Canopy Growth Corp. (TSX:WEED) is acquiring a majority stake in Toronto-based energy sports drink maker BioSteel Sports Nutrition Inc.
The deal has Canopy acquiring a 72% stake in Biosteel. The cannabis giant, which is headquartered in Smiths Falls, Ontario, said in a statement that it wants to quench the thirst of prospective consumers with a line of cannabis-infused sports drinks. Canopy Growth is hoping that it can become a player in the $50-billion U.S. global sports nutrition market.
Financial terms of the deal were not disclosed.
Canopy’s interim Chief Executive Mark Zekulin said that the acquisition will see the company leverage BioSteel’s well-established brand among professional athletes alongside its expertise in selling regulated products to consumers. A version of the pink-hued BioSteel drink infused with cannabidiol, the non-impairing compound found in the cannabis plant, is already in the works, he said.
Founded in 2009, BioSteel's products have been bought by 70% of the teams in North America’s four major sports leagues and have brand ambassador deals with hockey legend Wayne Gretzky, Edmonton Oilers star Connor McDavid and Brooke Henderson, one of the best female golfers in the world.
Although U.S. regulators are currently evaluating CBD-infused goods to determine if there's any public safety risk in consuming those products, some analysts project CBD-infused drinks could be a multi-billion market in the coming years. Sales of CBD-infused drinks are expected to rise to $1.4 billion U.S. in 2023 from $227 million U.S. this year, according to Zenith Global.
However, the U.S. Food and Drug Administration stated that CBD in food and drinks remains illegal despite the most recent U.S. Farm Act legalizing hemp, leaving the status of hemp-sourced CBD in a relative grey area.
Alongside BioSteel’s proposed CBD-infused drink, Canopy's is preparing to unveil other cannabis-infused beverages in the next few weeks as pot edibles, extracts and topicals become legal later this month in Canada. Canopy says it has a range of various drinks, some under the Tweed banner, which will be ready for sale later this year.
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