Deal With AB InBev Gives Tilray Stock a Pop

JSE:ANH 20 December

British Columbia-based Tilray has products available in 12 countries and operations in Australia, New Zealand, Canada, Germany, Latin America and Portugal.

In a joint press release, the two companies said they would each invest up to $50 million to better understand the market for beverages infused with cannabis.

It's the latest major company to start exploring the pot market following decisions to legalize recreational marijuana in Canada and a number of American states.

Proposed Health Canada rules would allow Canadians to buy a wide range of edible cannabis products, but limit the amount of THC in each package and ban anything that might appeal to children.

Brendan Kennedy, a chief executive of Tilray, said they were delighted to be joining forces with AB InBev to research how to create enjoyable cannabis beverage products.

"When I look across these categories it strikes me that, if you're currently in the illegal production business, we now have matchy-match on every category you make money on, which means you're going to quit making money soon".

In August, wine, liquor and beer company Constellation Brands announced a $4 billion investment in Canadian pot producer Canopy Growth Corp. Belgium-based AB InBev is the owner of hundreds of beer brands including Budweiser and Stella Artois.

A bottle of Durban Poison Cannabis Lager (supplied
A bottle of Durban Poison Cannabis Lager

The recreational use of cannabis in the USA has not been legalized at the federal level, however 10 states (Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, Washington) and Washington, D.C. now permit both recreational and medical cannabis sales.

With Democrats winning control of the US House of Representatives, Congress may finally pass the Farm Bill, which would make it legal to produce hemp and potentially open the door for more products containing cannabidiol (CBD), a element found in cannabis.

A total of 36 states have legalized some form of medical cannabis use (including the use of CBD products only). Each company intends to invest up to $50 million Dollars, for a total of up to $100 million USD. Decisions about commercialisation will be made later, as marijuana edibles and beverages won't be legal in Canada until next year.

The deal does not address future decisions about the commercialization and sale of a potential cannabis drink.

Anheuser-Busch InBev and Tilray Inc. said each would invest US$50m in the project announced Wednesday. As public support for legalization grows, and growing public support for legalization-shifts that have given investors more confidence about backing companies in the space and enticed big players in the beverage and tobacco industries to make bets on cannabis products.

'Labatt is committed to staying ahead of emerging consumer trends, ' President Kyle Norrington said.

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