Max A. Cherney
The joint venture will run through Anheuser-Busch’s BUD, +0.07% subsidiary Labatt Breweries of Canada, and each company intends to invest up to $50 million to research beverages infused with tetrahydrocannabinol, or THC, and cannabidiol, or CBD. THC is the compound that produces psychoactive effects, whereas CBD does not — though it has other properties some see as beneficial.
Tilray TLRY, -7.19% said that the partnership is limited to Canada, and that the two companies will make decisions about developing products from the research in the future.
“For us, it’s early days in this industry and research feels like the right place to start,” Tilray Chief Executive Brendan Kennedy said on the phone Wednesday morning. “At Tilray, we’ve been performing research and develop for almost five years on lots of different aspects of cannabis and cannabinoid delivery.”
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Tilray’s stock jumped more than 10% in after-hours trading Wednesday following the announcement, adding to gains from a different partnership revealed earlier this week. The company revealed a global distribution deal with pharmaceutical giant Novartis AG NVS, -1.10% on Tuesday morning
The goal, says Kennedy, is to understand how to create and produce “iconic and responsible cannabis infused beverages and brands” that will arrive in product formats will likely be new to the industry.
Unlike rivals such as Cronos Group Inc. CRON, -3.21% , CRON, -4.11% which took a $1.8 billion investment from Marlboro maker Altria Group Inc. MO, +1.00% , and Constellation Brands Inc.’s STZ, -0.31% $4 billion investment in Canopy Growth Corp., CGC, -3.87% WEED, -4.28% Kennedy said Tilray was not interested in an investment from its partner, and is not seeking to be being bought or acquired at this point.
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“We obviously want to partner with other global pioneers and other leaders in their respective sectors,” he said. "We think it’s too early to give up control of our own destiny. Other companies have bought two of our competitors in this industry and it’s far too early for a transaction like that.”
Tilray’s volatile stock has soared to more than $200 from its initial public offering price of $17. Shares have declined 12% in the past five days, though rose more than 10% Tuesday after it announced the Novartis partnership. The ETFMG Alternative Harvest ETF MJ, -2.64% has lost 6.7% in the past five days, as the S&P 500 index SPX, -1.54% has fallen 2.9%.