Canna Provisions in Massachusetts launched a pair of sodas — Doctor Durban and Lemon-Lime Haze, based on highly popular cannabis strains, and the response from consumers has been excellent, chief operating officer Erik Williams says.
Market analysts have been projecting significant growth in the cannabis beverage sector for several years. Manufacturers and retailers alike have been waiting for this anticipated growth … and waiting … and waiting … and … still waiting.
According to BDSA, beverage sales accounted for just 6% of the retail edibles market in Q4 of 2023, or, generously, about 1% of the total regulated cannabis market. Cannabis beverages have been roughly 1-2% of the total regulated market in basically every story Marijuana Venture has published on the topic over the past decade. One year ago, when Marijuana Venture researched edibles trends, beverages accounted for 7% of the retail edibles market.
And yet, many cannabis professionals remain bullish that drinks will be a major factor in the future of cannabis.
Paul Weaver, head of the cannabis division at Boston Beer Co., says beverages are “the most brand-centric form of cannabis.” And Boston Beer Co. knows a thing or two about beverages, having produced some of North America’s top alcohol brands over the company’s 40-year-history.
With a gummy, Weaver points out, consumers rip open the package, take one or two bites and the gummy is gone. Same with a pre-roll: once the package is opened and discarded, branding is largely invisible or forgotten.
“Beverage is a can: it’s branding, it’s explicitly in your face, it’s very extroverted,” he says. “The ability to deserve brand loyalty in a cannabis beverage is far greater than any other form factor. It’s also the one with the most prolonged consumption. It takes 10 to 15 minutes to drink a drink, as opposed to instantaneous consumption of every other form factor. So taste matters.”
Also, the relatively slow sales of cannabis-infused beverages at dispensaries fails to account for booming business of hemp-derived drinks, typically containing delta-8 THC, which are now available online and all across the country in retail channels that reach far more mainstream customers than the typical pot shop.
Many people also believe beverages represent the best opportunity to lure new customers — the cannabis industry’s white whale. Research from New Frontier Data in 2023 found that 39% of “potential consumers” in adult-use states said they were likely to try cannabis within the next six months, with edibles (76%), topicals (50%) and beverages (42%) being the form factors they were most interested in trying. Flower, not surprisingly, was toward the bottom with only 18% of respondents saying that was the mode they would likely try.
Kim Sanchez Rael, CEO of the cannabis ingredients company Azuca, says she has long believed new consumers are less likely to be interested in smoking or vaping, meaning there’s a significant opportunity for edibles. Plus, beverages have the built-in social construct: “We’re accustomed to socializing with a beverage in our hand,” she says. “It’s not our largest category yet, but I wouldn’t be surprised if by the end of 2024 beverages is an equal or even potentially larger category than our traditional edibles, because of the high consumer demand.”
Smoking also invokes more barriers to consumption. Beverages can be more accessible and more acceptable.
“It’s not like you’re at a dinner party, and you have to sneak out to hit a vape pen or smoke a joint on the porch,” Theory Wellness chief marketing officer Thomas Winstanley says. “You can actually enjoy it without getting that stigma attached of having to be clandestine.”
But beverage makers are finding it’s not that simple.
“I still think there’s a lot of growth potential there,” says Tim George, chief operating officer of Assurance Laboratories, the New Mexico manufacturer of the Fligh edibles brands. “We don’t have a crystal ball, but I think as people become more familiar and comfortable with cannabis, more people will opt in on drinks because it could be a healthier social alternative to drinking alcohol. We thought when rec happened here that a lot of new customers would move into the micro-dosing, and we saw kind of the opposite trend, where people were trying to get more THC for that same dollar. We’re optimistic that there is growth there, but it’s going to take time and drinks are just finding their place still.”
While new consumers tend to be the target demographic for cannabis beverages, especially in markets where packaged products are capped at 5-10 milligrams of THC, higher dose drinks and products that complement, rather than replace, flower have shown some promise.
For Canna Provisions, the company’s Smash Hits beverage line grew directly out of its relationship with the plant — and not a repudiation of cannabis flavor and culture. Chief operating officer Erik Williams says the company had two beloved strains — Durban Poison and Lemon Haze — and saw a gap in the market for flavor-forward beverages to contrast the numerous “light and refreshing” distillate-based seltzers on the market. The result was Doctor Durban and Lemon-Lime Haze, connecting the strains’ terpene profiles with a familiar soda flavor.
“As a retail store, we’re always looking for a differentiator,” Williams says.
Williams, careful to temper expectations, says the response from consumers has been excellent.
“You don’t hope for grand slams — that just leads to disappointment in the cannabis business,” he says. “We were hoping for a solid base hit, and I think we hit a triple.”