Molson Coors wants to sell pot-infused drinks in Canada

Sebastien St-Louis Hydropothecary CEO

Sebastien St-Louis Hydropothecary CEO

"We believe, potentially, it's got really significant potential and we're going to learn a lot and if other markets start to open up in due course and this becomes federally legal then we'll be in a good place at that point in time", Molson Coors CEO Mark Hunter said during a conference call about its second-quarter results. This new venture will function as a stand-alone startup company that has its own independent management team and board of directors. Molson Coors Canada will have a 57.5% controlling interest, while Hexo will own the remaining stake.

"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".

The joint venture is subject to various approvals conditions and is scheduled to close before September 30.

"Molson Coors Canada has a unique opportunity to participate in this exciting and rapidly expanding consumer segment", he said.

A Hydropothecary-Molson partnership is not the first venture between brewers and cannabis growers, as the deal follows USA alcoholic beverage company Constellation Brands Inc. buying a minority stake in Smiths Falls, Ont. -based cannabis producer Canopy Growth Corp. past year.

Molson Coors' foray into the Canadian cannabis market comes about nine months after Constellation Brands purchased a 9.9 percent stake in another Canadian cannabis company, Canopy Growth Corporation (WEED), for $191 million.

Although the impact of cannabis on beer consumption is unproven and hard to evaluate until legalization takes place, the brewer believes consumer acceptance of cannabis and cannabis beverages is going to increase.

Deprince Race & Zollo Inc. boosted its holdings in shares of Molson Coors Brewing Co Class B (NYSE:TAP) by 29.7% in the 2nd quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission (SEC). Molson has been in serious talks with several Canadian-based cannabis companies.

Hydropothecary has said in its filings that it "deliberately set out to build a commanding position in one jurisdiction - Québec - immediately post-legalization, while making strategic inroads in selected other markets across the country". It is poised to provide Quebec with 20,000 kilograms of cannabis products, including plants, sprays and powders, in the first year of legal sales.

Hexo CEO Sebastien St-Louis said: "Hexo continues to lead the way for smoke-free cannabis innovation in Canada".

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