Molson Coors Brewing Co. has engaged in discussions with several Canadian-based cannabis companies in an effort to stem declining beer sales and capitalize on the coming marijuana legalization in Canada.
A deal would see another major U.S. player enter the lucrative marijuana market ahead of Canada legalizing recreational cannabis on October 17 of this year. Molson Coors has spent the past six months engaged with as many as four separate cannabis companies, including Aphria Inc. and Aurora Cannabis Inc., discussing its plans to enter the marijuana space.
A deal with a marijuana producer would provide Molson Coors with access to a growing market pegged to be worth as much as $6.5 billion by 2020, according to a report published last month by CIBC Capital Markets. A report released by Cowan & Co. in April said cannabis and alcohol are substitute social lubricants. The report said that binge drinking behaviours – described as consuming at least seven drinks per sitting – accounts for 17% of the U.S. population, but is set to fall as the legalization of recreational marijuana usage widens in North America.
Molson Coors wouldn’t be the first alcohol-related company to enter the sector. Constellation Brands Inc., the U.S. distributor for Corona beer, disrupted the cannabis industry by taking a 9.9% stake in Canopy Growth Corp. in October 2017 for $245 million.
Constellation’s stake in Canopy, Canada’s largest cannabis company by market capitalization, is now roughly worth $877 million after the alcohol producer acquired one-third of a $600-million convertible note offering.
