Molson Coors Brewing Co (NYSE: TAP) has entered discussions with several Canadian cannabis companies about investing and collaborating on cannabis-infused beverages, according to a BNN Bloomberg report.
Molson Coors is seeking “a high quality product that isn’t going to embarrass them” and assurance of a cannabis supply high enough to sustain such a drink, one of the sources said.
The brewer has reportedly been in discussions for the past six months with as many as four different companies, including Aphria Inc. (OTC: APHQF) and Aurora Cannabis Inc. (OTC: ACBFF).
Why It’s Important
Alcohol and cannabis are often considered substitute products, a view backed up by a report from Cowan & Co in April. Cowan expects the amount of binge drinking to decline as more and more places legalize recreational marijuana use.
If any brewer can appreciate the impact of cannabis on the market, it’s Molson Coors. The company has seen sales decline in its home state of Colorado, which legalized recreational marijuana in 2012.
A deal wouldn’t make it the first beverage company to do so though. Last October, Constellation Brands, Inc. (NYSE: STZ) took a 9.9-percent stake in Canopy Growth Corp (NYSE: CGC) for $245 million.
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Canada is set to legalize recreational cannabis nationwide on Oct. 17. The Canadian Imperial Bank of Commerce projects that the market could be at large as $6.5 billion by 2020.
With that date soon approaching, Molson Coors could be looking to make a move as fast as possible. One source familiar with the discussions told BNN Bloomberg a deal could be reached by the end of the year.
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