Commentary

Molson Coors Canada, Hexo Rolling Joint Cannabis Drink Company

Molson Coors Canada and The Hydropothecary Corporation (aka Hexo), a Canadian cannabis producer, are teaming up to create weed-infused nonalcoholic beverages for the Canadian market as a yet-to-be-named start-up company. Molson Coors Canada will hold a 57.5% controlling stake in the venture when the deal closes, hopefully before Sept. 30. Hydropothecary will own the rest. 

In June, Canada joined Uruguay as the only countries in the world to fully legalize marijuana use. “Recreational marijuana becomes legal in Canada in October, but consumable forms of the drug will be legal there in 2019,” according to the AP. 

“We decided entering the cannabis space would provide us with a real growth opportunity,” Frederic Landtmeters, CEO of the Canadian business unit of Denver-based Molson Coors Brewing Company, tells Bloomberg’s Kristine Owram. “After talking with several potential partners, Molson Coors chose Hydropothecary because of its research and development capabilities, its loyal customer base and its strong brand, he said,” Owram adds.

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At the same time, “America’s Long Love Affair With Beer Is on the Rocks,” as a Wall Street Journal hed reports this morning. 

“U.S. drinkers, particularly young ones, are having relationship problems with the national beverage. It’s no longer true they start out favoring mild pilsners and low-calorie beers, then graduate to harder stuff later in life, if at all. Now they are thinking about other things: taste, value, beer bellies,” write Saabira Chaudhuri and Annie Gasparro.

“According to the Beer Institute, a trade group, drinkers chose beer just 49.7% of the time last year, down from 60.8% in the mid-’90s. Among 21- to 27-year-olds, the decline has been sharper,” they add.  Indeed, “last year, for the first time, Americans reaching for a drink more often chose a glass of wine or a cocktail.”

Cannabis consumption is evolving as well.

“While significant because Molson Coors is also such a big player in the market for mind-altering drinks, the move also reflects a trend by consumers away from smoking ‘flower’ marijuana — the raw plant — and instead toward vaping and consuming cannabis-infused foods known as edibles,” writes Trevor Hughes for USA Today.

Edibles include everything from Baked Bros Gummie Bears to Wholest Freeze Dried Organic Strawberry Slices. “If you can imagine it, there's probably a cannabis edible version of it,” claims Leafly, a cannabis information site.

“This is just the start of all these big companies coming in,” Jessica Lukas, VP of consumer insights for marijuana data firm BDS Analytics, tells Hughes. “It’s going to change the game for the existing market and for the consumers.”

“Although the impact of cannabis on beer consumption is unproven and difficult to evaluate until legalization takes place, the brewer believes consumer acceptance of cannabis and cannabis beverages is going to increase,” writes The Canadian Press’ Ross Marowits for CTVNews

“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 (including a 2.4% decrease in worldwide brand volume). 

There are, however, no plans to sell the new drink in the United States where legalization is, as Newsweek puts it, “on a roll.” There are, however, “some cannabis-infused drinks out in some of the illegal markets in the U.S.”  according to Sébastien St-Louis, Hexo's CEO and co-founder, the CBC reports. “But nothing has ever been attempted to the level of quality that we’re designing here in this partnership,” St-Louis claims.

Not to be a downer, but there are some risks, “although marijuana isn’t very dangerous compared to some drugs,” Vox’ German Lopez writes: “Dependence and overuse, accidents, nondeadly overdoses that lead to mental anguish and anxiety, and, in rare cases, psychotic episodes. Still, it’s never been definitively linked to any serious ailments — not deadly overdoses, lung disease, or schizophrenia. And it’s much less likely — around one-tenth so, based on data for fatal car crashes — to cause deadly accidents compared to alcohol, which is legal.

“Among the risks, drug policy experts emphasize the risk of overuse and addiction,” Lopez continues. “As Jon Caulkins, a drug policy expert at Carnegie Mellon University, has told me, ‘At some level, we know that spending more than half of your waking hours intoxicated for years and years on end is not increasing the likelihood that you’ll win a Pulitzer Prize or discover the cure for cancer.’”

A Clio may be another story.

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