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3 Companies That Could Benefit From The Expanding Cannabis-Infused Beverage Market

October 2, 2018 1:36 pm
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Molson Coors Brewing Co (NYSE:TAP) came out of the shadows last week to announce it’s getting into the marijuana business.

Although technically, this already happened in August after the company started a joint venture with HEXO Corp (OTC:HYYDF), formerly known as Hydropothecary, last week’s announcement got far more coverage after CEO Mark Hunter told Bloomberg the company is now planning to launch a line of cannabis-infused teas, seltzers and other drinks that beer consumers may be interested in trying.

Certainly this is big news for the cannabis industry. After all, Molson Coors is no slouch. It’s the world’s seventh largest brewer by volume, has a market cap of $13.4 billion, and last year, the company did $1.4 billion in net income.

Just as the cannabis market was strengthened by the Constellation Brands (NYSE:STZ) deal with Canopy Growth Corp (NYSE:CGC), the same is going to happen with Molson Coors’ entry into the market. And of course, this means there’s a select group of cannabis companies that could end up becoming very attractive partners or acquisition targets for this multi-national brewing behemoth.

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Province Brands

Province Brands is a premium adult beverage company run by folks who believe the world is ready for a third option outside of cannabis and alcohol. Something that combines the fun experience of drinking alcohol with the comparatively less harmful experience of consuming cannabis by means other than smoking or vaping.

Province’s flagship products are not alcohol. They’re not drinkable marijuana either. They’re something completely different. A fully-legal premium psychoactive beverage made from cannabis. And unlike alcohol, Province’s drinks are brewed from hemp, they’re low calorie, capable of delivering a short onset time and a short duration of effect. This is also a drink that offers the psychoactive benefits of alcohol, but without the hangover or negative health effects.

Province Brands closed a $10.95 million Series A round last month. The company is now expected to go public in Canada via a reverse takeover of Colson Capital Corporation. A $20 million Series B has been planned to coincide with the public listing.

Two Roots Brewing Company

Two Roots is the maker of an artisan fusion of cannabis and beer. Think craft beer meets cannabis.

Two Roots, in an effort to emulate the rapid onset of alcohol and dissipation, micro-doses its beers. And similar to Province Brands, the company’s “cannabier” offers the recreational benefits of alcohol without the negative health consequences and hangovers.

Two Roots currently offers a lager, a stout, an IPA, a blonde ale and a wheat beer.

The company’s first line of beverages was launched by Cannabiniers. This is a beverage, technology and brand management company that raised $19 million as a part of a Series A round.

Kikoko Tea

Kikoko Tea is a California-based, cannabis-infused tea company. The company’s teas represent a more evolved cannabis-infused style tea. Ingredients are organic and sustainably sourced. The teas deliver a more high-end experience and should not be confused with low-grade weed teas you might find placed next to a box of gummies at a dispensary. These teas command exclusive shelf space. In fact, the company is a preferred brand at some of California’s biggest retail chains, including MedMen Enterprises Inc (OTC:MMNFF) and Apothecarium.

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Although men do enjoy this tea, the company has become a hit with women. And not just in cannabis circles. Gwyneth Paltrow’s GOOP brand chose Kikoko for its first cannabis wellness collection, and the company even landed a six-page feature story in Oprah Winfrey’s “O” Magazine.

Kikoko Tea is a female-run operation that definitely caters to the female cannabis market. A market, by the way, that's considered to be one of the most lucrative in the cannabis space.

Two of the company’s products are certainly designed for women. The first, called Sympa-Tea is a a 3 mg THC, 20 mg CBD tea that helps relieve cramps, and the second, called Sensuali-Tea, is formulated to increase sexual desire and the effects of orgasm.

According to BDS analytics, when it comes to the cannabis-infused beverage category, Kikoko already owns the tea category and is the leader in the beverage category with 35 percent of the market.

There are dozens of cannabis-infused beverage companies in the marketplace, and there will be a consolidation in the near future. Whether or not Molson Coors will take part is yet to be seen. But make no mistake: Molson Coors, Constellation Brands and Heineken N.V. (OTC:HEINY) have all entered the market, and it's unlikely they will be niche players.

Photo credit: Javier Hasse.