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Budweiser’s Parent Company Enters $100 Million Deal with Cannabis Producer

AB InBev is the latest global beverage giant to invest in Canada’s legal cannabis industry.

Adam Drury

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Budweiser's Parent Company Enters $100 million Deal with Cannabis Producer
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On Wednesday, Belgium-based Anheuser-Busch InBev joined the ranks of other beverage giants that have inked deals with Canadian cannabis companies this year. Partnering with Tilray, Inc. AB InBev will match the company’s $50 million contribution, bringing the total investment in the partnership to $100 million. Those funds will support research into non-alcoholic cannabis-infused drinks. So far, however, the two companies have no immediate plans to commercialize any beverage the project might develop.

Labatt Breweries and High Park Subsidiaries Will Participate in the Research Partnership

AB InBev is a global leader in alcoholic beverages, owning more than 500 brands, including the iconic beer Budweiser. The Busch family sold the company to InBev in 2008 for $52 billion. Ten years later, the company is making its first North American foray into legal cannabis.

Both Tilray and AB InBev will participate in the $100 million research deal through a pair of subsidiaries. AB InBev will participate through Labatt Breweries of Canada, the country’s leading brewer. Tilray will participate through one of its adult-use subsidiaries, High Park Company. High Park develops, sells and distributes cannabis brands and products in Canada. Labatt Breweries of Canada President Kyle Norrington said the research project will “guide future decisions about potential commercial opportunities.”

2018 was a major year for North America’s cannabis industry. Canada, of course, implemented its world-historic Cannabis Act in October, legalizing cannabis for adults nationwide. And in the U.S., medical cannabis program expansions, the implementation of California’s retail industry and a Farm Bill legalizing hemp have all expanded access to cannabis products. Within the decade, industry analysts expect consumer spending in the legal industry to top $47 billion.

That figure, along with a shift in consumer trends toward cannabis concentrates and other non-botanical products like edibles and beverages, have drawn the attention of international beverage leaders. And after Canada’s summer legalization of the adult-use industry, they’re beginning to make their move. In August, for example, there was Constellation Brand’s $4 billion investment in Canopy Growth Corp. Coca-Cola is reportedly close to a deal with Aurora Cannabis, but ended up denying any future plans.

Tilray and Anheuser-Busch Will Research CBD and THC Beverage Infusions

The regulatory landscape for cannabis-infused beverages is still taking shape. In the United States, for example, some states have preemptively banned the sale of cannabis-infused beverages or alcoholic beverages with cannabis infusions. That’s why Tilray’s deal with AB InBev is limited just to Canada. There, product regulations regarding cannabis beverages are more clear cut. Compared with Constellation’s multibillion-dollar investment, however, AB InBev’s $50 million is a more conservative first step into the Canadian cannabis industry. For now, the two companies are focusing just on research.

Importantly, however, the partnership will study both THC and CBD beverage infusions. The explosive growth of the hemp CBD market is generating a number of popular trends in the health and wellness industries. At the same time, THC beverages are part of a rapidly growing segment of the adult-use market geared toward THC products that aren’t flower. The demand is definitely there. But AB InBev and Tilray want to make sure they meet it the right way. “Tilray and AB InBev share a commitment to responsible product development and marketing,” Tilray CEO Brendan Kennedy said.

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