Tilray acquires boozy candy company Smith & Sinclair to develop CBD edibles

Brendan Kennedy, CEO, Tilray

Scott Mlyn | CNBC

Tilray has acquired boozy gummy maker Smith & Sinclair to create a line of CBD edibles, the Canadian pot company announced Tuesday.

U.K.-based Smith & Sinclair infuses alcohol into food products to create boozy twists on sweet treats. The company sells alcoholic gummies and lollipops, edible fragrances and tablets that transform a standard cocktail into a fizzy drink. Tilray will work with the company to create new CBD-infused edibles and distribute them in the U.S. and Canada.

The deal gives Tilray another way to develop novel cannabis products as companies try to differentiate themselves and attract new customers who might not want to smoke a joint. U.S. consumers are hungry for products containing CBD, a non-psychoactive cannabis compound that's now federally legal thanks to Congress' passage of the farm bill late last year.

Tilray CEO Brendan Kennedy told CNBC he met the Smith & Sinclair team about a year and a half ago. He said he "loved" the company's marketing and product innovation teams, especially the possibilities for CBD-infused edibles. He decided the teams would make a "perfect addition" to Tilray's growing portfolio, which includes pot brand Marley Natural and hemp seed brand Manitoba Harvest.

"Over the course of the last nine years, I've met most of the cannabis edible companies, and this team was pretty different from anything I had seen in the hemp space and the CBD space," Kennedy said. "Based on some of the R&D they have done, we believed that they could create some innovative products."

Smith & Sinclair managing director and co-founder Melanie Goldsmith has won a number of awards for her work with the company. The company says it's on a mission to make "adult more fun," calling itself "in a nutshell: Willy Wonka for grown-ups." Goldsmith in a statement said Tilray's support will allow Smith & Sinclair to "turbo-boost" its efforts.

"The acquisition will see a turning point in the journey of Smith & Sinclair, helping us to build our international footprint and bring more ground-breaking products and ranges to market," she said.

Perhaps Smith & Sinclair's most well-known products are the "Trump Sucks" alcoholic lollipops it created in 2017 in response to President Donald Trump banning federal money for international groups that perform or provide information about abortions. The candies are molds of Trump's face affixed to a stick. Smith & Sinclair donated the money it raised to the International Planned Parenthood Federation.

Tilray declined to say what kind of products it might develop with Smith & Sinclair, which will become a wholly owned subsidiary of Tilray. The company also declined to disclose the terms of the deal, saying only that Tilray has acquired all outstanding and issued securities.

The lines between pot companies and traditional consumer products companies are blurring. Kennedy said Tilray continues to see interest from traditional companies in the U.S. who are feeling pressure from retailers to offer CBD products.

Tilray partnered with megabrewer Anheuser-Busch InBev late last year to form a joint venture to research cannabis-based beverages. The company also signed a deal with Authentic Brands, which owns names including Nine West, Prince Sports and Juicy Couture, to develop CBD-based consumer products.

Correction: This article was corrected to reflect that the CBD products will be sold only in the U.S. and Canada, not in Europe.

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