Pot stocks are crazy. In 2018, many marijuana businesses saw their valuations double, triple, or even quadruple. In 2019, however, most of those gains were wiped away during a nasty bear market. Here’s the thing: the industry has matured to a point where the risk is lower, but the upside is still very lucrative. HEXO’s partnership with Molson Coors is a prime example. Several years ago, it agreed to collaborate on a THC-infused drink for Canadian markets. The joint venture used HEXO’s cannabis infrastructure but leaned on Molson Coors for its beverage know-how and seasoned brand. Just ask yourself one question: Will Canadians prefer a cannabis drink from Molson Coors or an unknown pot startup? HEXO is betting on the former.
“HEXO understood long ago what the competition is now just figuring out. If you want to make sustainable profits, you need to have a brand consumers trust,” I concluded last year. “That’s why the company skipped straight to partnerships, leveraging brands that customers already know and love.”
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