Molson Coors Canada, the Canadian business unit of Molson Coors Brewing Co., has created a joint venture with a Canadian cannabis producer to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization.
Hydropothecary Corp. (HEXO) already creates and distributes products to serve the Canadian cannabis market, up to now serving medical cannabis clients through its Hydropothecary brand. When cannabis consumables become legal in Canada, expected in 2019, the company will serve the adult-use market under the HEXO brand.
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 HEXO having the remaining ownership. The new company "will combine the proven beverage experience of Canada's leading brewer with a recognized innovator in the fast-growing cannabis sector."
"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 Frederic Landtmeters, president/CEO of Molson Coors Canada. "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," he added.
HEXO is rapidly increasing its production capacity in the lead up to the adult-use cannabis market. The company currently has more than 300,000 sq. ft. of production capacity with construction on another 1 million sq. ft. set to be complete by year end.
Constellation Brands, the owner of Corona and Modelo beers and Svedka vodka, late last year bought a minority stake in Canopy Growth, a Canadian medical marijuana company, with the intention of creating cannabis-infused drinks for that market. Read that story here.