National Post (Latest Edition)

CANOPY TO BRING CANNABIS BEVERAGES TO U. S. NEXT YEAR.

- Tiffany Kary

Canopy Growth Corp., the cannabis company that attracted Corona beer producer Constellat­ion Brands Inc. as an investor, is moving to bring cannabis beverages to the U.S. in 2021.

The drinks will contain THC, the psychoacti­ve compound found in marijuana, in dosage amounts designed to keep people buzzed and social in a similar way to beer, cocktails or wine, the company said in a statement.

“Just as hard seltzer disrupted beer by providing a lighter, low- calorie alternativ­e, we believe cannabis beverages will be an attractive option for what have traditiona­lly been alcohol- driven occasions and mood states,” said David Klein, Canopy’s chief executive, in an email exchange with Bloomberg News.

The company’s shares closed down 1.36 per cent at $ 18.33 in Toronto trading Thursday, reversing an earlier gain. The stock lost about 30 per cent of its value through the first nine months of 2020.

Canopy, based in Smiths Falls, Ont., said it will start selling the drinks in California and Illinois next summer with the distributi­on network of Acreage Holdings Inc. and move into other states in following months. They’ll appear first in dispensari­es, with aims to get them in liquor stores or other retail locations once that becomes legally permissibl­e.

Canopy said it will have access to Constellat­ion’s brand expertise and distributi­on network in the venture. Acreage, which has an agreement to merge with Canopy when federal legalizati­on occurs in the U. S., has already moved to start manufactur­ing operations for the beverage.

The deal shows the increasing overlap between the beverage and cannabis industries. Drinks with CBD, a non- psychoacti­ve cannabis ingredient, are already catching on in the U. S., with big companies like Molson Coors Beverage Co. starting to take action.

The beverage industry is experienci­ng disruption as Americans, looking for new ways to unwind amid Covid-19 and lockdowns, increasing­ly turn to products like canned cocktails and hard seltzers over standbys like beer.

Other THC drinks on the market have much larger doses of the compound, and Canopy’s drinks aim to draw new users to cannabis with a better taste and a lower dose that will make the experience more akin to an alcoholic beverage.

Consumer insights have shown the drinks may be a better fit than alcohol for some people, “such as a young parent who seeks to unwind with a beverage at the end of the day, but can’t afford a hangover with their 5 a. m. wake- up call,” Klein said.

Canopy already dominates the Canadian market for cannabis beverages. Since it started selling them there in March 2020, it’s sold more than 1.7 million cans, and has captured 70 per cent of the Canadian market by units sold, according to the company. Tweed is its No. 1 beverage brand in Canada. The company declined to say what brand names it would use in the U. S. or give any new financial projection­s tied to the drinks.

As of May, Constellat­ion owned a 38.6 per cent stake in Canopy. In its quarterly earnings Thursday, Constellat­ion reported a loss of US$ 31 million for its latest fiscal period related to the stake.

During Constellat­ion’s earnings call with analysts on Thursday, Chief Financial Officer Garth Hankinson said the company sees the latest generation of recreation­al cannabis products attracting new consumers, and that Canopy is “best positioned to win in the long term” and is well-capitalize­d.

 ?? Blair Gable / reuters files ?? Beverage cans run through machinery at a facility in Smiths Falls, Ont., run by Canopy Growth, which has captured
70 per cent of the Canadian cannabis beverage market and hopes to sell drinks in California and Illinois in 2021.
Blair Gable / reuters files Beverage cans run through machinery at a facility in Smiths Falls, Ont., run by Canopy Growth, which has captured 70 per cent of the Canadian cannabis beverage market and hopes to sell drinks in California and Illinois in 2021.

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