Joint Operations: Canadian Cannabis Firm Buys Atlanta’s SweetWater

The Ontario-based Aphria calls its $300 million acquisition of the “420” brewer a “strategic entry into the United States.”

Joe Stange Nov 5, 2020 - 4 min read

Joint Operations: Canadian Cannabis Firm Buys Atlanta’s SweetWater Primary Image

Aphria, a large cannabis company based in Ontario, Canada, announced Wednesday that it has agreed to acquire Atlanta-based SweetWater Brewing in a $300 million cash-and-stock transaction—an interesting indicator of how marijuana is increasingly mainstream and increasingly big business in North America.

SweetWater is best known for its flagship 420 Extra Pale Ale, but it has had additional success in recent years with its 420 Strain G13 IPA and Mango Kush Wheat Ale, which use dank hop terpenes and natural hop flavors to simulate marijuana aromas. “SweetWater’s portfolio of beer brands, including the flagship 420 brand, aligns with a cannabis lifestyle and provides a scalable platform for expansion into the U.S. and Canada,” says Tucker Berta Sarkisian, spokeswoman for SweetWater.

According to IRI, the Chicago-based market research firm, the 420 Extra Pale Ale is one of the country’s top 30 craft-beer brands, based on retail scans at grocery, convenience, and liquor stores. That beer is also available on virtually all Delta Airlines flights. Meanwhile, the G13 IPA has become SweetWater’s second-best seller.

Founded in 1997, SweetWater currently distributes to 27 states plus Washington, D.C. The Brewers Association’s most recent ranking of the largest craft breweries by sales volume places SweetWater as the country’s 14th largest. The brewery says its production increased 7 percent in 2019, to about 261,000 barrels per year.

“No matter if it’s a hard seltzer or craft brew, Aphria will be able to use SweetWater’s U.S. infrastructure—e.g., manufacturing, marketing, innovation, promotion, distribution—to build awareness in the U.S. for Aphria’s key cannabis brands—Broken Coast, Good Supply, Riff and Solei—once cannabis is federally legalized in the U.S.”

As of Election Day this week, 15 states plus the District of Columbia have legalized (or voted to legalize) marijuana for adult recreational use, while 35 states allow it for medicinal use, according to NORML, the National Organization for the Reform of Marijuana Laws. However, it remains illegal at the federal, interstate level. Former Vice President Joe Biden has promised to federally decriminalize marijuana should he emerge as the winner of the presidential election. President Trump’s position is less clear; he has said that he supports states’ rights to legalize it, but he has appointed several anti-reform officials and made no move toward federal decriminalization during four years in office.

Aphria’s entry into the United States via SweetWater is an indication of optimism for continued legalization and for growing synergy between the cannabis and beer industries. This acquisition, according to the companies’ joint announcement, “creates a combined, branded, cannabis-lifestyle products company with diversified financial position.” The deal also would allow faster entry into the United States cannabis market, in the event of federal legalization, as well as opportunities for cross-sales of beer and cannabis products.

“Our strong balance sheet and access to capital have enabled us to enter the U.S. through this strategic and accretive acquisition,” says Irwin D. Simon, Aphria’s chairman and CEO, in the announcement. “We look forward to building upon the strengths of each of our respective and complementary brands, diversifying our product offering, broadening our consumer reach, and enhancing loyalty with consumers.”

Based in Leamington, Ontario, Aphria is a “leading global cannabis company inspiring and empowering the worldwide community to live their very best life.”

Joe Stange is Managing Editor of Craft Beer & Brewing Magazine® and the Brewing Industry Guide®. Have story tips or suggestions? Contact him at [email protected].