The week in marijuana deals: Cronos goes down under and MedReleaf brands with beer

2018-02-27 Mark Rendell

The week in marijuana deals: Cronos goes down under and MedReleaf brands with beer

Your weekly roundup of cannabis industry news

Christian Groh, partner with Privateer Holdings and Philippe Lucas, VP of Patient Services and Research at Tilray. The companies announced financing rounds.Postmedia file photo

The marquee deal of the week saw Aurora Cannabis Inc. secure a toehold in the retail market by acquiring a 20 per cent stake in Edmonton-based Liquor Stores N.A. Ltd. for $103.5 million. Midweek brought confusion around the date that recreational retail sales will begin — likely in late summer or early fall now, given indications from federal ministers — as well as a decision from securities regulators not to punish Canadian cannabis companies with operations in the U.S.

Here are a few deals last week that you may have missed.

Getting high down under

On Monday, Cronos Group Inc. announced a 50/50 partnership with Australian company NewSouthern Capital Pty Ltd., to launch Cronos Australia Pty Ltd.

“Cronos Australia will serve as the Group’s hub for Australia, New Zealand and South East Asia, bolstering the Group’s import/export supply capabilities and distribution network,” the company said in a press release.  

To start, Cronos Australia plans to build a 20,000-square foot facility capable of producing 2,000 kilograms a year. In the interim, before cultivation begins, Cronos says it will supply its subsidiary with Canadian-grown cannabis, “subject to obtaining its import licence.”

Branding with beer

On Friday, MedReleaf Corp. launched its recreational cannabis brand San Rafael ’71 by announcing a clever marketing partnership with Toronto’s Amsterdam Brewing Co.

Amsterdam will produce San Rafael branded “4:20 pale ale,” to be sold at Beer Store locations and bars in the Greater Toronto Area.

The beer, however, won’t contain marijuana products; cannabis drinks, like other edibles, will be illegal for at least another year following recreational legalization this summer, and it’s doubtful that mixed cannabis and alcohol products will ever be allowed.

“With cannabis marketing and advertising standards likely to be very limited, cannabis companies will have to be very creative in distinguishing themselves from ‘the pack’,” Russell Stanley, analyst with Echelon Wealth Partners, wrote in a note to clients.  “Through the launch of a pale ale product, LEAF should be able to build awareness for a new brand and provide positive spillover support for eventual cannabis products under this brand.”

Other deals

Invictus MD Strategies Corp.closed a previously announced investment in AB Laboratories Inc., bringing its ownership stake in the Hamilton-based grower up to 50 per cent. Invictus is putting $10 million towards the expansion of AB Labs’ existing facility, and an expansion into an adjacent plot of land, “for a combined production space of approximately 56,000 square feet,” according to the company.

Private company Tilray announced on Thursday that it raised $60 million in its series A round of fundraising. The company plans to use the money to expand its international footprint; it already has a production facility in Portugal and distribution contracts in several EU countries. Tilray’s parent company, Seattle-based Privateer Holdings, recently closed a US$100 million series C financing round, bringing its total private capital raised to US$200 million.

Evolve Funds Group Inc. filed its final prospectus to launch an actively managed cannabis-focused exchange traded fund, Evolve Marijuana ETF. The fund is expected to list on the Toronto Stock Exchange Monday under the ticker SEED.  This is the second actively managed cannabis ETF, after Redwood Asset Management launched its Marijuana Opportunities Fund on Feb 1. Both funds build on the popularity of passively managed Horizons Marijuana Life Sciences Index ETF, which launched in the spring of 2017 and has more than $700 million under management.

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