Under the terms of the agreement, Molson Coors Canada will hold a controlling 57.5 per cent stake in the partnership. Hydropothecary will own the remaining ownership interest.
The joint venture is subject to various approvals conditions and is scheduled to close before September 30. Following the completion of the transaction, the chief executive officer now directly owns 147,275 shares in the company, valued at $9,022,066.50.
HEXO is one of Canada's lowest-cost producers of medical cannabis products, and the company is rapidly expanding into the recreational market by expanding their current 300,000 sq. ft. of production capacity by adding 1 million more square feet by year's end.
In a statement, Molson Coors President and CEO Frederic Landtmeters said the companies will aim to be a "market leader in offering Canadian consumers new experiences with quality, reliable and consistent non-alcoholic, cannabis-infused beverages".
Analysts watching the cannabis and beverage space called the deal a "historic milestone" for the Canadian cannabis industry.
"While much of our work has focused on the substitution impacts that we believe are evident in the U.S". "We expect today's Hexo/Molson Coors Canada JV to be nothing short of trend-setting for the cannabis industry as a whole". Zacks Investment Research lowered shares of Molson Coors Brewing Co Class B from a "hold" rating to a "sell" rating in a research note on Tuesday, April 24th.
"There is a paradigm shift underway and cannabis has the potential to provide answers to the alcoholic drinks industry's existential questions", said Spiros Malandrakis, head of alcoholic drinks at Euromonitor International.
Molson Coors Canada is headquartered in Toronto and is indeed North America's oldest brewer, with sales that capture about one-third of the total Canadian beer market, selling brands like Coors Light, Belgian Moon, Molson Canadian, and several others.
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"We're going to start with THC but also CBD and then CBG".
Meanwhile, Molson Coors reported that it earned US$424.1 million or $1.96 per diluted share in the second quarter.
However, worldwide brand volumes were down 2% in Q2 driven by declines in the the U.S. (-5%) and Canada (-2%) that were only partially offset by Europe (+3%).
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Revenues for the period ended June 30 slipped to almost US$3.1 billion, slightly below expectations. Revenue per hectoliter increased 0.9 percent, however.
Hunter said the company plans to build volumes with its wholesale partners in the second half of the year, which will lead to higher shipments than depletions.