Canadian cannabis producer Tilray Inc. TLRY is in the spotlight after the company announced a partnership between its subsidiary High Park Farms and Anheuser-Busch InBev NV BUD's Labatt Breweries of Canada.
What Happened
High Park Farms and Labatt Breweries of Canada forged a partnership to research non-alcoholic beverages containing THC and CBD. Under the terms of the agreement, each company will provide up to $50 million for a total of up to $100 million for the program. The details of any product sales are to be determined.
Bernstein's Take
The cannabis industry's structure has a rather uncertain future that depends mostly on consumer tastes, Bernstein analyst Trevor Stirling said in a note.
Flower is likely to be ultimately dethroned as the main means of cannabis consumption, with consumers opting for vaping for THC consumption and for edibles and beverages for CBD, the analyst said.
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Edibles and drinks are two of the most exciting segments of the cannabis market.
Following legalization of recreational use in Canada and 10 U.S. states, many companies have entered the market with products such as chocolate, gummies, baked goods and a variety of beverages infused with CBD and/or THC.
As the market grows, it's beating flower in sales. In a number of states, such as Colorado, California and Washington, sales of cannabis flower have dropped to less than 50 percent, with concentrates, edibles and topicals accounting for the remainder of the market.
Bernstein has a Buy rating and $122 price target on Anheuser-Busch.
Tilray shares were up 7.75 percent at $76.50 at the time of publication Thursday.
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