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LGC Capital shares fizz as it forms joint venture to enter cannabis infused drinks industry

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

R&D work has started in Switzerland, Estonia and the United Kingdom on a premium craft range, LGC said

LGC Capital Ltd (CVE:LG) shares surged 11% on Wednesday as it entered what it sees as a growing market - the cannabis infused drinks industry.

The firm, along with Creso Pharma Limited (Australia and Switzerland) and Baltic Beer Company Ltd (UK) have signed a binding LOI (letter of intent) to form a joint venture to develop a a bespoke portfolio of cannabis- and hemp-derived alcoholic and non-alcoholic beverages, it said.

It is expected the first test batches of the terpene beer will reach selected markets in April or May of 2018.

Commercial sales are expected to be ready for shipments from June and July.

Terpenes are the essential oils found in plants that carry flavour and aroma.  The beer, notably, will carry the characteristic odour and fragrance of cannabis with the same taste and feel but will not contain THC or CBD or any other cannabinoids.

Research and development has already started in Switzerland, Estonia and the United Kingdom on a premium craft beer range.

"The cannabis infused beverage industry is an emerging and growing industry and we see a lot of potential value in this market, said John McMullen,  the chief executive of LGC Capital.

"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."

The partners added they had already identified potential distribution partners in Europe, far East Asia, Central and Latin America, Canada, Africa and with the recent legalization of hemp seed-based food and drink products in Australia and New Zealand, partners have been identified in this region as well.

LGC shares added 11.25% to C$0.44 in Toronto.

Quick facts: LGC Capital Ltd

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Market: TSX-V
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