Vancouver-based licensed cannabis producer Sproutly Canada Inc. (CSE:SPR) has partnered with New Brunswick brewer Moosehead Breweries Ltd. to create a joint venture that will produce cannabis-infused drinks, the companies announced April 30.
The partnership is the latest in a string of agreements between drinks manufacturers and cannabis companies in the lead-up to Canada fully legalizing marijuana.
The eagerness to get into the sector is fueled by reports such as one last year by Canaccord Genuity (TSX:CF), which estimated that the cannabis-laced drinks sector could be worth US$600 million by 2022.
The government has committed to legalize edibles, extracts, topicals and drinks by October 17, although the rollout of those products is not expected to be until early 2020.
Last week, Vancouver-based Invictus MD Strategies Corp. announced that it has signed a letter of intent to form a joint venture with Kiss frontman Gene Simmons, Simmons’ MoneyBag Sodas and Rock Steady Sodas, to make non-alcoholic, CBD-infused beverages to be distributed across the U.S. and Canada.
The trend toward these kinds of partnerships has also prompted B.C.-based companies such as Tilray Inc. (Nasdaq:TLRY), Emerald Health Therapeutics (CSE:EMH) and Chemesis International Inc. (CSE:CSI) to jump on the research bandwagon to improve technology for infusing drinks with active cannabis ingredients.
Sproutly’s partnership with Moosehead is to create a joint venture in which each company owns an equal 50-50 equity stake.
Matthew Oland, one of Moosehead’s senior executives, has been appointed to be the joint venture’s CEO. His venture will develop, produce, and market non‐alcoholic cannabis-infused beverages in Canada using Sproutly’s proprietary, naturally produced, water-soluble cannabinoids that the company calls “Infuz2O,” the companies said.
Executives at the two companies plan to address questions about the new joint venture on a conference call on May 1.
The largest of the partnerships between cannabis producers and drinks makers was hatched last year, when the beer, wine and spirits giant Constellation Brands Inc. (NYSE:STZ) invested $5 billion in Ontario-based licensed cannabis producer Canopy Growth Corp. (TSX:WEED; NYSE:CGC).
Molson Coors Canada, the business unit of the global brewing behemoth Molson Coors Brewing Co. (TSX:TPX; NYSE:TAP), was also active last year by forging an agreement with Quebec’s Hydropothecary Corp. (TSX: HEXO) to form a joint venture to develop non-alcoholic, cannabis-infused beverages in Canada.
Despite the many ventures partnering to be ready to produce cannabis-infused drinks, perfecting these drinks is difficult work.
One problem is that many people do not like the taste of cannabinoids, such as CBD. A second challenge is to infuse the cannabinoids into water-based drinks because the cannabinoids are oil-based in their purest form.
The need to make cannabinoids water soluble stems not just from consumers’ desire for homogenized drinks with a consistent texture but also because water soluble drinks provide intoxicating effects much faster than do non-water-soluble drinks.
Drinks that are not water soluble have a delay in the effects of oil-based cannabinoids, which bind with fat in the human body before they’re absorbed. That means that they are not felt for 90 minutes or more. Alcohol, in contrast, fuses with water and is absorbed quickly into the bloodstream to create intoxicating effects.
