NEW YORK, July 16, 2019 /PRNewswire/ -- Each year, more and more countries are moving towards approving cannabis use. In particular, medicinal cannabis is witnessing immense support as most of the countries looking to enter into the market space are more keen on the medical sector due to the therapeutic benefits associated with cannabis. However, several regions around the world have also either decriminalized or legalized the use of recreational cannabis in moderate amounts. For instance, Canada completely legalized adult-use cannabis in late 2018. On the other hand, countries such as Colombia and Spain have only decriminalized recreational use, allowing adults to possess up to a certain amount. Moreover, the U.S. has given states the jurisdiction to legalize cannabis or keep the drug illicit. As a result, more than half the U.S. legalized cannabis for medical use, while a fifth of the nation, including the District of Columbia, allows for legal recreational usage. While the medical marketplace is much more globally prevalent, the recreational market is expected to overshadow the medical segment as the North American market continues to mature. Additionally, as the recreational market continues to expand, consumers are also experiencing an influx of new products. Aside from traditional cannabis flower, consumers can now choose from a variety of products at dispensaries and retail stores. Now, cannabis-based concentrates, extracts, and edibles are becoming highly popular among consumers. Specifically, the edible and beverage marketplace is quickly gaining popularity due to the ease at which customers can use the products. Furthermore, a large recreational user base exists for the edible and beverage market, and the industry is heavily being accelerated by the increasing demand for wellness products to treat a variety of health concerns. According to data compiled by Reports and Data, the global cannabis-based beverage market was valued at USD 1.57 Billion in 2018. By 2026, the market is expected to reach USD 5.04 Billion while exhibiting a CAGR of 15.4% during the forecast period. BevCanna Enterprises Inc. (CSE: BEV), Anheuser-Busch InBev SA/NV (NYSE: BUD), Molson Coors Brewing Company (NYSE: TAP) (TSX: TPX), Brown-Forman Corporation (NYSE: BF-B), iAnthus Capital Holdings, Inc. (OTC: ITHUF) (CSE: IAN)
The cannabis-infused edible and beverage market is expected to witness a strong increase in demand, particularly for beverages over the next several years. Canaccord Genuity analyst Bobby Burleson noted last year that beverages packed with CBD or THC ingredients can account for nearly 20% of the U.S. edible products markets by 2022, increasing from 6% in 2018. Burleson highlighted that the growing beverage industry is becoming an attractive investment opportunity for beer and soda makers and that data has shown that there is a direct correlation between alcohol and cannabis consumption. A joint research conducted by the University of Connecticut, Georgia State University, and Universidad Del Pacifico discovered that counties located in medical marijuana states witnessed a 15% reduction in monthly alcohol sales. The conclusion of the study uncovered that cannabis and alcohol are both substitutes for one another, meaning that they share the same target audience. The study also indicates that as more countries move towards cannabis legalization, more users will be inclined to shift over to the cannabis market. The shift has even prompted alcohol producers to enter into the cannabis industry to maximize its consumer base reach. While alcohol beverage producers may look towards developing THC beverages, soda producers are looking to leverage CBD for health and wellness beverages. Soda producers are specifically focusing on CBD because of the consumer shifts from sugary drinks to more functional options. Regardless of the market type, Canaccord expects both the THC and CBD-based beverage markets in the U.S. to experience growth, as by 2022, Canaccord expects the demand for CBD beverages to reach USD 260 Million, while THC beverages are projected to reach USD 34 Million. "Interest has spiked from the beer industry on mounting evidence of a substitution relationship between cannabis and alcohol, while large soda companies increasingly view CBD as a natural fit within their strategically important wellness offerings," Burleson wrote.
BevCanna Enterprises Inc. (CSE: BEV) announced earlier last week, "its business objectives for the second half of 2019 and beyond. The Company's business objectives for the upcoming six months include:
- completion of testing of water-soluble, powder-based beverages in the United States, with a focus on the California market;
- entry into multiple LOIs with Canadian Licensed Producers for white-label manufacturing of cannabis infused beverages for initial clients for the Canadian market;
- refinement and roll-out of BevCanna's in-house brand concepts for both the Canadian and United States markets, including Anarchist Mountain Beverages, BevCanna's first brand, which is inspired by the site of the Company's bottling operations; and
- identification of a suitable partner and finalization of cultivation crop-sharing agreement with an established Canadian Licensed Producer in respect to the Company's 100-acre outdoor cultivation site in the fertile Okanagan Valley.
As disclosed in the Company's prospectus dated June 20, 2019, available under BevCanna's SEDAR profile at www.sedar.com, the Company also announces that it has entered into an exclusive master lease and services agreement with world-class beverage manufacturer Naturo Springs. The agreement includes exclusive access to Naturo Springs's alkaline spring water aquifer, from which the Company will source water to infuse with CBD and THC for its cannabis infused beverage products. The partnership also enables BevCanna to cultivate its own sun-grown cannabis biomass, through the lease of 100 acres from Naturo Springs. BevCanna was recently awarded a hemp cultivation license from Health Canada, and is subsequently pursuing a Cannabis Cultivation License. The biomass and pristine spring water will form the basis of BevCanna's range of innovative infused beverages, for both house brands and white-label clients.
In addition to providing access to these on-site resources, Naturo Springs has agreed to allocate their 40,000-square foot HACCP-approved bottling facility and warehouse for BevCanna's exclusive use. A Standard Processing License has already been applied for on the existing facility and BevCanna is in the final evidence submission stage.
