- Molson Coors and cannabis producer Hexo are exploring opportunities for non-alcohol hemp-derived CBD beverages in Colorado. The joint venture will be called Truss CBD USA and will be majority owned by Molson Coors.
- All production and distribution for Truss will stay in Colorado since the state already has a regulatory framework for hemp-derived CBD in food and beverages. The company said no CBD products will be produced at Molson Coors facilities.
- “CBD beverages are a growing segment within the non-alcohol beverage category and this JV provides us an opportunity to build capabilities in Colorado,” Pete Marino, Molson Coors’ president of emerging growth, said in a statement.
This new partnership in the U.S. expands on one that Hexo and Molson Coors already established in Canada. Two years ago, Molson Coors started a joint venture in Canada with Hydropothecary, now called Hexo, to develop non-alcoholic, cannabis-infused beverages for that market.
The companies have been early movers in the space, forming a partnership well before Canada started to allow CBD-infused beverages and edibles on shelves in December. In October, Truss Beverage Co., also the name for the joint venture between Molson Coors Canada and Hexo, partnered with Flow Glow Beverages to make and distribute CBD-infused spring water in Canada — the first of its six expected cannabis beverage brands.
As Canada has expanded its legalization of CBD products, many are watching progress there to see what the U.S. could look like in the future. And according to a study by Euromonitor, the main market for THC and CBD-infused products is in the alcoholic drink space.
But Molson Coors isn’t the only brewer that partnered with a cannabis company and started in the Canadian market. AB InBev and Canadian cannabis company Tilray partnered to launch non-alcoholic CBD-infused beverages under the Fluent Beverage brand in Canada after the two companies announced a $100 million joint venture to research cannabis-infused non-alcoholic drinks for the Canadian market in 2018.
And Constellation Brands spent about about $4 billion investing in the world’s largest publicly traded cannabis company Canopy Growth, an investment that hasn’t yet paid off.
There have been delays with CBD product development in Canada though. Both Fluent Beverage and Truss have been slow to launch products in the country, while Canopy Growth hadn’t finished scaling up its cannabis beverage production facility in Ontario in time for commercial production. These companies, including Molson Coors, will likely want to work out these issues before they move into other markets like the U.S.
Molson Coors and Hexo said in the release that Truss has been preparing for the launch in Canada by finishing product formulations, branding and constructing a cannabis beverage production facility in Belleville, Ontario. Truss said it expects to launch its first beverages in Canada later this year.
If this new joint venture is successful, expanding into the CBD space in the U.S. could help lift Molson Coors’ volume declines in the North American beer market. Last year, former Molson Coors CEO Mark Hunter stepped down and the beer giant announced a name change “to better reflect its strategic intent to expand beyond beer and into other growth adjacencies.”
Even though the FDA hasn’t approved CBD as an ingredient in foods and beverages, many companies are moving ahead with plans for CBD products in Canada and the U.S.
A study from A.T. Kearney showed 30% of Americans are willing to try a cannabis-infused nonalcoholic beverage. Keef sodas have seen success in the market already and Bolthouse Farms was planning to launch CBD-infused products including some in juice and coffee. Arizona Beverages and Dixie Brands, a Denver-based cannabis company, also partnered last year for the production, distribution and sale of marijuana-infused products containing THC.
As the market for cannabis products continues to grow and regulation in the U.S. remains uncertain, there are a lot of moving pieces. But with spending on all cannabinoids projected to reach $4.1 billion by 2022 from $1.5 billion last year, according to a report from BDS Analytics, Molson Coors could be making the right move as it seeks to expand its reach beyond beer.