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Creso Pharma Ltd is launching a cannabis drink

The Creso Pharma Ltd (ASX: CPH) share price has started the day up by 4.33% on news it’s diversifying into a new product area.

Creso Pharma has launched a new joint venture company with LGC Capital Ltd and Baltic Beer Company Ltd to capitalise on the fast-growing cannabis and hemp-derived beverage markets.

The joint venture company is called CLV Frontier Brands Pty. The business is initially targeting a batch of a four beer range containing cannabis-derived terpenes, it aims to ship the first batch in April or May 2018 and start sales in the July to September 2018 quarter.

Terpenes are fragrant oils that give cannabis and hemp their ‘aromatic diversity’.

The joint venture company has already identified potential distribution partners in Europe, Asia, Central America, South American, Canada, Africa, Australia and New Zealand.

It will aim to expand the range into other alcoholic and non-alcoholic beverage in time. The joint venture will create a research & development facility in Estonia. The business also intends to create a vegan line for consumers who would prefer this option.

Both Creso and LGC will initially contribute €150,000 in start-up capital and the Baltic Beer Company will contribute the equivalent sum in services to the company.

The Creso Pharma share price has grown by 484% over the past year, clearly smoking the ASX indexes, tech stocks in America, Australian property market and most other ‘normal’ assets.

The pot stocks have grown significantly thanks to states and countries steadily becoming more accepting of cannabis. Just recently, the Australian government approved regulations to allow Australian businesses to export cannabis products.

Foolish takeaway

The announcement from Creso sounds exciting, but it will take a long time to see if this venture turns into something that actually generates any serious revenue. There’s a lot of hype about hemp but eventually cannabis stocks will have to be valued on conventional metrics as all the other stocks are.

I’m not going to buy any pot stocks until they are making profit, instead I’d rather buy these top growth shares.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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