In its third deal in less than 30 days, Canadian licensed producer Tilray (TLRY) on Tuesday announced a partnership with brand management company Authentic Brands Group.
Under the long-term revenue-sharing agreement, both the parties would together develop and distribute weed-based consumer products in regions where regulators have shown a green flag. The products are likely to hit Canada and the US by next year.
As part of the deal, Tilray will initially pay Authentic Brands $100 million. If certain regulatory or commercial targets are achieved, an additional payment of up to $250 million will be paid in cash and stock.
In return, Tilray will be entitled to receive up to 49% of the net revenue from the cannabis products and will have a guaranteed minimum payment of up to $10 million annually for 10 years.
Tilray shares jumped 2.45% during pre-market trading.
Authentic Brands, headquartered in New York City, boasts of a varied portfolio of lifestyle and entertainment brands including Nine West and Juicy Couture. It has over 4,600 branded stores across the globe.
The agreement comes barely a month after AB InBev (BUD), the maker of Budweiser beer, inked a $100 million deal with Tilray to study the production and distribution of non-alcoholic drinks infused with cannabis components. The joint venture, in its initial phase, is focused only in Canada.
A couple of days before the deal with AB InBev, Tilray sealed another agreement with German company Sandoz, which is a subsidiary of Novartis (NVS). Under this agreement, the two companies would collaborate to make new medical marijuana products and co-brand some non-combustible products.
The marijuana industry may be a relative newbie in the stock markets, but that isn’t stopping it from going on a deal rampage. The legalization of recreational use of weed in Canada in October, as well as constructive discussions happening in the US and many other parts of the world, have given cannabis companies enough confidence to shake hands within and outside the industry.
In early December, rival weed firm Aurora Cannabis (ACB) announced that it was acquiring the sole Mexican importer THC products, Farmacias Magistrales. The deal opens up a Mexican market of 130 million population to Aurora. Value of the deal was not disclosed.
Separately, Altria Group (MO), the parent company of Phillip Morris International (PM), inked a deal in December with Cronos Group (CRON) to invest about $1.8 billion in the Toronto-based weed company. At the close of the deal, Altria’s holding in the company would increase to almost 45%.
Meanwhile, the maker of Corona beer, Constellation Brands (STZ), raised its stake in the largest medical marijuana company, Canopy Growth (CGC), from 10% to almost 38% in August with an additional investment of $4 billion. The deal was sealed on hopes that US regulators will sooner or later give a green signal to the sale of drinkable cannabis.
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