The Hydropothecary Corporation Stock Skyrockets After Coors Partnership

  • The Hydropothecary Corporation Stock Skyrockets After Coors Partnership

The Hydropothecary Corporation Stock Skyrockets After Coors Partnership

Molson Coors Canada and leading Canadian cannabis producer, The Hydropothecary Corporation (TSX:HEXO), announced a joint venture earlier this week.

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.

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

Weed beer has been something talked about ever since it became clear that the federal government was going to legalize marijuana. However, cannabis-infused edibles and beverages will not be immediately legalized - those products expected to receive approval sometime in 2019.

"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.

St-Louis went on to say that the companies share "a track record of excellent practices, as well as respect for law and regulations", and a relationship built on trust that will develop high-quality, responsible cannabis-infused beverages for Canadians.

In May, marijuana producer Aphria Inc. said it has reached a deal that will see Southern Glazer's Wine & Spirits to become its exclusive distributor of recreational cannabis products in Canada.

Last year, Corona beer-maker Constellation Brands Inc became the first major beer and spirits producer to partner with a Canadian marijuana producer, picking up a almost 10 percent stake in Canopy Growth Corp.

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".

Molson Coors' foray into the Canadian cannabis market comes about nine months after Constellation Brands purchased a 9.9 percent stake in another Canadian cannabis company, Canopy Growth Corporation (WEED), for $191 million.

Meanwhile, Molson Coors reported that it earned US$424.1 million or $1.96 per diluted share in the second quarter. The business's revenue for the quarter was down.2% on a year-over-year basis. sell-side analysts forecast that Molson Coors Brewing Co Class B will post 4.84 earnings per share for the current year.

Revenues for the period ended June 30 slipped to almost US$3.1 billion, slightly below expectations.