Molson Coors Canada and Hydropothecary announces a joint venture

The Molson Coors brewery in Montreal.
Canadian Press

The Molson Coors brewery in Montreal. Canadian Press

Molson Coors Canada has entered into a joint venture to develop non-alcoholic, cannabis-infused beverages, making it the latest big alcohol company to turn its eye to the budding marijuana market. Molson Coors Canada will retain the majority controlling interest with a 57.5 percent ownership stake.

Hydropothecary would own the rest.

The deal is expected to close before the end of September.

Molson Coors will attempt to sell pot-infused drinks in Canada, where consumable marijuana will soon become legal.

In May, marijuana producer Aphria Inc. said it has reached a deal that will see Southern Glazer's Wine & Spirits to become its exclusive distributor of recreational cannabis products in Canada. If Molson Coors can get ahead of everyone, they just might seal the deal for the top cannabis-infused beverage. Molson is a brewer with historic roots in Montreal, and Gatineau-based Hydropothecary touts itself proudly as the first licensed producer of cannabis in the province.

"We look forward to partnering with Hexo, a recognised 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".

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Cannabis is set to be legalized in Canada on October 17, though cannabis-infused edibles and beverages won't immediately be available.

Hunter added the JV with HEXO, which now operates a 300,000 sq. ft production space and is expected to complete a 1 million sq. ft. expansion before the end of the year, is another piece in the company's overall strategy to grow and diversify its non-alcoholic portfolio, which includes investments in Clearly Kombucha and ready-to-drink chai tea maker Bhakti Inc.

The Hydropothecary Corporation partners with Molson Coors, sending the cannabis company's stock skyrocketing on both the Canadian and American markets today.

"We are excited about this partnership with Molson Coors Canada.as we embark on the journey of building a brand new market", added HEXO CEO and co-founder Sebastien St-Louis.

In a memo following the announcement, Cowen and Company analyst Vivien Azer called Molson Coors' entry into the cannabis market encouraging due to her "view that cannabis and alcohol are substitute social lubricants".

In connection with the closing of the transaction, subject to the final approval of the Toronto Stock Exchange, HEXO will issue to Molson Coors Canada warrants to purchase shares of HEXO.

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