The JV between Molson Coors Canada and HEXO, a recreational cannabis "sister brand" to The Hydropothecary, a licensed producer and distributor of medical cannabis, will be structured as "a standalone start-up company" led by its own board and management team.
The deal is expected to close before September 30, just ahead of the proposed legalization of recreational marijuana in Canada.
17 legalization date for recreational marijuana creeps closer, ties between pot companies and the alcohol industry seem to be getting stronger. Hydropothecary will own the remaining ownership interest.
He said there are no plans to sell beverages to US states that have legalized cannabis.
Molson Coors sales declines improved slightly in the second quarter of the year but a global volumes drop saw the United States and Canadian brewer pledge to address weakness in its home markets.
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Other alcohol companies have also been circling Canadian marijuana companies amid falling beer consumption in Canada and concerns that the buzzy and soon-to-be legal drug could take a further bite out of booze sales.
St-Louis went on to say that the companies share "a track record of excellent practices, as well as respect for law and regulations", and a relationship built on trust that will develop high-quality, responsible cannabis-infused beverages for Canadians.
In a memo, Euromonitor's head of alcoholic drinks, Spiros Malandrakis, wrote: "There is a paradigm shift underway and cannabis has the potential to provide answers to the alcoholic drinks industry's existential questions".
Recreational marijuana is set to become legal in Canada on October 17, but edible products infused with pot - including beverages - will remain illegal until specific government regulations are rolled out in 2019 at the earliest. "Indeed, our own consumer survey work in Canada, as well as consumer survey work conducted by Deloitte, indicate that only 20% of users regularly consume alcohol when using cannabis".
Canopy Growth Corp. reached a deal last fall with Constellation Brands that saw the alcohol supplier invest $245 million for a 10 per cent stake in Canopy. Molson Coors Brewing Co Class B has a fifty-two week low of $58.75 and a fifty-two week high of $94.02. The company reported $1.88 earnings per share for the quarter, beating the Thomson Reuters' consensus estimate of $1.83 by $0.05.