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Issue link: http://digital.canadawide.com/i/1159085
SOURCE: NURTURING NEW GROWTH: CANADA GETS READY FOR CANNABIS 2.0, DELOITTE Although some rules around the pot- infused beverages have come to light, most of them have to do with production and marketing. Manufacturers won't be able to promote drinks with colourful imagery or packaging, for example, or use terms that are synonymous with beer, wine and spirits. They're also forbidden from adding alcohol, caffeine or nicotine, and there's a limit of 10 milli grams of tetrahydrocannabinol ( THC), the chemical that produces a cannabis high. And only licensed cannabis retailers will be able to sell THC goods, so forget buying them in bars and restaurants—at least for the foreseeable future. But there's no real clarity on where you'll be able to enjoy the beverages, which makes Stewart ner- vous. "If, for example, someone opens a cannabis store on Denman Street, and has an ability to sell edibles and drinkable products, these products are regulated like cannabis and not like alcohol," he says. "So you're able to buy your cannabis drinks at the store on Denman and walk down to English Bay and drink them right in front of the Cactus Club. But you can't go into the Cactus Club and buy a beer and go out on the beach and drink it." Joint ventures It makes sense, then, that beverage companies are lining up to partner with cannabis enter- prises, seeking to use their existing infrastruc- ture to hit what projects to be a burgeoning, untapped market. Constellation Brands, the New York–based producer of Corona beer, invested $5 billion for a 38-percent stake in Ontario weed giant Canopy Growth Corp., while Molson Coors Canada paired up with Quebec's Hexo Corp. to launch Truss, a line of pot drinks. B.C.-based licensed producer Tilray has partnered with Budweiser producer Anheuser-Busch InBev to research the market in Canada, with each company reportedly contribut- ing $50 million to the venture. "I guess the question is, what would you give for the opportunity to invest in one of the first five breweries ever in Canada?" asks Dan Sutton, founder of Vancouver-headquartered cannabis pro- ducer Tantalus Labs, which runs a 75,000-square- foot state-of-the-art facility in Maple Ridge. In the spring, Tantalus announced a letter of intent to produce cannabis beverages with Craft Collective Beerworks, a Vancouver-based contract brewing operation that has relationships with well- known brands like Postmark Brewing and Doan's Craft Beer Co. "In the cannabis beverage market, we're antici- pating a future need. The market is exactly zero today," Sutton says. "There's no explicit need for this product right now. It's kind of like Henry Ford said: 'If I had asked people what they wanted, they would have said a faster horse.' That analogy rings true in this situation, because it's hard to envision a product mix that hasn't been executed on." Cannabis drinks are legal in some U.S. states, but they haven't permeated the market like many were expecting. Sutton believes that over time, there'll be some real growth: "I think it'll take sev- eral years to shape up. But as products succeed, 38 BCBUSINESS SEPTEMBER 2019