Ontarians waiting for a sip of a legal cannabis-infused drinks will finally be able to quench their curiosity, as Valens GroWorks Corp. (TSXV: VLNS) launches the first bottled beverages in the province.
The B.C.-based cannabis extractor announced Thursday the launch of the first pot drinks to the provincial market, which were produced under a white label agreement with A1 Cannabis Company, a subsidiary of Iconic Brewing. Offerings in other jurisdictions are expected to follow.
The new line of beverages includes Basecamp, a CBD-forward iced tea, and Summit, a THC-infused citrus water. Basecamp will be available in select Ontario stores in the coming days, and Summit is expected to hit shelves in the coming weeks.
Valens teamed up with Seattle-based SōRSE to develop the emulsion technology for the beverages.
The company says they’ve been able to turn cannabis oil into water-soluble forms for infused edibles, topicals and beverages, while removing cannabis taste, colour and smell. The technology also provides faster onset times, shorter offset time and better dosing, according to Valens.
“Our agreement with A1 demonstrates the strategic value of partnering with leading companies that share our vision and reinforces our commitment to launching the cannabis 2.0 products that consumers are looking for,” Valens CEO Tyler Robson said in a statement.
“This is the next step in the execution of our strategy to introduce innovative, high-quality products that deliver safe and customized user experiences.”
According to market researchers at Deloitte, the weed-infused beverage segment is expected to reach $529 million annually.
Valens projects Canadians will spend $1.6 billion a year on cannabis extract-based products, including drinks.
Cannabis beverage market uncertainty
However, some analysts are skeptical of the bullish outlook for the cannabis 2.0 market in Canada — especially the drink segment — which has been legal to sell since Dec. 17, but has yet to be available for consumers.
Industry titan Canopy Growth (TSX: WEED) has committed significant resources to developing more than a dozen cannabis drinks since beverage giant Constellation Brands bought a 37 per cent stake in the company worth $5 billion in 2018.
But the company announced in January it will delay its beverage launch due to issues scaling up its processing facility in Smith Falls, Ontario. No release date has since been made public.
Despite the uncertainty around pot drinks, A1 Cannabis CEO Cole Miller remains positive.
“We are incredibly proud to introduce the Summit and Basecamp beverages in partnership with Valens, and are fully confident that they will meet the taste and quality expectations of Canadian consumers who have been waiting eagerly for cannabis-infused beverages,” he said.
The two companies have signed off on a deal for the production of a minimum of 2.5 million infused beverages over five years, with the option to expand to new product offerings in the near future.
Despite Valens reporting a quarterly profit Feb. 24, the company’s stock has dropped 17 per cent on the Toronto Venture Exchange since that date.
Valens says it has signed white label contracts with 11 companies including B.C.-based producers Tilray Inc. (NASDAQ: TLRY). The company reported a $4.4 million net profit and record $30.6 million in revenue for the fourth quarter ended Nov. 30, 2019.
Top photo via Deposit Photos