US wholesaler Breakthru Beverage invests $9.2m in cannabis

US multi-state wholesaler Breakthru Beverage is to invest over US$9.2 million in Canadian cannabis producer CannTrust, which will see Breakthru become the exclusive distributor for CannTrust products in Canada.

In a joint press release, it was stated that Breakthru will establish a “cannabis-focused sales brokerage company” through which it will distribute CannTrust’s products in Canada once recreational use is legalised on 17 October. The brokerage company will work directly with provincial control boards and designated retail outlets to support sales of the CannTrust portfolio.

Breakthru was founded in 2015 through the merger of Chicago-based Wirtz Beverage Group and New York’s Charmer Sunbelt Group.

Established in 2014, CannTrust, which has three new recreational cannabis brands – liiv, Xscape and Synr.g – also recently secured a deal with the Ontario Cannabis Store.

As part of the investment, an affiliate of the Breakthru Beverage Group will purchase 902,405 CannTrust shares, priced at $10.23 each. The investment will total $9,231,600 and Breakthru will also have the option to purchase an additional two million CannTrust shares should certain conditions be met.

Brad Rogers, president of CannTrust, said: “Breakthru was the first nationally established beverage alcohol broker in Canada and is the country’s leader in representing top beverage alcohol brands in the marketplace. Their progressive model, sales technology, infrastructure and extensive relationships across Canada make them an ideal fit for our business strategy.

“CannTrust has made significant investments in both capacity and innovation with the next generation of products such as edibles and cannabis-infused beverages expected to launch in 2019. We have a nano-technology that enables us to produce cannabis infused beverages neutral in taste, and clear as water. This technology will position us to be a leader in Canada, and in future markets globally”.

Danny Wirtz, vice-chairman of Breakthru Beverage Group added: “We’re excited to work with the most respected producer in Canada and leverage our well-established business model, which will put us at the forefront of shaping a high performing organisation and socially responsible industry. This is a logical extension of our expertise and provides a new growth opportunity into this emerging market”.

Breakthru is the latest in an increasingly long line of drinks companies investing in the cannabis sector.

Last month there were reports that that the owner of Gordon’s Gin and Guinness, Diageo, was in talks with at least three leading cannabis producers and may be adding marijuana-infused drinks to its portfolio.

A spokesperson from Diageo refused to comment on the reports, but did add: “As we’ve said before, we are monitoring this space closely”.

Earlier in the same month, it was announced that brewer Molson Coors had made a deal with The Hydropothecary Corporation, a Canadian cannabis producer, to launch a new stand-alone business which will develop “non-alcoholic, cannabis-infused beverages for the Canadian market following legalisation”.

Meanwhile, Constellation Brands, which bought a stake in Canadian company Canopy Growth in October last year, increased its stake in the business in August, investing US$4 billion to acquire a 38% share. The new deal, which it claims is “the largest to date in the cannabis space,” cements Canopy Growth as its exclusive global cannabis partner. Constellation said that the funds will enable Canopy Growth to “build and/or acquire key assets” in around 30 countries that are legally developing a medical cannabis programmes.

In July, a team of Canadian scientists announced that they were attempting to make a beer brewed with the “stalks, stem and roots of the cannabis plant”.

Meanwhile, in May, the Canadian branch of distributor Southern Glazer’s Wine and Spirits created an off-shoot dedicated to cannabis products. It hatched a deal with marijuana producer Aphria to distribute its products across Canada when the drug is officially legalised later this year.

Among those planning to launch cannabis-related drinks products include Heineken-owned US craft brewer Lagunitas with its “IPA-inspired, THC-infused sparkling water,” a cannabis-infused Sauvignon Blanc from California’s Rebel Coast Winery and Blue Moon creator Keith Villa’s new business dedicated to producing cannabis-infused craft beer.

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