Gatineau's Hydropothecary, Molson Coors launch cannabis drink project

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Beer giant Molson Coors said Wednesday it is teaming up with a Canadian pot producer to develop cannabis-infused non-alcoholic beverages.

Molson Coors will have a 57.5% stake in the firm and three board eats whilst Hydropothecary will hold the remaining stake and two board seats.

Hydropothecary would own the rest.

"The new company will combine the proven beverage experience of Canada's leading brewer with a recognized innovator in the fast-growing cannabis sector to explore the highly anticipated consumable cannabis market, which is expected to be legally permissible in Canada in 2019", said Molson Coors.

The deal is expected to close before September 30, just ahead of the proposed legalization of recreational marijuana in Canada.

In May, marijuana producer Aphria Inc. said it has reached a deal that will see Southern Glazer's Wine & Spirits, one of North America's largest wine and spirits distributors, become its exclusive distributor of recreational cannabis products in Canada. "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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The move follows an announcement a year ago by Constellation Brands, which revealed it would will pay CAD 245 million ($191 million) for a 9.9% stake in Canopy Growth Corporation, a Canadian supplier of medicinal marijuana, paving the way for it to launch a series of cannabis-infused alcoholic drinks.

In a memo, Euromonitor's head of alcoholic drinks, Spiros Malandrakis, wrote: "There is a paradigm shift underway and cannabis has the potential to provide answers to the alcoholic drinks industry's existential questions".

Beer and alcohol companies are circling Canadian marijuana companies amid falling beer consumption and concerns that the buzzy and soon-to-be legal drug could take a further bite out of booze sales.

Recreational cannabis is set to be legalised on 17 October, thought cannabis-infused edibles and beverages will immediately be available.

HEXO is based in Gatineau, Que., and now has more than 27,8700 square metres (300,000 square feet) of production capacity with an expansion more than three times that size to be completed by the end of the year. Molson Coors shares closed up 4.92 per cent or $4.50 at $96.01. 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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