Alcohol and cannabis companies form pot-beverage industry group to push changes

TORONTO — A group of alcohol and cannabis companies have formed an industry alliance to push for changes to proposed rules governing pot-infused beverages before edibles become legal in the coming months.

The Cannabis Beverage Producers Alliance is arguing for, among other things, the ability to produce pot-based drinks in the same facilities where non-cannabis beverages are made.

The additional cost of establishing separate manufacturing and processing facilities is a “significant barrier to entry,” particularly for small and mid-sized producers, said Paddy Finnegan, business unit manager for food and beverage at Lakeside Process Controls, an alliance member.

The extra cost will also make it harder to compete with the illicit market on price, he added.

“Those producers that are able to enter the market, at all, are not going to be able to do so at a price point that is appetizing to the consumer,” Finnegan said during a news conference.

The group, which launched on Wednesday with 10 member companies including the Molson Coors-Hexo Corp.-joint venture Truss Beverages, is also arguing for less stringent marketing rules that would allow companies to use terms related to alcoholic beverages, such as “wine.” As well, the group is pushing for companies to be able to tap existing alcohol brand and product names for pot-infused drinks.

Ottawa finished its consultation process for its proposed rules in February, but has not yet released the final version. Health Canada has said the final rules must be brought into force no later than Oct. 17, 2019.

Under Health Canada’s proposed rules for edibles, pot-infused drinks and food must be made in a separate facility. Draft regulations, which were released in December, also stipulate that companies that make alcoholic beverages cannot use their existing names or brands on cannabis drinks.

Certain terms related to alcoholic beverages are also prohibited from use in connection with cannabis-based drinks under the draft regulations.

Preventing the use of words such as “beer” in connection with cannabis-beverages would be “very confusing for the Canadian consumer,” said Terry Donnelly, chief executive of Hill Street Beverage Company.

The alliance, led by former Nova Scotia premier Darrell Dexter, anticipates that the government’s final rules for edibles will be released this summer.

The group hopes their concerns will be heeded, but if not, its members are “prepared for plan B under the current proposed regulations,” said Lisa Campbell, chief executive of Lifford Cannabis Solutions consultancy, a group member.

“Ideally, we’ll see some flexibility, especially around marketing,” she said. “If we really want to limit the black market, we need to have branding and marketing that can compete with it.”

Companies in this story: (TSX:TPX.B, TSX:HEXO)

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