Molson Coors Canada and The Hydropothecary Company have announced a joint venture to produce non-alcoholic, cannabis-infused beverages to be sold in the Canadian market.
Molson Coors Canada is the Canadian arm of beer giant Molson Coors Brewing Company, and The Hydropothecary Company (HEXO) is one of the leading producers of cannabis in Canada. They have signed a definitive agreement, and will be looking to pursue the venture after the legalization of recreational cannabis in Canada, which is expected to occur in 2019.
The structure of the venture will be as a standalone company, including its own board of directors and an independent management team, according to a post in New Cannabis Ventures. Molson Coors Canada will own 57.5% of the company, and the Hydropothecary Company will have 42.5%, comprising the remaining ownership interest in the company. The details of the transaction, which is expected to close prior to the end of September, have yet to be worked out, but are subject to various conditions, comprising partially of the execution of agreements to include governance, R&D, and supply documents. In addition, the transaction will be subject to the final approval of the Toronto Stock Exchange.
Molson Coors Canada is the country’s leading brewer and has substantial experience in that market, and HEXO is a nationally recognized cannabis company, having brought innovation to the Canadian cannabis market. Molson Coors Canada was responsible for one-third of total Canadian beer sales in 2017, making it Canada’s second largest brewer by volume. HEXO is responsible for serving medical cannabis clients through its Hydropothecary brand, producing and distributing innovative cannabis products. HEXO currently operates over 300,000 sq ft of production capacity, and has plans to expand with another 1,000,000 sq ft set to be finished by the end of 2018.
The two companies released a joint statement, saying:
“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,” said Frederic Landtmeters, President and CEO of Molson Coors Canada. “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. We look forward to partnering with HEXO, a recognized leader in the medical cannabis space in Canada that will bring robust production capacity, a track record of innovation, and, most importantly, shared values when it comes to doing business the right way and earning the trust of consumers.”
“HEXO continues to lead the way for smoke-free cannabis innovation in Canada. 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. With this new company, we are bringing together Quebec’s oldest, most established company with one of its newest success stories in a truly innovative partnership,” said HEXO’s CEO and co-founder Sebastien St-Louis. “As two leading companies who share a track record of excellent practices, as well as respect for law and regulations, HEXO and Molson Coors Canada have established a relationship built on trust, and together we will develop responsible, high-quality cannabis-infused beverages for the consumable cannabis market in Canada.”