Canada’s Aphria to expand into US in anticipation of federal legalization of cannabis

CANADA – Canadian cannabis giant Aphria is gearing up for the US cannabis market and has announced a planned acquisition of SweetWater Brewing Company for US$300 million as the first step into achieving this goal.

Based on volume, SweetWater Brewing is one of the biggest independent craft brewers in the U.S.

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The brewing company’s signature 420 branded craft brews use terpenes and hemp flavors combined with hops to replicate the flavors and aromas of cannabis.

The deal which is expected to close by the end of 2020 will give the company a foothold in the U.S. and put them in a strong position if the substance is federally legalized in food and beverage.

This acquisition will also give Aphria already established manufacturing, marketing and distribution assets in the U.S. as cannabis gains momentum in the country.

Currently, Cannabis use for recreational purposes is legal in 11 of US States and for medical purposes in 34.

Its use for recreational purposes is however illegal at the federal level, despite of the 2018 Farm Bill legalizing hemp and CBD cultivation.

The FDA held a public hearing about legalization more than a year ago, but the agency has since told manufacturers that cannabis is still not Generally Recognized as Safe for use in food and FDA is still working through regulation.

As a growing number of states make their own laws about cannabis legalization and clear a path for more food and beverages to be allowed with cannabis, companies like Aphria are getting incentives to launch into the space.

“I think there will be a time when there will be tetrahydrocannabinol (THC) drinks that will be legal in the U.S. and we want to be able to have a platform to jump onto that when this happens and this gets us there,” Aphria CEO Irwin Simon said in a statement.

In Canada, cannabis-infused food and beverage is now legal. That legalization sparked more partnerships with companies in the U.S. and Canada.

Canopy Growth, which is backed by U.S. alcohol giant Constellation Brands, already sold more than 1.5 million cans of its THC-infused ready-to-drink beverages in Canada this year and is now planning its U.S. launch.

Beer giants like Molson Coors and AB InBev have also made investments and developed partnerships to release CBD drinks in Canada.

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