Cannabis producer Canopy Growth Corp. announced Wednesday that it struck a deal to buy a majority stake in sports-drink maker BioSteel Sports Nutrition Inc. for an as-yet undisclosed amount.
Canopy says the all-cash transaction is an avenue into the $50-billion sports nutrition market, providing a foundation from which the company can launch future cannabidiol-infused recovery drinks when regulations allow for them. CBD is a non-intoxicating chemical substance in cannabis that has been studied for possible therapeutic uses, according to the Canadian government.
“This acquisition allows us to enter the sports nutrition space with a strong and growing brand as we continue towards a regulated market of food and beverage products that contain cannabis,” said Mark Zekulin, CEO of Smiths Falls, Ont.-based Canopy Growth, in a press release.
Canopy says that the deal gives it a 72-per-cent stake in BioSteel, but that there is also an “agreed upon path” to buying 100 per cent of the company.
“The transaction provides Canopy Growth with a significant platform to enter the sports nutrition and hydration segment, and lays the groundwork for the adoption of cannabidiol … in future product offerings in accordance with regulations globally including products to be sold in the U.S. containing CBD sourced from federally permissible industrial hemp,” the release stated.
Toronto-based BioSteel was founded in 2009 and sells mixable protein and hydration powders that have been purchased by more than 70 per cent of teams in North America’s four major sports leagues, the release said.
The company also boasts backing from “ambassadors of the brand” such as Dallas Cowboys running back Ezekiel Elliott, Edmonton Oilers star Connor McDavid and NHL Hall of Famer Wayne Gretzky, among others.
“The use and acceptance of CBD-based products in the professional sports landscape has changed,” said Michael Cammalleri, former NHLer and the co-founder and co-CEO of BioSteel, in the release. “We have witnessed the negative effects of prescription painkillers and athletes are looking for healthier alternatives. Its presence is already commonplace amongst NHL players and as a regular CBD user myself, I couldn’t be more proud to champion BioSteel’s evolution and leadership in this space.”
Canaccord Genuity analyst Matt Bottomley said in a note that the deal could be “complementary to Canopy’s existing strategy,” as BioSteel operates mostly in the beverage industry, similar to Canopy’s biggest shareholder Constellation Brands Inc.
Canopy has also already committed to an investment in CBD production in New York state, Bottomley wrote, and the deal “adds to Canopy’s arsenal an asset that is already a developed brand with several high-profile partners.”
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