Hexo Receives Expanded License to Use Its Main Facility to Produce Cannabis Beverages

HEXO (OTC:HYYD.F) has cleared a major hurdle for the production of cannabis-infused beverages. The company announced Monday that it has received a license amendment for the range of marijuana products it can make at its production and processing facility in Belleville, Ontario.

The amendment granted to the Canadian marijuana company allows it to market drinks, as well as the previously allowed extracts, topicals, edibles, and dried and fresh cannabis flowers. 

HEXO is particularly eager about the beverage category, perhaps because it has a heavyweight partner in that business — the Canadian wing of brewer Molson Coors (NYSE:TAP). HEXO and Molson Coors have formed Truss Beverages, a joint venture that will develop and sell cannabidiol (CBD)-infused drinks.

Last October, Canada’s so-called “Cannabis 2.0” legalization kicked in, sanctioning the production and sale of cannabis derivative products. In the wake of that, it was announced that Truss Beverages was gearing up to produce a line of six CBD-laced beverages for the Canadian market. 

Truss will gain a significant advantage from being able to make these drinks in Ontario. It is by far the most populous of Canada’s 10 provinces, and contains both the country’s largest city (Toronto) and its capital (Ottawa). 

The company pointed out several other advantages. “HEXO’s Belleville facility is a purpose-built manufacturing center,” the company wrote in a press release. “By using specifically designed automation and best-in-class cannabis technology to streamline our processes, we are focusing on long-term cost reductions and improvements to our portfolio wide gross margin.”

On Tuesday, however, HEXO’s share price fell by nearly 5.1%. That was a worse performance than that posted by numerous peer marijuana stocks, and also contrasted with the gains of the major U.S. equity indexes.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.”>