Booze-free beverage company banking on local cannabis

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An Ontario-based beverage company looking to create intoxicating alternatives to alcohol will get its key ingredient at the edge of Regina.

An Ontario-based beverage company looking to create intoxicating alternatives to alcohol will get its key ingredient at the edge of Regina.

“There’s a great saying: Five guys get drunk and they start a fight. Five guys get stoned and they start a band,” said Hill Street Beverage Company chairman and CEO Terry Donnelly.

Hill Street announced Tuesday it will acquire OneLeaf Cannabis for a total purchase price of $16 million. The move is part of Hill Street’s vision to become a leader in the infused beverage market when the sale of cannabis edibles becomes legal in Canada, expected by Oct. 17.

Donnelly, who was born and raised in Regina, said it was OneLeaf’s talented team and “world-class” 48,000-square-foot facility just outside of the city that inspired the acquisition.

Right now, Hill Street is exclusively focused on alcohol-free beer and wine, having won several awards for their products. The company’s mission was to deliver an alternative “that was as enjoyable as the finest wine and beer on the planet” to those who can’t or won’t drink alcohol. “We’ve been able to do that,” Donnelly said.

He’s looking to take that same strategy and apply it to weed drinks, so consumers get the same feeling and degree of intoxication from cannabis as they would from liquor.

“It mirrors the onset and duration of alcohol. So you feel the effect within two minutes and you’re no longer intoxicated within about 90 minutes and it’s out of your blood stream in a few hours,” Donnelly said.

“That solves the problem that everyone keeps talking about with cannabis edibles, where it takes two hours and then it’s in your bloodstream for 24 hours. That’s a huge commitment to make to a beer.”

He believes his products will be healthier and safer than alcohol, citing fewer calories and no hangovers as two of the benefits.

Mike Templeton, OneLeaf’s chief operating officer, and Donnelly both believe it will be the first of its kind in Canada to feature a fully-integrated cannabis cultivation and beverage production facility.

“It’s been an awful lot of hard work, but it’s a great feeling for us to finally get this thing close to the finish line — we’re not quite there, but we’re close,” Templeton said.

Templeton said his team is excited about the opportunity to get into the finished goods manufacturing side and differentiating OneLeaf from other Canadian cannabis companies.

“It’s a market segment here that’s not being exploited at the moment,” Templeton said.

A recent Nielsen report shows cannabis beverages are the fastest-growing segment of the market in American states where they are legal, growing at up to 61 per cent in the past year.

About 17,000 square feet of the OneLeaf facility will be used for cannabis production, while the other 31,000 square feet will be home to Hill Street’s canning and bottling production lines, projected to produce more than 300,000 cases of cannabis-infused wine and beer. Donnelly expects to hire more than 50 people once the facility is fully operational.

OneLeaf’s existing and planned flowering rooms will be able to produce 1,800 kilograms of cannabis annually, far more than what Hill Street needs for drinks. One kilogram of THC (distilled from 25 kilograms of flower) will infuse 100,000 bottles of wine or 500,000 of beer. The remaining cannabis will go to consumer products like gummies, pre-rolled joints, tinctures and oils.

The deal will close upon the facility receiving its Health Canada cultivation and standard processing licence, which Templeton believes should happen by mid-August. OneLeaf is also hoping to join a handful of licensed Canadian cultivators to achieve one of the highest levels of quality certification in the world, EU-Good Manufacturing Practices (EU-GMP).

Among other conditions of the deal, Hill Street will assume up to $5.5 million in debt related to the construction of the facility.