Drink Up, Buttercup. A new marijuana stock deal has just been inked. On Wednesday, December 19 AB InBev (BUD), the brewer of beverages like Budweiser, and Tilray (TLRY), a global cannabis company, announced a partnership to research non-alcoholic beverages that contain THC and CBD. Though this partnership is only limited to Canada and though there are no actual deals to commercialize a beverage yet, this move marks a major milestone.
Marijuana Stock Investors Have Been Waiting For This
Despite this being a very early phase of what could be a big deal, this has been something marijuana stock investors have been waiting for. The long-awaited entry by the alcohol industry has been speculated on for years now. First brought by Constellation Brands (STZ), the behemoth in wine, beer and spirits has invested billions into cannabis. This was the litmus and now we’re seeing more market adoption.
The research partnership between AB InBev and Tilray combines deep beverage industry expertise and new opportunities in cannabis. Labatt will be spearheading this initiative as InBev’s Canadian subsidiary while Tilray’s High Park Company will be taking the reigns on behalf of the company.
“Labatt is committed to staying ahead of emerging consumer trends. As consumers in Canada explore THC and CBD-infused products, our innovative drive is matched only by our commitment to the highest standards of product quality and responsible marketing. We intend to develop a deeper understanding of non-alcohol beverages containing THC and CBD that will guide future decisions about potential commercial opportunities,” said Kyle Norrington, President, Labatt Breweries of Canada. “We look forward to learning more about these beverages and this category in the months ahead.”
Even though this may not be an actual investment into Tilray, this is a multimillion-dollar partnership. The companies intend to invest “up to” $50 million each for up to $100 million invested. Don’t get me wrong, this is a great step in the right direction for a broader cannabis market but the “up to” leaves much to be desired as it leaves unknowns. Let’s also not forget the other big industry event that came about this month also with Tilray.
A subsidiary of big pharma juggernaut Novartis (NVS) took its own foray into the industry. Under the deal, Tilray Canada Ltd. and Sandoz AG’s (A Novartis Company) Canadian arm plan to jointly operate in jurisdictions where cannabis is or will be approved for medical purposes. The agreement also allows the companies to potentially collaborate in such areas as co-branding certain non-smokable/non-combustible products and developing new medical cannabis products. Tilray has products available in 12 countries and operations in Australia, New Zealand, Canada, Germany, Latin America, and Portugal.
Comparatively, Cronos Group (CRON) saw a full-on investment from one of the traditional “Sin Industry” leaders, Altria (MO). Their deal calls for $1.8 billion to be invested into Cronos. Similarly, earlier this year we saw Hexo Corp (HYYDF) snag joint venture deal with Molson Coors (TAP).
So what’s next?
Right now marijuana stock investors are closely watching everyone else on the sidelines. We haven’t heard anything from Samuel Adams (SAM) or Diageo (DEO). Also, reports from soft drink companies like Coca-Cola (KO) have focused mostly on where full legalization stands in the US. With the potential signing of the 2018 Farm Bill by President Trump in the near term, there is likely to be mounting anticipation for what comes next. Furthermore, now that tobacco and Big Pharma have come into the picture, there will likely be many companies looking to Altria and Novartis as the guinea pigs.