Breakthru Beverage to Invest $9.2 Million in Canadian Cannabis Producer

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Yet another major U.S. alcohol company is getting into the cannabis sector.

Breakthru Beverage, a multi-state wholesaler that was formed via the 2015 merger of Chicago-based Wirtz Beverage Group and New York’s Charmer Sunbelt Group, has agreed to invest $9.2 million in CannTrust, a Canadian marijuana maker.

In a press release, the two companies announced a letter of intent that will make Breakthru the exclusive distributor of CannTrust’s recreational marijuana products throughout Canada.

“Breakthru was the first nationally established beverage alcohol broker in Canada and is the country’s leader in representing top beverage alcohol brands in the marketplace,” CannTrust president Brad Rogers said via the release. “Their progressive model, sales technology, infrastructure and extensive relationships across Canada make them an ideal fit for our business strategy.”

According to the statement, Breakthru will facilitate sales via a newly formed subsidiary and purchase 902,405 shares of common CannTrust stock at $10.23 per share. Breakthru will also hold an option to purchase an additional 2 million shares, according to the announcement.

“We’re excited to work with the most respected producer in Canada and leverage our well-established business model, which will put us at the forefront of shaping a high performing organization and socially responsible industry,” Breakthru vice chairman Danny Wirtz said in the release. “This is a logical extension of our expertise and provides a new growth opportunity into this emerging market.”

Breakthru’s investment north of the border comes as the Federal Trade Commission continues to look into its proposed $12 billion merger with Republic National Distributing Company. According to the Capitol Forum, a subscription-based regulatory analysis service covering antitrust and global mergers and acquisitions, FTC attorneys have requested information from national suppliers with a presence in the Southeast and Mid-Atlantic.

That transaction, first announced last November, was supposed to have been completed by June 30.

Nevertheless, Breakthru is the latest alcohol company to invest in the Canadian cannabis industry, which will officially allow adult recreational marijuana use on October 17.

Earlier this year, competing alcohol wholesaler Southern Glazer’s announced plans to distribute products from Aphria Inc. across Canada via its “Great North Distributors” subsidiary.

Major brewing companies are also investing in the Canadian cannabis market. Last month, Constellation Brands said it would invest another $4 billion to up its stake in Canopy Growth Corporation. Molson Coors Brewing Company also formed a joint venture with HEXO, a cannabis company based in Quebec.

In June, California’s Lagunitas Brewing, which is 100 percent owned by Heineken International, announced the launch of Hi-Fi Hops – a line of non-alcoholic beverages containing THC and CBD that are produced in partnership with California’s CannaCraft.

According to BDS Analytics, which tracks cannabis industry trends, legal sales of cannabis in North America are expected to grow to $24.2 billion by 2021.

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