May 1, 2019
Sproutly, a Toronto-based licensed cannabis producer, is teaming up with Moosehead Breweries to create new beverages for the expanding Canadian marketplace. In October 2019, the government is expected to begin allowing cannabis-infused beverage sales; the joint venture between Sproutly and Moosehead will be there to capitalize on the rapidly growing product category.
“Sproutly spoke to many beverage companies, both large and small,” CEO Keith Dolo said on a conference call May 1. “We were looking for the right partner who shares our enthusiasm on our technology and the willingness to be creative on new beverage platforms.”
In this case, both companies bring a sense of reputational trust to the table (New Brunswick-based Moosehead has been operating for more than 150 years) and a track record of scale in Canada.
On Sproutly’s side of the deal, the company will bring a suite of proprietary water-soluble cannabinoid technologies, known as Infuz2O. The company will produce infux2O cannabinoids at its Toronto facilities, and Dolo said Sproutly can produce up to 33 million doses per year. The key to the company’s technology, according to Dolo, is the titration: onset takes place within five minutes, and cannabinoid effects last up to 90 minutes.
The titration is important, Dolo said, because he and this as-yet-unnamed joint venture are counting on the Canadian cannabis beverage market to respond to the more sociable pathways to cannabis use. Much like Moosehead’s roster of popular beers, infused beverages are seen as a way to enjoy cannabis in a group setting—and perhaps, increasingly, in a public setting.
“Our team firmly believes that the cannabis beverage market will increase substantially with the introduction of beverages that are ‘sessionable,’ allowing instant user gratification and multiple drinks per occasion,” he said.
Moosehead CEO Mathew Oland will be in charge of the joint venture, which will be a 50/50 split ownership. The transaction is expected to close at the end of this month.
“We’re aligned in our mutual goal of capturing substantial market share in the cannabis beverage category,” Oland said.
Indeed, market share of the cannabis beverage segment is a hotly anticipated narrative and conversation in these early months of 2019. The Canadian government set aside its approach to edibles and beverages for a year, following the October 2018 legalization of an adult-use cannabis market. The intent was to hammer out stringent rules required for products that might more readily accessible to children. Draft rules, for instance, demand that beverages are sold in plain packaging—with child-resistant caps. These beverages may not even be allowed to be sold as “beer” or “wine.”
The newly formed Cannabis Beverage Producers Alliance is working with the government to advocate for regulations similar to alcohol in Canada.
Those debates are under way now, and businesses on the sidelines show no sign of slowing down their preparations for this soon-to-open corner of the market.
“We are delighted to see the excitement and build-up to the next phase of cannabis legalization in Canada later this year,” said Dooma Wendschuh, co-founder and CEO of Province Brands of Canada. “With today’s news of Sproutly and Moosehead coming after recent match-ups from AB InBev and Tilray, Constellation Brands and Canopy Growth, Heineken and CannaCraft, and Molson-Coors and Hexo, there can be little doubt that beverages will be the dominant form of cannabis consumption in the years ahead.”