CannabisNewsWire
Editorial Coverage: Projections for the cannabis markets are
staggering, yet there’s evidence that the lofty estimates may be
understated.
- Cannabis projections often fall far short of actual sales
growth.
- Cannabis-infused beverages looks to be next area of explosive
upside.
- Beverage and cannabis companies striking deals to gain market
access.
- New technologies could snag significant market share.
Once viewed as wild conjecture for the future of cannabis
markets, forecasts in 2015 fell severely short of actuality. At
that time, consensus was that Canada could reach CA$2.8 billion in legal sales by 2020. Sage
prognosticators now say that the market may exceed CA$7 billion in 2019. Catering to the tastes of market
demographics, intense interest is now focused on the
cannabis-infused beverages market. Not even legal in Canada until
this fall, the infused beverage market is already pegged to reach a
mind-boggling CA$4.4 billion within five years.
Joining the ranks of the majors to meet this titanic demand,
Sproutly Canada Inc. (OTCQB: SRUTF) (CSE: SPR) (SRUTF
Profile) announced a joint venture with Moosehead
Breweries, the largest and oldest independent beer company in
Canada. Cannabis colossus Tilray Inc. (NASDAQ:
TLRY) announced a research partnership into infused
beverages and is bringing in executives with backgrounds in the
beverage industry. The maker of Corona and Modelo beer increased
its stake in Canopy Growth Corp. (TSX: WEED) (NYSE:
CGC) to 38%, spurring speculation of cannabis-infused
beverages to come. HEXO Corp. (NYSE American: HEXO) (TSX:
HEXO) entered a joint venture with Molson Coors Canada to
produce CBD-infused beverages. And New Age Beverages Corp.
(NASDAQ: NBEV) is anticipated to begin roll out of
Marley+CBD-infused drinks in four targeted U.S. states.
To view an infographic of this editorial, click here.
Untapped Market
Soothsayers seem to consistently underestimate the warp-speed of
public acceptance and the velocity of uptake of cannabis products.
As marijuana muscles into the mainstream, usage among all age
groups is on the upswing. However, among the most coveted 18-34
demographic, there’s an explosion of acceptance as these users
mature in a world where cannabis is common. Millennials are about
three times and Gen Z about four times more likely to use cannabis than aging Boomers.
Forward-leaning cannabis companies are full throttle in product and
brand development to corral this coveted demographic and capture
market share, now and for decades to come.
According to a United Nations report, cannabis is the most
widely consumed drug on the planet. Even so, only about 4% of the
world’s adult population has used it. North America, the leader in
cannabis growth, is only the fourth largest cannabis consumer
market on the globe, ranking behind Asia, Africa and Europe in
sheer size of its cannabis consumer market. As public perceptions
change and legalization expands, the number of users is certain to
skyrocket in a nearly untapped market. A global transition is
underway and presenting a once-in-a-generation opportunity.
The Deal
Of particular interest is the cannabis-infused beverages market.
Poised to capture an outsized share of the infused beverage boom,
Sproutly Canada
Inc. (OTCQB: SRUTF) (CSE: SPR) and Moosehead announced a joint venture that marries Moosehead’s
vast adult-beverage experience with Sproutly’s innovative cannabis
technology. The result? A fast-onset, fast-offset option that some
have called the industry’s holy grail of beverages.
Leveraging Sproutly’s transformational technology to create the
world’s first and only truly natural water-soluble cannabinoids,
the partners will develop, produce and market beverages that will
solve the major issues that limit the consumer appeal of
cannabis-infused beverages in the market today: 1) a
beverage that actually tastes good and 2) that can provide the
cannabis experience with an immediate onset and controllable
experience of up to 90 minutes. Sproutly and Moosehead intend to be
ready to put recreational infused beverages on the shelves by the
time of legalization.
Utilizing Sproutly’s acquired patent-pending process, validated
by 13 years of scientific R&D, the partners will form a new
company to launch a full line of infused products. Moosehead is an
iconic Canadian brand, selling more than 140 million bottles of
beer annually across Canada, the U.S. and 15 countries around the
world. The company’s 152 years of beverage experience and
formulation prowess has led to over a dozen popular brands,
including licensed and supporting partner brands such as Angry
Orchard, Twisted Tea and Samuel Adams beer, proving the ability to
manufacture and market leading adult beverages. In addition, the
Oland family who owns 100% of Moosehead also owned the beer brand
Alexander Keith’s prior to its sale to Labatt Brewery Company which
is currently owned by Anheuser-Busch InBev.
Unlike other lopsided joint venture forays into cannabis
beverages, the Sproutly-Moosehead agreement is a 50-50 equity
partnership structured to maximize the alignment of interests. Even
the board of directors will have an equal number of board members
from each company, with Sproutly appointing the chairman. The joint
venture includes a five-year exclusive agreement for Sproutly to
deliver its breakthrough water-soluble cannabis solution, and
Moosehead will license all its brands and related intellectual
property to the new company formed by the agreement. Moosehead will
provide marketing, distribution, logistics, admin and other
resources while Sproutly will deliver formulation, R&D,
marketing and other resources.
Underscoring the significance of the agreement, Matthew Oland, a
Moosehead executive and scion of the founders, will leave Moosehead
to become CEO of the newly formed company. Moosehead and Sproutly
combined appear to be going all in on this enterprise.
