Tilray (TLRY) , the consummately volatile pot stock, is seeing a key partnership push shares higher.
Shares have burned up to the ballpark of a 20% rise at intraday highs, getting higher off the headline grabbing deal with Anheuser-Busch InBev (BUD) . The deal marks the second this week, following the Canadian cannabis company's partnership with pharmaceutical giant Novartis (NVS) on Tuesday.
"We are delighted to be joining forces with a world-leading beverage company, AB InBev, to research how to create enjoyable cannabis beverage products," Tilray CEO Brendan Kennedy said Wednesday evening. "Tilray and AB InBev share a commitment to responsible product development and marketing, and we look forward to beginning our work on this important partnership as Tilray continues to pioneer the development of a professional, transparent, and well-regulated cannabis industry."
The deal will entail Tilray's provision of cannabis to market a line of non-alcoholic CBD and THC tinged beverages for AB InBev's Labatt Breweries, a Canadian subsidiary. Tilray will participate in the deal through its own subsidiary, High Park Co., a "socially responsible cannabis brand" in Canada.
Each company will invest up to $50 million in the effort ahead of the full legalization of marijuana edibles and beverages on Canadian shelves in 2019.
AB InBev's statement speaks to the cannabis trend that may make partnerships like this more popular in the future.
"Labatt is committed to staying ahead of emerging consumer trends," Kyle Norrington, President of Labatt Breweries Canada said in a statement. "As consumers in Canada explore THC and CBD-infused products, our innovative drive is matched only by our commitment to the highest standards of product quality and responsible marketing. We intend to develop a deeper understanding of non-alcohol beverages containing THC and CBD that will guide future decisions about potential commercial opportunities."
In that deal, Constellation retains the option to take a majority stake in the company and took a significant equity stake. InBev's approach represents less of a buy in, and more of an exploratory approach to the nascent market.
"This low risk approach in part reflects reputational risk - ABI is a global business with a number of markets where attitudes to marijuana are less liberal than Canada and parts of the US - and with Tilray also indicating that [they are] not looking to get bought or acquired," Jefferies analyst Edward Mundy pointed out.
Nonetheless, with U.S. states furthering legalization efforts and major corporations across pharmaceuticals and alcoholic beverages buying into the industry, cannabis could be a rare spot of green in a largely red market at present.