Backup plan = beer... Cannabis companies have been waiting for US federal regulators to legalize marijuana, and now they’re having a (few) drinks while they bide their time. Yesterday Canadian cannabis giant Tilray bought NYC’s top craft brewer Montauk Brewing Co..
- Big swigs: Montauk is sold in 6K+ stores, including Target, Whole Foods, Trader Joe's, Costco, and Walmart. It joins beer maker SweetWater and bourbon brand Breckenridge Distillery in Tilray’s growing beverage portfolio.
- Two cans with one stone: Tilray said the purchase would boost profitability. But it serves another purpose: Tilray plans to leverage Montauk’s US distribution network (and customers) to start selling canna-beverages nationwide as soon as they’re legal.
Stuck in the weeds… Recreational cannabis is legal in 19 states and DC — and five more states are voting today on whether to greenlight it. But since cannabis still isn't federally legal, many canna-companies are struggling to build national distribution networks.
- Impatient partners: Bud brewer AB-InBev ended a two-year partnership with Tilray this year after waiting for legalization. Meanwhile, drink giants Constellation and PBR have launched their own canna-beverages in smaller markets.
- Placeholder products: Pot rival Canopy Growth has launched non-cannabis lines, like a skincare biz and sports-drink brand, to prep for legalization (think: eventually infusing moisturizer with CBD).
The star player is on the sidelines… While Tilray, Aurora Cannabis, and Canopy posted overall losses last quarter, Tilray’s smaller non-canna brands are already profitable — and Tilray expects positive cash flow by the end of the year (FYI: Aurora reports Thursday). But the cannabis industry’s main attraction (cough, cannabis) could spur rapid growth when it gets in the game: the market is forecast to grow from roughly $1B last year to $19B by 2028.