"We're incredibly excited to leverage Naturo Springs's unparalleled natural resources, as well as their extensive manufacturing expertise," said John Campbell, Chief Strategic Officer of BevCanna. "This partnership will support BevCanna's transformation from an emerging leader into a global force in cannabis-infused beverages, and will provide an early-mover advantage within the industry."
"The scalable infrastructure and assets obtained through this deal will allow us to commercialize our own in-house brands and formulations, and will also work with white labelling partners across Canada," added Emma Andrews, Chief Commercialization Officer at BevCanna. "There's unmatched expertise on our team, and untapped potential within the infused product landscape."
Naturo Springs has also obtained pre-approval from the Agricultural Land Commission to expand the facility up to 170,000 square feet, to be used for BevCanna's future growth strategy. The bottling plant's current capacity is 72 million bottles per shift/per annum.
For more information on the Company, including its business, objectives and the agreement with Naturo Springs, including all material terms of the agreement, see the Company's prospectus dated June 20, 2019, available under BevCanna's SEDAR profile at www.sedar.com.
About BevCanna: BevCanna Enterprises Inc. (CSE: BEV) plans to develop and manufacture cannabinoid-infused beverages and consumer products for in-house brands and white label clients. With decades of experience creating, branding and distributing iconic brands that have resonated with consumers on a global scale, the team demonstrates an expertise unmatched in the emerging cannabis beverage category. Based in British Columbia, Canada, BevCanna has a 100-acre outdoor cultivation site in the fertile Okanagan Valley and the exclusive rights to a pristine spring water aquifer, as well as a world-class 40,000-square-foot, HACCP certified manufacturing facility, with a current bottling capacity of up to 72M bottles per shift/per annum. BevCanna's vision is to be a global leader in infused innovations."
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Anheuser-Busch InBev SA/NV (NYSE: BUD) is a publicly traded company (Euronext: ABI) based in Leuven, Belgium, with secondary listings on the Mexican (MEXBOL: ANB) and South African (JSE: ANH) stock exchanges and with American Depositary Receipts on the New York Stock Exchange. Recently, 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 USD 50 Million USD, for a total of up to USD 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."
Molson Coors Brewing Company (NYSE: TAP) (TSX: TPX) has defined brewing greatness for more than two centuries. Molson Coors Canada (MCC), the Canadian business unit of Molson Coors Brewing Company, and HEXO Corp. recently announced that they had closed the transaction announced on August 1st, 2018, to form a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization. The joint venture, Truss, will be led by former Molson Coors executive, Brett Vye, in the role of Chief Executive Officer. Vye will report to the Truss board of directors consisting of three members appointed by MCC and two members appointed by HEXO. "With the backing of two partners with deep Canadian roots, proven success, and market-leading experience in the respective beverage and cannabis industries in Canada, Truss will hit the ground running," said Brett Vye, Chief Executive Officer at Truss. "When consumable cannabis is legalized in Canada, Truss will be ready to make its mark as a responsible leader in providing high-quality beverages for the Canadian consumer. Why "Truss"? We are joining together the extensive experience and excellent practices of each partner to build a powerful foundation for the future."
Brown-Forman Corporation (NYSE: BF-B), founded in 1870 by George Garvin Brown, has enriched the experience of life by responsibly building fine quality beverage alcohol brands. Brown-Forman Corporation recently reported results for the fourth quarter and fiscal year ended April 30th, 2019. For the fourth quarter, the Company's reported net sales increased 1% to USD 744 Million (+5% on an underlying basis) compared to the same prior-year period. In the quarter, reported operating income grew 55% to USD 228 Million (+9% on an underlying basis) and diluted earnings per share grew 47% to USD 0.33. According to the Company's forward-looking statements, Brown-Forman is tracking changes in: consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, its premium products, or spirits generally, and its ability to anticipate or react to them; legalization of marijuana use on a more widespread basis; shifts in consumer purchase practices from traditional to e-commerce retailers; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation. Lawson Whiting, the Company's President and Chief Executive Officer, said, "We delivered solid underlying net sales growth of 6% after considering the one point drag due to tariff-related price reductions. This growth rate is in-line with fiscal 2018, as well as our expectations for fiscal 2020, demonstrating the consistency of our revenue delivery. We believe that delivering sustained, compounding growth is the best way to create value for shareholders over the long term."
iAnthus Capital Holdings, Inc. (OTCQX: ITHUF) (CSE: IAN) owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry. iAnthus Capital Holdings, Inc. recently announced that its U.S. subsidiary had closed the previously announced acquisition of CBD For Life, a top-ranked, national CBD brand in the U.S. CBD For Life has experienced accelerating revenue growth, from both existing customers and new account additions—representing approximately 50% quarter over quarter growth. CBD For Life's products are sold directly to consumers online at www.cbdforlife.us as well as in over 1,000 retail locations in 46 states, with a dedicated sales channel working with national retailers to on-board new locations weekly. CBD For Life's roster of national retailers include Urban Outfitters, Paper Source, Of a Kind, Olympia Sports, and Weis Markets, with others soon to be announced. Since announcing the Urban Outfitters relationship in mid-April 2019, the retailer has expanded the lineup of CBD For Life products it carries and the number of retail locations in which it offers them. CBD For Life's CBD-infused wellness, self-care, and beauty products have been featured in a wide range of cable, online, and print publications—including on NBC's Today Show and Telemundo47. "I couldn't be more thrilled to continue driving iAnthus' national strategy with CBD For Life's proven product line," said Beth Stavola, Co-Founder of CBD For Life and Chief Strategy Officer of iAnthus. "I continue to believe in iAnthus' long-term value creation following the completion of both this deal as well as the MPX transaction, and I look forward to the great future ahead for team iAnthus."
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