Breakthru Beverage Invests $9.2 Million in Cannabis

The alcohol industry continues to enter the emerging cannabis market.

North American distribution company Breakthru Beverage Group has signed a letter of intent for an exclusive partnership in Canada to represent the legal pot products of CannTrust Holdings Inc.

This comes on the heels of other relationships between alcohol and cannabis: Constellation Brands investing $4 billion in the industryWSWA’s stated support for states’ pot rights and Diageo’s rumored interest.

CannTrust has already established a number of medicinal cannabis brands. This new deal allows Breakthru to distribute three of the company’s new recreational pot brands – liiv, Xscape and Synr.g.

“Breakthru will invest in a cannabis-focused sales brokerage company and develop a route-to-market platform for CannTrust in Canada, effective when the adult-use recreational market opens in October 17, 2018,” the company says in a press release. Breakthru also announced a company investment in CannTrust totaling approximately $9.2 million.

The transaction remains subject to typical closing conditions.

“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,” says Brad Rogers, president of CannTrust. “Their progressive model, sales technology, infrastructure and extensive relationships across Canada make them an ideal fit for our business strategy.”

CannTrust recently announced a deal with the Ontario Cannabis Store to supply a broad range of adult-use products from the company’s recreational brands.

“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,” says Danny Wirtz, vice-chairman of Breakthru Beverage Group. “This is a logical extension of our expertise and provides a new growth opportunity into this emerging market.”

Like Breakthru’s role representing numerous suppliers in the beverage alcohol industry, the sales brokerage operation will work, where permitted by law, directly with provincial control boards and designated retail outlets supporting the sales efforts for the CannTrust portfolio of products.

The cannabis sales brokerage operation will reside in a newly formed subsidiary of Breakthru Beverage Group and will be entirely separate from its beverage alcohol brokerage. It will, however, leverage the company’s North American business insights, strategies, technology and analytic tools.

“CannTrust has made significant investments in both capacity and innovation with the next generation of products such as edibles and cannabis-infused beverages expected to launch in 2019,” Rogers says. “We have a nano-technology that enables us to produce cannabis infused beverages neutral in taste, and clear as water. This technology will position us to be a leader in Canada, and in future markets globally.”