Canadian cannabis company purchases U.S. craft-beer maker Sweetwater

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

Aphria Inc. has become the latest cannabis company to acquire a craft beer company. Headquartered in Leamington, Canada, Aphria  has announced that it intends on purchasing Atlanta’s Sweetwater Brewing Co. The deal will set back Aphria approximately $300 million.

This hefty price tag is reflective of the fact that the craft brewer has been serving customers since 1997 and has since established itself firmly in the cannabis industry with its “420”-labelled brews. 

Our 420 brand offerings and SweetWater 420 Fest complement Aphria’s cannabis business and create mutual opportunities for accelerated expansion into other cannabis and beverage-related products in the U.S. and Canada,” said the founder and Chief Executive of Sweetwater, Freddy Bensch, in an announcement following the deal’s confirmation.

Various other companies have formed joint partnerships to serve the ever-growing cannabis beverage consumer demographic. For example, Constellation Brands (STZ) an American producer and marketer of beer, wine and spirits and a Fortune 500 company is a major investor in Canadian cannabis company Canopy Growth Corp. Together, both companies have managed to pull off a project that saw the development and manufacturing of cannabis-infused drinks; which have since been distributed among the Canadian market.

Furthermore, beer maker Molson Coors TAP has worked alongside Hexo Corp. to share it’s weed-infused drinks with this swelling segment of the cannabis industry.

Aphria and Sweetwater’s cannabis-infused beverages will not produce mind-altering effects

Although the newly inked deal will not result in beer lovers getting “high”, there’s a chance that psychotropic cannabinoids like THC (tetrahydrocannabinol) could be added to Sweetwater’s infused brews in the future. Aphria intends on harnessing the power of Sweetwater’s contacts throughout the U.S. and, hopefully, tap into an existing market of drinkers that may be inclined to dabble in cannabis. 

Furthermore, as per details of the cannabis-infused beverages deal, Bensch will become a wholly-owned subsidiary of  Aphria and maintain its 125-strong workforce. Additionally, Bensch will not be replaced as CEO of Sweetwater. He was the man responsible for founding the company back in the year 1997.

“Terpenes and natural hemp flavors that, when combined with select hops, emulate the flavors and aromas of popular cannabis strains.” These were the words of Aphria officials, who emphasized the appeal of its cannabis-infused beverages deal in its recent announcement. 

The company did not hesitate in mentioning its annual music festival, “Sweetwater 420 Fest,” which takes place in Atlanta on/around April 20. Aphria and Sweetwater’s 420 brand offerings are likely to be made available to consumers who attend the festival. 

Aphria shares soared after cannabis-infused beverages deal was confirmed with Sweetwater

As expected, pot stock shares of Aphria climbed 11.7 percent at the start of trading on Thursday, November 5. This meant that shares topped $5.55, but not before slumping slightly as the day progressed. Nonetheless, Aphria claims victory as a pot stock that has only lost 3.8 percent in valuation so far this year; not too dismal in comparison with the 27.7 percent reduction experienced by the Horizons Marijuana Life Sciences ETF.

To confirm the craft brewer deal, Aphria intends on paying $250 million with a cash payment and an extra $50 million with a stock payment. In addition to this, cash on-hand and an at-the-market equity program will fund the deal. 

“Our strong balance sheet and access to capital have enabled us to enter the U.S. through this strategic and accretive acquisition,” Aphria Chief Executive Irwin Simon said in Wednesday’s announcement. “We will establish and grow our U.S. presence through Sweetwater’s robust, profitable platform of craft-brewing innovation, manufacturing, marketing and distribution expertise.” 

The deal as predicted by both companies will officially close by the end of December.