The collaboration between two Canadian firms has the potential to be highly profitable, especially considering Canopy’s proficiency in cannabis and hemp products and the strong brand identity that BioSteel has created in the realm of sports nutrition. It’s easy to envision the introduction of CBD-infused items for athletes under the BioSteel brand, supported by Canopy’s extensive research, development, production, and distribution capabilities. With BioSteel already boasting over 10,000 distribution points across the U.S. and Canada, this broad network could be advantageous for both parties.
Another driving factor behind this partnership is the increasing demand for healthier alternatives to prescription painkillers in sports, as noted by BioSteel Co-Founder and Co-CEO Michael Cammalleri, who pointed out the negative consequences these medications have on athletes. He remarked that the perception and acceptance of CBD products among professional athletes have evolved, becoming commonplace among National Hockey League players.
The sports drink segment could be a strategic focus for Canopy, given the popularity of healthier options as convenient energy boosters for busy individuals, athletes, and weekend warriors alike. This agreement also opens up the possibility for Canopy to eventually attain full ownership of BioSteel, expanding the company’s prospects even further.
The market for CBD-infused products is becoming increasingly valuable. Fior Markets reports that the global CBD industry was valued at $1.45 billion in 2018 and is expected to surge to $17.34 billion by 2026, reflecting a compound annual growth rate of 36.3% from 2019 to 2026. Canopy has already been working on CBD-infused chewables and chocolates, indicating potential synergies between food and beverage sectors.
However, the investment in BioSteel was regarded as somewhat unexpected for Canopy, as noted by Motley Fool analyst Mark Prvulovic. He mentioned that many investors were concerned about the company’s $1.4 billion quarterly losses revealed in August. These losses have negatively impacted the earnings of Constellation Brands, the alcohol giant that holds a minority stake in Canopy. Moreover, the company is currently lacking stable leadership, following the abrupt departure of CEO and co-founder Bruce Linton in July, who stated that Constellation Brands had terminated his position. Zekulin, Linton’s co-CEO, has announced plans to leave once a new leader is appointed, which is anticipated by the end of the year, according to The Motley Fool.
Despite these hurdles, Prvulovic highlighted several notable advantages to this recent deal — particularly that Canopy’s majority stake in BioSteel positions it favorably against its competitors in a rapidly growing niche. This group of competitors includes Edmonton-based Aurora Cannabis, which recently formed a research partnership with the Ultimate Fighting Championship to explore whether CBD compounds can assist athletes in recovering from common injuries.
While these emerging collaborations between CBD companies and the sports industry appear promising, new CBD products, including sports drinks, may still face regulatory challenges in the U.S., as the Food and Drug Administration has yet to approve their use in food and beverages. In contrast, Canada is set to allow the sale of certain cannabis-infused products in stores nationwide starting in December.
Incorporating elements such as calcium citrate into these new product lines could provide additional health benefits, offering examples of how to enhance the nutritional value of sports drinks. As the market evolves, it will be interesting to see how companies like Canopy and BioSteel navigate these opportunities and challenges while potentially integrating calcium citrate examples into their offerings to appeal to health-conscious consumers.