Anheuser-Busch and Tilray Partner to Research Non-Alcoholic THC and CBD Drinks

Anheuser-Busch InBev today announced a partnership with Canadian cannabis company Tilray that is aimed at researching non-alcoholic beverages infused with THC (tetrahydrocannabinol) and CBD (cannabidiol).

In a joint press release, the two companies said they would each invest up to $50 million to better understand the market for beverages infused with cannabis. The arrangement is limited to Canada.

“We intend to develop a deeper understanding of non-alcohol beverages containing THC and CBD that will guide future decisions about potential commercial opportunities,” Labatt Breweries of Canada president Kyle Norrington said via the release. “We look forward to learning more about these beverages and this category in the months ahead.”

Under the terms of the partnership, A-B subsidiary Labatt Breweries of Canada will work with Tilray subsidiary High Park Company, an adult-use cannabis company that makes, sells and distributes cannabis brands in Canada.

Rumors that A-B InBev was exploring the cannabis space surfaced earlier this year when Canada’s The Globe and Mail, citing unnamed sources, said executives with A-B, Pernod Ricard, Heineken, Coca-Cola and Diageo had visited with Canadian cannabis producers.

Legal recreational cannabis sales throughout Canada began on October 17, 2018, and A-B InBev is latest major beer manufacturer to partner with a cannabis company north of the border.

Constellation Brands has invested more than $4 billion into Canada’s Canopy Growth Corporation, acquiring a 38 percent stake in the process.

Earlier this year, Molson Coors formed a joint venture with Quebec cannabis company Hexo, a recreational cannabis “sister brand” to The Hydropothecary, a licensed producer and distributor of medical cannabis. That JV is structured as a standalone startup company led by its own board and management team.

Other U.S. beer manufacturers, including Heineken-owned Lagunitas and Craft Brew Alliance (31.4 percent owned by A-B InBev), have already experimented or are looking into the possibility of experiment with THC and CBD-infused beverages.

The recreational use of cannabis in the U.S. has not been legalized at the federal level, however 10 states (Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, Washington) and Washington, D.C. currently permit both recreational and medical cannabis sales.

A total of 36 states have legalized some form of medical cannabis use (including the use of CBD products only).

Earlier this month, Congress passed the 2018 Farm Bill, which allows for the cultivation and more widespread commercialization of industrial hemp — a variety of the Cannabis sativa plant that, according to the bill, contains less than 0.3 percent THC. The bill would also exclude hemp from the Controlled Substances Act.

President Donald Trump is expected to sign the 2018 Farm Bill on Thursday.

In after hours trading, shares of Tilray stock were going for more than $80 on the NASDAQ, as of press time. The company’s stock had finished the trading day down more than 7 percent to $71.

Meanwhile, shares of A-B InBev stock were up only slightly over its closing price of $68.80.

A-B and Tilray’s joint release, which includes additional information about the partnership, is below.

AB InBev and Tilray Announce Research Partnership Focused on Non-Alcohol THC and CBD Beverages

New Partnership to Focus on Research that will Guide Responsible Innovation

TORONTO, CANADA – December 19, 2018 – Today, AB InBev, the world’s leading brewer, and Tilray, a global pioneer in cannabis production and distribution, announced a partnership to research non-alcohol beverages containing tetrahydrocannabinol (THC) and cannabidiol (CBD). The partnership is limited to Canada and decisions regarding the commercialization of the beverages will be made in the future.

The research partnership combines AB InBev’s deep experience in beverages with Tilray’s expertise in cannabis products. AB InBev’s participation will be through its subsidiary Labatt Breweries of Canada, one of the country’s founding businesses and its leading brewery, and Tilray’s participation will be through its Canadian adult-use cannabis subsidiary High Park Company, which develops, sells, and distributes a portfolio of socially responsible cannabis brands and products in Canada. Each company intends to invest up to $50 million USD, for a total of up to $100 million USD.

“Labatt is committed to staying ahead of emerging consumer trends. As consumers in Canada explore THC and CBD-infused products, our innovative drive is matched only by our commitment to the highest standards of product quality and responsible marketing. We intend to develop a deeper understanding of non-alcohol beverages containing THC and CBD that will guide future decisions about potential commercial opportunities,” said Kyle Norrington, President, Labatt Breweries of Canada. “We look forward to learning more about these beverages and this category in the months ahead.”

“We are delighted to be joining forces with a world-leading beverage company, AB InBev, to research how to create enjoyable cannabis beverage products. Tilray and AB InBev share a commitment to responsible product development and marketing, and we look forward to beginning our work on this important partnership as Tilray continues to pioneer the development of a professional, transparent, and well-regulated cannabis industry,” said Brendan Kennedy, CEO of Tilray.

With strong track records of responsible product development and marketing in their respective industries, AB InBev and Tilray believe that the legal market for THC and CBD beverages will only thrive if the industry embraces appropriate regulation of adult-use cannabis, including responsible production, marketing, sale and consumption.

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