Labatt partners with cannabis producer Tilray to create research joint venture
The Labatt's brewery is seen in Toronto Thursday March 31, 2005. (Aaron Harris / THE CANADIAN PRESS)
David Paddon, The Canadian Press
Published Wednesday, December 19, 2018 5:02PM EST
Last Updated Wednesday, December 19, 2018 5:07PM EST
TORONTO -- The parent company of Labatt Breweries of Canada has struck a research deal with Tilray Inc. that's expected to result in the creation of a variety of non-alcoholic beverages containing some of the active ingredients found in cannabis.
Tilray chief executive Brendan Kennedy says that the B.C.-based cannabis producer and the Canadian arm of brewing giant Anheuser-Busch InBev will set up a joint venture to build on the expertise of their respective businesses.
Each partner has committed to provide the equivalent of about $67.5 million of funding to the joint venture, which has yet to be named.
There's also no time-table yet for when the joint venture will have drinks ready to sell on the Canadian market. Current federal law allows non-medical use dried cannabis by adults but other forms of marijuana aren't yet legal for recreational use in Canada.
Molson Coors Canada and HEXO Corp., a Quebec-based cannabis producer, announced a similar partnership in August. Alcohol producer Constellations Brands Inc. invested $5 billion in Canopy Growth Corp. the same month.
Kennedy says that Tilray's strategy is to partner with global companies, like AB InBev, that can help it eventually grow beyond Canada -- one of the first countries to allow cannabis products for non-medical use by adults.
"We're proud to be global pioneers and we want to pioneer with other global pioneers who are leaders in their respective sectors," Kennedy said in an interview.
Tilray and Labatt will look at a broad spectrum of ready-to-drink and ready-to-mix beverages in many different forms, for different types of consumers and different consumer needs, he said.
Kyle Norrington, president of Labatt, says his company intends to develop "a deeper understanding of non-alcohol beverages containing THC and CBD that will guide future decisions about potential commercial opportunities."
THC, or tetrahydrocannabinol, is the ingredient that provides pot users with a buzz while CBD, or cannabidiol, is a non-intoxicant that has medicinal properties.
Tilray Inc. shares closed at US$71 on the Nasdaq market prior to the announcement, down US$5.50 from the previous close after they gained more than $10 Tuesday following an expanded co-operation agreement with the Sandoz AG of Novartis, a global pharmaceutical company.
The Sandoz announcement follows recent additions to Tilray's international advisory board, which includes former finance ministers from Canada, Australia and Germany and politically connected representatives from the United States including former Vermont governor Howard Dean and former lieutenant governor of Maryland Michael Steele.
In Canada, Tilray's operation in Nanaimo, B.C., is licenced to produce dried cannabis and cannabis extracts, including both bottled oil and capsules, for medical purposes in Canada.
The company's High Park subsidiary, which will work with Labatt, has a licenced facility in Enniskillen, Ont., that it intends to use to service the adult market for dried cannabis and it's seeking a licence for a processing facility in London, Ont.