HEXO sees cannabis drinks venture with Molson as ‘springboard’ to global markets

Close-Up Of Beer And Cannabis On Table

HEXO Corp.’s (HEXO.TO) vice president of strategic business development expects his company’s cannabis beverages joint venture with the Canadian business unit of Molson Coors Brewing Company (TAP) will be a “springboard” for a global drinks expansion.

Speaking at the World Cannabis Congress in Saint John, N.B. on Monday, Jay McMillian said Canada has the advantage of developing beverages at a larger scale than rivals in the United States, where laws require products to be manufactured and sold within each state where the drug is legal. He anticipates that distinction will be a selling point for major consumer companies looking to enter the space that will lure them to Canada.

“Canada is this great experiment, this great place where we can come and establish these high-quality products, this great distribution, be able to see how it works across different demographics, get that feedback from the consumer and then we will move into other jurisdictions whether that’s into the UK, the U.S. or Latin America,” McMillian said.

A recent report from Deloitte predicted the market for next-generation cannabis products, which includes beverages, will be worth $2.7 billion annually.

Ottawa released its final regulations for edibles, drinks, vapes and topicals on Friday. The new products are set to become legal for sale on Oct. 17.

Last August, Gatineau, Que.-based HEXO announced a joint venture partnership with the Canadian business unit of Molson to develop non-alcoholic, cannabis-infused beverages for the Canadian market.

Cannabis beverages sold in U.S. states like Colorado have been criticized for poor taste, inconsistent potency, and unpredictable effects. McMillian said Canada has the opportunity to set the “gold standard for the world” in the category.

Former Nova Scotia Premier and executive director of the Cannabis Beverage Producers Alliance Darrell Dexter joined McMillian in a panel discussion on Monday. He agrees the opportunities in Canada for drinks are international in scale.

“It’s that kind of leadership in this sector that is going to establish the producers here, not just within the Canadian market,” he said.

“As things are changing globally, you are going to see that part of that export is expertise and innovation that is going to reach the global market.”

However, he also cautioned that the regulatory challenges will be formidable for companies looking to use Canada as a test market.

“The cannabis sector is treated differently than every other sector. The regulatory environment is more difficult. It’s more onerous,” he said. “There’s not much we can do about that.”

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