BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Drink Up: The Next Frontier In Cannabis Is Beverages

This article is more than 4 years old.

© 2018 Bloomberg Finance LP

Cannabis drinks are already big business, and they’re growing fast.

When people think about cannabis, the first thing that comes to mind is usually smoking it, then vaping it or eating it inside an edible. Until recently, the idea of drinking cannabis wasn’t really on most people’s radars.

But that’s starting to change. For example, this summer in San Francisco, the Beverage Trade Network is hosting its first Cannabis Drinks Expo to discuss canna-beverages, which are expected to be a $1.4 billion market by 2023, according to Zenith Global. That’s up from $89 million in 2018.

A wide variety of producers are infusing CBD and THC into all sorts of beverages, including tea, soda, cider, margaritas and wine, with a range of concentrations, from small doses of 2.5 milligrams of THC per container to high-potency doses of 100 mg per container. Rebel Coast Winery offers a nonalcoholic wine with 5 mg of THC per glass. MJ Wines has infused cannabis into energy drinks, coffee and wine, and is working on a hemp IPA. Brands like Recess, which raised $3 million from investors, are selling sparkling waters infused with hemp extract. California Dreamin’ offers customers “a light, fun buzz” in fruit juices infused with 10 mg of THC.

One thing that’s common among many brands is that they’re positioning themselves in the health and wellness category. Most target their products to people who want either a midday boost or a way to unwind at night. Mood33 promises “your own personal aromatherapy session” in every bottle of its low-calorie seltzers, made with 10 mg of THC and various herbs, flowers and fruits. Heineken released a sparkling cannabis drink called Lagunitas Hi-Fi Hops it says is “IPA-inspired.” It’s loaded with hops and THC, but zero alcohol, calories or carbs. In January, organic beverage company New Age Beverage introduced Marley+CBD Mellow Mood, billed as relaxation drinks with 25 mg of CBD per serving.

Last fall, even Coca-Cola was rumored to be in talks to explore a line of CBD-infused beverages, but the beverage giant ultimately decided not to proceed — for now. A big problem for big brands like Coke is that cannabis is still a Schedule 1 drug at the federal level, which means it’s categorized with heroin, methamphetamine and LSD, and considered to have no medical value. That designation has scared some brands off. It also makes it hard for companies to grow, since they’re at the mercy of each state’s individual rules and restrictions on THC and CBD. Labeling, bottling and even concentration regulations can differ from state to state, making it difficult to build brand identity.

And then there’s the taste. Cannabis drinks aren’t the greatest-tasting beverages. In fact, they’ve been described as tasting “funky,” “skunky” and “like a barnyard.” Unfortunately, the plant’s signature earthy smell doesn’t play well with fruit juice — or any other water-based liquid. That’s because neither THC nor CBD oil is water-soluble, so they tend to float, adding a scummy, smelly layer to the drinks. It’s one of the reasons many canna-drinks are heavy on intense flavors like lemon and ginger and some add lots of sugar or fruit juices. There’s hope that breakthroughs in CBD and THC isolates, which are virtually odorless and tasteless, will help beverages make big strides in the taste department. One Canadian company thinks it already has the solution: It’s planning to brew beer directly from cannabis plants, instead of infusing it into the finished product.

There’s also hope the 2018 farm bill, which legalized industrial hemp and its extracts, cannabinoids and derivatives, will allow CBD-infused beverages to gain a toehold nationwide so brands can build awareness and loyalty in advance of the cannabis prohibition being lifted sometime soon.

In the meantime, the alcohol industry is still deciding whether cannabis is a threat or an opportunity. Some huge companies, like Heineken, have jumped in with both feet. Constellation Brands, makers of wines, liquors and beers, including Corona, invested $4 billion in cannabis company Canopy Growth. AB InBev, owner of Budweiser and Labatt beers, invested $50 million in a joint partnership with canna-company Tilray, which kicked in another $50 million, to research nonalcoholic beverages containing THC and CBD.

Much like CBD is considered a way for cannabis companies to introduce their products to a broader audience, these alcoholic beverage companies see cannabis as a way to gain access to mainstream consumers. Younger drinkers are demanding modern flavor profiles and many generally avoid alcohol, particularly beer. Cannabis drinks are also a way to entice new consumers who may be canna-curious, but who aren’t interested in smoking or eating the plant, or are still worried about the stigma. Drinking cannabis offers an easy, discreet way of sampling.

Plus, there’s lots of money to be made in canna-drinks — because they aren’t cheap. An 8.5-ounce bottle of Torrey Holistics Berry Lemonade with 100 mg of infused THC is $25; with tax, it’s more than $31 a bottle. At just $8 per 12-ounce bottle, Mood33 seems like a bargain. But consumers appear more than willing to shell out to ensure they stay “highdrated.”

Forbes Special Offer: Click to learn about a stock poised to profit from the rapidly growing cannabis industry