Creso to collaborate on cannabis and hemp derived alcoholic and non alcoholic beverages

By Megan Graham. Published at Nov 29, 2017, in ASX Biotechs

Creso Pharma (ASX:CPH) has signed a binding Letter of Intent with LGC Capital Ltd and Baltic Beer Company Ltd to develop cannabis and hemp derived alcoholic and non-alcoholic beverages.

The three companies are undertaking the Joint Venture to create a bespoke portfolio of unique alcoholic and non-alcoholic beverages infused with various cannabis and hemp derived ingredients. The beverages will be created to combine seeds, various plant extracts, and unique terpenes mixes mimicking the hemp and cannabis plants aromas and tastes.

The development is part of CPH’s broader plan to expand into the burgeoning cannabis and hemp based Edibles and lifestyle markets, with research and development currently underway in Switzerland, Estonia and the UK.

The UK-based Baltic Beer Company is the home of the multi-award winning and iconic Estonian beer brand, Viru Beer — currently sold in numerous markets around the world including Australia, China, UK, Italy and Mexico.

LGC Capital is a Canadian incorporated company listed on the TSX Venture Exchange (TSXV:LG) which invests in a diversified portfolio of businesses. To date it has entered into agreements for investments in private cannabis operations in South Africa, Australia and Canada.

The new joint venture company will comprise of the following board members: Dr Miri Halperin Wernli of Creso Pharma, Mr John McMullen of LGC Capital Ltd, and Mr Alex Klaos of Baltic Beer Company Ltd.

Next steps going forward

The companies have already begun the research and development phase for a range of premium craft beers, which will contain unique terpene mixes mimicking the terpenes of the cannabis and hemp plants.

Terpenes are organic essential oils found in plants that carry flavour and aroma.

The beer itself will be designed to have the odour and fragrance of cannabis and hemp, however will not contain THC or CBD or any other cannabinoids — and in so doing will avoid the issue of regulatory restrictions. Terpenes are safe molecules and are recognized as GRAS (which stands for “Generally Recognized as Safe”) by the US Food and Drug Administration as well as by the Food and Extract Manufacturers Association and other world regulatory bodies.

It is expected the first test batches of the terpene beer range will reach selected markets in April or May 2018, with commercial sales expected to be ready for shipments from June or July 2018.

However, how much of the market CPH can attain at this point in time remains to be seen and investors should seek professional financial advice if considering this stock for their portfolio.

Further research and development will identify other opportunities within the legal framework of the target markets, which focus on a range of premium beers containing cannabis and hemp derived components.

The joint venture partners plan to expand their portfolio into other alcoholic and non-alcoholic beverages.

The Joint Venture will only market and sell its products with full compliance with local market regulations and only after securing all appropriate regulatory approvals.

Creso Pharma’s CEO and Co-Founder, Dr Halperin Wernli said: “This new joint venture combines Creso Pharma’s cannabis and hemp expertise with the prestigious and multiple award-winning beer creators, Baltic Beer Company, to develop and provide consumers with innovative, high quality hemp and cannabis derived beverages.

“Through the vast geographic reach of the three parties which spans a number of continents, future commercial and distribution partners have already been identified and are eagerly anticipating this innovative new range of drinks.”

Among the three companies comprising the joint venture, the group have identified potential distribution partners in Canada, Africa, Europe, Far East Asia, Central and Latin America, as well as Australia and New Zealand.

Commenting on today’s announcement, CEO of LGC Capital Ltd John McMullen said: “The cannabis infused beverage industry is an emerging and growing industry and we see a lot of potential value in this market.

“We also note Constellation Brands’ (NYSE:STZ) recent minority stake in Canada based Canopy Growth Corporation which clearly signals real interest in this sector from much larger, established and more traditional business.”

Alex Klaos, Director of Baltic Beer Company Ltd added: “This partnership brings together parties who have the expertise and proven history to develop unique cannabis and hemp plant derived product offerings for consumers.

“We are all very excited about working with Creso Pharma and LGC Capital on this project. The partners bring scientific expertise, significant financial investment and a wealth of experience in the beer industry which we believe will be a resounding success.”

David Lenigas, LGC founder and Co-Chairman said: “This is an excellent first venture with Creso Pharma. The international hemp and cannabis infused beverage market is growing at astonishing rates and we are committed to becoming an active player in this exciting new market.”

This news follows on the heels of CPH’s announcement yesterday that it had raised A$17.5 million via an oversubscribed placement, to go towards pursuing opportunities in the hemp and cannabis derived Edibles space — including a terpene-infused premium Swiss chocolate in partnership with Swiss company Aeschbach Chocolatier.

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