The Althea Group Holdings Ltd (ASX: AGH) share price is soaring today following news the company will soon be producing cannabis-infused drinks.
A subsidiary of Althea has entered into agreements with Boston Beer Company Inc (NYSE: SAM) to develop beverages.
Right now, the Althea share price is 26 cents, 8.51% higher than its previous close.
Let's take a closer look at the intriguing news from the medical cannabis producer and supplier.
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Is green the new gold?
The Althea share price is gaining following news its subsidiary, Peak Processing Solutions, will be infusing drinks with cannabis.
Peak will work with The Boston Beer Company's subsidiary BBCCC to produce the non-alcoholic beverages. It will use cannabis from WeedMD Rx Inc, a subsidiary of Entourage Health Corp. The drinks will then be sold in Canada.
Under the agreement, BBCCC will provide Peak with US$2 million of funding to research and develop the products.
Peak will also receive a minimum of US$285,000 each year. Additionally, it will become the exclusive manufacturer of all cannabis beverages produced or sold in Canada under BBC branding for the duration of the 5-year agreement.
Entourage will supply all cannabis materials Peak needs to make the beverages and will buy the resulting products from Peak.
According to Althea, infused-cannabis beverage sales are growing and Peak has positioned itself as the leading producer in the category. Althea pointed to a recent report by Million Insights which estimated the cannabis beverage market will be worth US$2.8 billion in 2025.
Commentary from management
Althea's CEO, Josh Fegan, commented on the news driving the company's share price today, saying:
This project is further validation of Peak's significant and unique capabilities in the recreational cannabis industry and the latest in a growing list of deals Peak has signed with high quality customers, including seven North American publicly listed companies. AGH is very optimistic about the cannabis-infused beverage category and Peak remains well positioned to capitalise on the recreational cannabis boom in general.
BBCCC's head of cannabis, Paul Weaver, added:
Peak has built a world class facility in Canada, with the right staff and systems in place to ensure every drink is prepared with the highest care and excellence. WeedMD is one of Canada's oldest and most respected regulated cannabis cultivators. Their unwavering commitment to quality is exactly what we look for in our partners.
Finally, Entourage's CEO and chair, George Scorsis, stated:
[O]ur collective industry expertise together with Entourage's cannabis research and advanced branding strategies will establish our product portfolio with another unique offering. In addition, this provides an opportunity to further explore our collective reach into international markets.
Althea share price snapshot
Despite being in the green today, the Althea share price has been struggling recently.
It has fallen 42% year to date. It is also currently 32% lower than it was this time last year.
