Molson Coors Brewing Co. (TAP) is partnering with Hydropothecary Corp. (TSE:HEXO) to develop non-alcoholic, cannabis-infused beverages. The joint venture between the Canadian cannabis products maker and Molson Coors Canada, the company’s Canadian unit, will be structured as a standalone startup company.
Molson Coors President and CEO Frederic Landtmeters said the move is consistent with the company’s growth strategy. He said Molson is “a beer business at our core,” but the new joint venture will help it become a market leader for cannabis-infused drinks in Canada. (See also: 10 Canadian Marijuana Stocks for Your Portfolio.)
This is the second major beer-cannabis partnership in the last year. Last October, Constellation Brands, Inc. (STZ) — a Fortune 500 company that owns brands such as Corona beer, Black Velvet Whisky and Casa Noble tequila — agreed to take a 9.9% stake in Canadian marijuana company Canopy Growth Corp. (TWMJF). The two companies plan to work together to develop and market beverages that will be infused with cannabis. (See also: This Is the First Fortune 500 Marijuana Stock.)
"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,” said Landtmeters in a statement.
Canadian Marijuana Law
Canada has no federal ban on the sale of marijuana. Medical marijuana is legal there. The country voted in June to legalize recreational marijuana, which takes effect Oct. 17. In the U.S., medical marijuana is legal in 30 states and recreational marijuana is legal in 10 states, but U.S. marijuana companies cannot list on U.S. exchanges. (See also: Why U.S. Cannabis Companies Are Listing in Canada.)
Through the terms of the joint venture deal, Hydropothecary will issue warrants to Molson to purchase its shares. The transaction is expected to close before Sept. 30.
“We are excited about this partnership with Molson Coors Canada, an iconic leader in adult beverages, as we embark on the journey of building a brand new market,” said Hypothecary CEO Sébastien St. Louis in a statement.