AB InBev in cannabis drinks tie-up

AB InBev, the world’s largest brewer, is team­ing up with Cana­dian pot com­pany Til­ray to re­search cannabis­in­fused drinks in the lat­est sign some of the world’s big­gest con­sumer com­pa­nies are de­vel­op­ing a taste for the drug

The Star (St. Lucia) - Business Week - - FRONT PAGE - ALISTAIR GRAY AND NI­COLE BUL­LOCK IN NEW YORK

AB InBev, the world’s largest brewer, is team­ing up with Cana­dian pot com­pany Til­ray to re­search

cannabis-in­fused drinks in the lat­est sign some of the world’s big­gest con­sumer com­pa­nies are de­vel­op­ing a taste for the drug. The in­volve­ment of the drinks com­pany

be­hind Bud­weiser in recre­ational cannabis brings new le­git­i­macy to an in­dus­try pre­vi­ously the do­main of drugs car­tels. Canada be­came the largest coun­try to com­pletely le­galise recre­ational pot use in Oc­to­ber, and sev­eral US states, in­clud­ing Cal­i­for­nia, have made sim­i­lar le­gal changes.

Un­der the lat­est part­ner­ship, which will be con­fined to Canada, ABI will work on a joint ven­ture with Til­ray in Lon­don,

On­tario. Each com­pany will in­vest $50m to re­search how recre­ational cannabis drinks might be brought to mar­ket, ex­plor­ing fac­tors in­clud­ing flavour­ing and the length of the high. In an in­ter­view, Til­ray chief ex­ec­u­tive

Bren­dan Kennedy said: “We’re in the mid­dle of a global par­a­digm shift. We’re see­ing an en­tire in­dus­try de­velop and re­ally trans­form, tran­si­tion­ing from a state of pro­hi­bi­tion to a state of le­gal­i­sa­tion.”

Cannabis le­gal­i­sa­tion was “dis­rupt­ing” sev­eral in­dus­tries, in­clud­ing phar­ma­ceu­ti­cals as well as al­co­hol, he added. There was ev­i­dence that “cannabis

was a sub­sti­tute in some set­tings for al­co­holic bev­er­ages”.

“We don’t know how big this will be but what is hap­pen­ing is we are see­ing a rapidly emerg­ing in­dus­try — at a time when there’s not a lot of global

growth avail­able.” Til­ray’s tie-up with ABI comes on top of a part­ner­ship it an­nounced ear­lier in the week with the pharma group No­var­tis to de­velop med­i­cal mar­i­juana. Shares in the com­pany, which floated ear­lier this year, jumped 17 per cent to $82.80 in af­ter-hours trad­ing on Wed­nes­day, com­pared with an is­sue price of $17 each. This month Marl­boro cig­a­rettes maker Al­tria struck a deal to take a stake in Cana­dian mar­i­juana com­pany Cronos for C$2.4bn. Ear­lier this year ABI ri­val Con­stel­la­tion Brands pumped al­most $4bn into Canopy Growth, an­other Cana­dian pot group, and Aurora Cannabis in May struck a $2bn deal to buy the med­i­cal mar­i­juana group MedRe­leaf.

ABI’s in­volve­ment will be through its sub­sidiary La­batt Brew­eries. Kyle Nor­ring­ton, pres­i­dent of La­batt Brew­eries, said in a state­ment: “We in­tend to de­velop a deeper un­der­stand­ing... that will guide fu­ture de­ci­sions about po­ten­tial com­mer­cial op­por­tu­ni­ties.” Til­ray took its place in the his­tory books this year as the first cannabis com­pany to go pub­lic in the US, list­ing on Nas­daq in July.

US ex­changes are able to list com­pa­nies so long as their op­er­a­tions are le­gal in the ju­ris­dic­tion where they op­er­ate.

In a sign of in­vestors’ mount­ing in­ter­est in the sec­tor this year, Til­ray’s more than qua­dru­pling in value from its of­fer price makes it the best per­form­ing US-listed ini­tial pub­lic of­fer­ing in 2018, ac­cord­ing to Dealogic. Shares have been volatile, how­ever.

Of the ABI drinks tie-up, Mr Kennedy said: “De­ci­sions around com­mer­cial­i­sa­tion will be made at a later date but this was the right way to start.”

Beer Brewer AB InBev (NYSE:BUD) has joined the list of the many com­pa­nies who are ex­plor­ing the cannabis in­dus­try. The world’s largest brewer has es­tab­lished a part­ner­ship with Cana­dian pot firm Til­ray Inc. (NAS­DAQ:TLRY). Each of the two will put in up to $50 mil­lion as an in­vest­ment. In to­tal, they will raise $100 mil­lion, which will go to­wards the study of non-al­co­holic bev­er­ages con­tain­ing THC and CBD.

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