Molson Coors To Sell Cannabis Drinks In Canada

Gatineau's Hydropothecary, Molson Coors launch cannabis drink project

Gatineau's Hydropothecary teams up with Molson Coors

In a joint venture with leading cannabis producer, The Hydropothecary Corporation, the two companies will develop non-alcoholic drinks infused with cannabis.

Molson Coors will gain a 57.5 percent controlling stake in the project, and HEXO will retain ownership of the rest.

The companies are aiming to close the deal before September 30, pending certain conditions such as the "execution and delivery of various transaction agreements, including governance documents and R&D and supply agreements".

Hexo, a Hydropothecary medical marijuana company, said will continue to use the Hydropothecary moniker for its medical products, anything aimed to the recreational market will carry the new brand.

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Molson Coors, the second-largest beer manufacturer in the US, will hold a controlling 57.5 percent interest in the JV and HEXO will own the remaining 42.5 percent.

"We believe that the merger of the cannabis and beverage industries hold great potential for investors looking to reap the benefits of innovation in the space", a group of analysts at Beacon Securities, a Toronto-based investment bank, said in a note.

"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", said Molson Coors Canada president and CEO Frederic Landtmeters.

"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. "We expect today's Hexo/Molson Coors Canada JV to be nothing short of trend-setting for the cannabis industry as a whole".

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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.

HEXO now has more than 300,000 square feet to work on the new drink with and is getting an expansion more than three times that size to be completed by the end of the year.

Molson Coors Brewing Co Class B (NYSE:TAP) last posted its quarterly earnings data on Wednesday, August 1st. HEXO is the name of a recreational cannabis brand recently launched by Hydropothecary, as well as the company's current ticker symbol on the Toronto Stock Exchange. The company reported $1.88 earnings per share for the quarter, beating the Thomson Reuters' consensus estimate of $1.83 by $0.05.

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