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Budweiser maker Anheuser-Busch InBev SA has joined the growing ranks of alcohol giants dipping their toes into the cannabis industry through a research partnership with Canadian pot firm Tilray.
The two companies said on Wednesday they will jointly conduct research into non-alcoholic, cannabis-infused beverages. Each company will invest up to $50m in the partnership, which is limited to Canada. Decisions about commercialisation will be made later, as marijuana edibles and beverages won’t be legal in Canada until next year.
Tilray shares jumped 16% and AB InBev gained 2% in post-market trading in New York. New Age Beverages, which has said it wants to launch a line of cannabis-infused beverages, rose 6.3%.
AB InBev is the third alcohol company to partner or invest in a Canadian marijuana producer after the country became the first major economy to legalise marijuana in October. Molson Coors Brewing signed a joint venture with Hexo, while Constellation Brands is now the biggest shareholder in Canopy Growth.
Tobacco company Altria also announced a $1.8bn investment in Cronos Group this month.
Unlike the Constellation and Altria deals, both of which include the option to take majority control in the future, Tilray wanted to remain independent, said chief executive officer Brendan Kennedy.
"We want to control our own destiny," he said. "We haven’t sold our company to anyone, we’re not looking to get bought or acquired."
Long talks
Tilray and AB InBev have been in talks for a year, making the deal potentially one of the best-kept secrets in the rumour-saturated marijuana industry, Kennedy said in a phone interview. AB InBev, based in Leuven, Belgium, is the world’s biggest brewer, with brands including Beck’s and Bud Light.
"We’ve met in Seattle, Denver, New York, Toronto, and Nanaimo, British Columbia to discuss the terms of this agreement and the more we’ve gotten to know them, we realised that we have a shared vision and values," Kennedy said. "Anheuser-Busch InBev produces and distributes many of the world’s most iconic beverages and they seemed like an ideal partner for us."
The partnership is the second announced by Tilray this week. On Tuesday, the firm said it’s reached an agreement with a division of Swiss drug giant Novartis to develop and distribute medical marijuana in legal jurisdictions around the world, sending its shares up 16%.
Tilray has jumped more than four-fold since it went public in July and is the second-largest pot company by market value. Shares in AB InBev, by contrast, have fallen 34% this year.
The research will be conducted at Tilray’s High Park processing facility in London, Ontario, where AB InBev subsidiary Labatt Breweries of Canada has a large plant. Kennedy said the $100m investment by the two companies will create jobs in the city, about 200 kilometres southwest of Toronto, although the exact number is to be determined.
The research will focus on both tetrahydrocannabinol-, or THC-infused drinks that would get users high, and the non-intoxicating cannabidiol, or CBD drinks.
Tilray, based on Vancouver Island, is confident it’s already solved several of the problems that have slowed development and consumer adoption of cannabis-infused beverages, including water solubility and flavour.
"The one core focus will be creating beverages that we think will delight consumers," Kennedy said.
