Canada's leading brewer with a recognised innovator in the fast-growing cannabis sector to explore the highly anticipated consumable cannabis market, which is expected to be legally permissible in Canada in 2019.

"Canada is breaking new ground in the cannabis sector and, as one of the country's leading beverage companies, Molson Coors Canada has a unique opportunity to participate in this exciting and rapidly expanding consumer segment. This new venture is consistent with our growth strategy and our commitment to being First Choice for Consumers and Customers by ensuring that Canadians have access to high-quality products that meet their evolving drinking preferences. 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

This continues a trend of alcohol companies entering the cannabis industry. In October 2017, Constellation Brands bought into Canopy Growth (which subsequently sent the industry  – and all stock – on a hyperbolic growth streak), and Ontario-based MedReleaf – now part of Aurora Cannabis – teamed up with Toronto's Amsterdam Brewing Co.. to create a "cannabis-inspired beer."

Alcohol purveyors are shifting from a defensive posture against the looming wave of cannabis legalisation toward a belief that legalisation can be an opportunity for product diversification. We expect to see more of these deals moving forward. As always, we will keep you posted.

And they told you money doesn't grow on trees.

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Mark Bernberg
Mark Bernberg

Mark Bernberg is a long-time cannabis investing enthusiast and founder of The Green Fund, Asia Pacific's preeminent media house, positioned at the forefront of the global cannabis industry.

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