Canopy Growth partners with American booze distribution giant

Jeff Lagerquist

Canopy Growth (WEED.TO)(CGC) has announced a partnership with a company that bills itself as the "world's pre-eminent distributor of beverage alcohol." The deal will broaden the availability of its CBD-infused beverages in the United States.

The Smiths Falls, Ont.-based company said on Wednesday that Southern Glazer's Wine & Spirits will distribute the non-intoxicating drinks in seven U.S. states, with plans to expand into more regions in the coming months.

Canopy launched the four sparkling, flavoured drinks from its Quatreau brand in March on its American e-commerce website. The products are infused with U.S.-grown hemp-based CBD. Canopy said its Quatreau products are currently the top-selling ready-to-drink CBD beverage in Canada, where the company sells a broader line of intoxicating drinks with THC.

Southern Glazer's is a family-owned business founded in Dallas, Texas in 1909 that sold flavoured soda from the back of horse-drawn wagons. Today, it represents thousands of wine, beer and spirits brands, with operations spanning 44 U.S. states, the District of Columbia and Canada.

Canopy Growth is tapping into a massive U.S. booze distribution network. REUTERS/Blair Gable
Canopy Growth is tapping into a massive U.S. booze distribution network. REUTERS/Blair Gable

"We will leverage Southern Glazer's established distribution network to bring our CBD beverage portfolio to retailers and consumers across the U.S. market," Canopy chief commercial officer Julious Grant stated in a news release on Wednesday.

Southern Glazer's owners have been active in Canada's legal cannabis market since 2018, when they founded Great North Distributors. The company describes itself as "Canada's first national sales broker for legalized adult-use cannabis," and boasts a reach that spans every province.

In January, the company added Aurora Cannabis (ACB.TO)(ACB) to its portfolio of pot companies. A spokesperson for Southern Glazer's told Yahoo Finance Canada in an email that it has no relationship with Canopy in Canada.

Canopy said the agreement with Southern Glazer's in the U.S. showcases its ties to Corona beer-maker Constellation Brands (STZ). The New York-based booze giant owns a 38.6 per cent stake in the company.

The pot giant was an early-mover in launching infused beverages in Canada's legal recreational market in March 2020 after significant product delays. However, the category has yet to gain significant traction among consumers, representing a sliver of overall sales.

In the U.S., Canopy's strategy has been to introduce a suite of CBD products ahead of potential changes to federal laws that would allow it to fully enter the market.

Toronto-listed Canopy shares climbed 3.17 per cent to $33.34 as at 11:22 a.m. ET on Wednesday.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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