News that Molson Coors expects to bring cannabis-infused beverages to the Canadian market as early as next year sent shares of Gatineau-based marijuana producer Hexo – the brewing giant’s partner in developing pot-laced drinks – up 10 per cent on Wednesday.
“We will be in a ready-to-go position and, you know, one of the first on the playing field as the market opens up,” said Molson Coors CEO Mark R. Hunter in a conference call with analysts after the company released its third-quarter earnings report Wednesday.
Recreational cannabis products such as dried flower and pre-rolled joints became available for legal purchase in Canada on Oct. 17, but edibles and pot-laced beverages won’t be legalized until next year.
OBJ360 (Sponsored)
A new strategic affiliation between Stratford Intellectual Property and North IP aims to enhance the ways Canadian companies protect, manage, and utilize their intellectual assets. This collaboration combines Stratford’s expertise
Charity flow-throughs help major donors stretch
Whether it is in Ottawa, or just about any Canadian city, capital campaigns abound. Hospitals, universities and every charity or foundation in between are seeking millions to meet the needs
Estimates suggest the cannabis market could be valued somewhere between $7 billion and $10 billion, he said, with about 20 to 30 per cent of that coming from cannabis-infused, non-alcoholic beverages.
Even if one assumes the low end of both those projections, the beverages segment could be worth about $1.5 billion, he said.
Molson and Gatineau’s Hexo Corp. (TSX:HEXO) launched Truss, a joint venture, earlier this month. Truss will develop the beverages for the Canadian market following legalization.
Hexo announced in September that it had secured a stake in a 2-million-square-foot Belleville production facility. CEO Sébastien St-Louis told OBJ that the firm will work with partners such as Molson Coors on developing cannabis-based products in a “centre of excellence.”
“If Molson decides that they need 150,000 square feet, I can offer it to them. If an Estée Lauder comes to the table and says, ‘I need half a million feet,’ then I can offer that to them. So it’s really about flexibility,” he said.
Hexo’s share price rose more than 10 per cent on Wednesday, trading at $5.90 before markets closed.
Hunter said Molson is already researching what beverages it plans to offer and will be able to share more details early next year.
“We decided as a business that we did not want to be a spectator as this new market opened up and we clearly wanted to be a participant,” he said.
The company is also preparing for potential further international expansion, he said.
Molson Coors Canada shares rose $5.01 or 6.3 per cent to $84.50 in afternoon trading on the Toronto Stock Exchange. The shares of its holding company, Molson Coors Brewing, rose US$4.72 or 8.11 per cent to US$63.93 on the New York Stock Exchange.
The company topped expectations as it reported its third-quarter profit increased compared with a year ago, helped by higher sales.
– With files from OBJ staff