Paradigm Shift
Perplexing problems plague the creation of ingestible
cannabinoids. Cannabinoids and terpenes are completely insoluble in
water resulting in serious difficulties with absorption, dosing,
efficacy and onset/offset times. For years laboratory-formulated
cannabinoids have been engineered to become water compatible and
sort of mimic water solubility. These techniques have been in use
by pharmaceutical and beverage companies for decades, but
production challenges and insolubility issues remain for
cannabinoids. Relying on the same outdated, costly and ineffective
techniques, these encapsulation and emulsion technologies are
what’s currently being employed by the suitors to the
cannabis-infused beverage bonanza.
Establishing a paradigm shift in how cannabis is effectively and
efficiently processed, delivered and consumed, Sproutly is
transcending the industry's current antiquated regimens. Already a
licensed premium cannabis producer with 1,400 kg annual production
capacity, Sproutly also owns the rights to the world’s first and
only naturally water-soluble cannabis technology for Canada,
Australia, Jamaica, Israel and the entire European Union.
Sproutly’s partner who licensed the technology, Infusion
Biosciences, discovered that the cannabis plant naturally produces
water-soluble forms of phytochemicals. Infusion Biosciences then
created a patent-pending Aqueous Phytorecovery Process (APP) for
the recovery of naturally water-soluble phytochemicals
(Infuz2O). Unlike encapsulation or emulsion,
Infuz2O is a truly water-soluble cannabis solution that
fully dissolves in water and can be easily and economically added
directly into beverage formulations.
Infuz2O has the unique ability to deliver precise
doses and measurable amounts of cannabis and is predictable, with
less than five minutes onset and less than ninety minutes offset
times, the same as smoking or vaping cannabis. Sproutly’s APP
Technology also recovers valuable natural oil-based cannabinoids in
addition to the water-soluble phytochemicals destined for
beverages. Sproutly’s transformational technology produces the
world’s only naturally water-soluble bioactive molecules that
deliver the full experience of cannabis that is strain specific.
Product and production advantages such as these could lead to a
lion’s share of a market set to quickly balloon to billions of
dollars.
Creating Value
Highly scalable, Sproutly’s pioneering technology is also an
extremely cost-effective process to extract both water-soluble and
naturally derived oil-based cannabinoids. Using its APP technology,
Sproutly should be able to produce better quality products faster
and cheaper than the competition. Little wonder Moosehead is so
committed. Current methods require at least four complex processes
to extract cannabis oil from biomass and three more to obtain
water-compatible products.
In just two steps, using APP technology, Sproutly produces both
water-soluble and oil-based cannabinoids without using any alcohol
or solvents. And that’s not all. Using current CO2
extraction methods, THC recovery rate is about 60%. Sproutly’s APP
Technology delivers a total of 90% THC recovery rate. The economic
ramifications seem obvious. This isn’t an idea or concept; the
technology is in place. In fact, the APP Technology is already
proven in real-world applications and is ready for full operational
deployment.
Shortly after acquiring Infusion Biosciences Canada and the
rights to use the APP technology, Sproutly entered an exclusive
technology license agreement with Micronutrient Technologies to
produce nutritional minerals in water solutions in a low-cost,
scalable process. The agreement provides Sproutly the unique
ability to add healthy, water-soluble minerals such as calcium,
magnesium, iron and zinc, and in different combinations, directly
into various cannabis beverages without artificial chemical
additives. Sproutly now has the unequaled ability to create
beverages that not only cater to cannabis consumers but also cross
over to the large, functional beverage market. Sproutly’s seemingly
unparalleled versatility in beverage formulation crosses multiple
sectors with limitless end-user applications.
The joint venture with Moosehead not only validates Sproutly’s
technology but also positions the venture to reap enormous rewards
in the nascent cannabis-infused market. And this may only be the
beginning for Sproutly.
In the Hunt
Tilray Inc. (NASDAQ: TLRY) is one of the
established cannabis companies in the hunt for the infused-beverage
market. In December, the company announced a research partnership
with Anheuser-Busch. Tilray also recently announced that it was
bringing executives into its leadership team who have strong
backgrounds working for big beverage companies.
Focused on healthy beverages, New Age Beverages Corp.
(NASDAQ: NBEV) is banking on the popularity of Bob Marley
to help grow its products. The company's Marley+CBD products will
first begin roll out in four U.S. states, although a date hasn’t
been established for when that will happen.
Last August, Constellation Brands, the maker of Corona and
Modelo beer, increased its stake in Canopy Growth Corp.
(TSX: WEED) (NYSE: CGC) to 38%, spurring speculation of
cannabis-infused beverages to come. Canopy’s forays into the U.S.
hemp markets suggest CBD beverages may be on the horizon.
HEXO Corp. (NYSE American: HEXO) (TSX: HEXO)
entered a joint venture with Molson Coors Canada (MCC) last summer
to produce CBD-infused beverages in which the brewing giant took
57.5% ownership. The new company will be led by a former Molson
Coors executive. As part of the deal, HEXO issued 11,500,000
warrants to MCC.
There’s little argument where the cannabis markets are headed,
and all indications point to infused beverages becoming the next
big surge. Perhaps the lofty forecasts for the cannabis-infused
beverages market in Canada will imitate past cannabis projections
and vastly exceed expectations again.
For more information on Sproutly Canada, visit Sproutly Canada
Inc. (OTCQB: SRUTF) (CSE: SPR) (FRA: 38G)
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