INTERNATIONAL - Budweiser brewer Anheuser-Busch InBev NV has joined the growing ranks of alcohol giants dipping their toes into the cannabis industry through a research partnership with Canadian pot firm Tilray Inc.
The two companies said Wednesday they will jointly conduct research into non-alcoholic, cannabis-infused beverages. Each company will invest up to $50 million in the partnership, which is limited to Canada. Decisions about commercialization will be made later, as marijuana edibles and beverages won’t be legal in Canada until next year.
Tilray shares jumped 16 percent in post-market trading on Wednesday, while AB InBev was down as much as 1.8 percent early Thursday in Brussels, in a generally lower market.
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 legalize marijuana in October. Molson Coors Brewing Co. signed a joint venture with Hexo Corp., while Constellation Brands Inc. is now the biggest shareholder in Canopy Growth Corp. Tobacco company Altria Group Inc. also announced a $1.8 billion investment in Cronos Group Inc. 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.”
Tilray and AB InBev have been in talks for a year, making the deal potentially one of the best-kept secrets in the rumor-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 realized 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 AG to develop and distribute medical marijuana in legal jurisdictions around the world, sending its shares up 16 percent. 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 36 percent 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 $100 million investment by the two companies will create jobs in the city, about 200 kilometers (120 miles) 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 flavor.
“The one core focus will be creating beverages that we think will delight consumers,” Kennedy said.