Tuesday, September 26, 2023

Cannabis Beverages

Investing With a Big Splash


Look for cannabis-infused drinks to make a big splash this year, and start investing in the industry now. The cannabidiol (CBD) industry is projected to reach at least $22 billion by 2022. The market for cannabis-infused drinks is expected to rise to an estimated $4 billion by 2024, according to the “Disrupting Drinks” report published by cannabis market intelligence firm Prohibition Partners. The average manufactured cannabis drinks contain either marijuana compounds of CBD, an anti-inflammatory and mood modulator, or THC, which produces the psychoactive effect. Occasionally, you will find both of these compounds combined in one drink.

Cannabis tends to be an experience aimed at winding down, relaxing and reducing stress and is usually done at home. While you won’t get high from cannabidiol (CBD for short) beverages, studies have shown that CBD offers a heap of health benefits, from stress relief to reduced anxiety, decreased muscle and joint pain, improved sleep, nausea relief, and reduced inflammation and acne.

The fact that CBD can potentially be used for treating chronic pain, substance use disorders, anxiety and central nervous system diseases is expected to boost the sales of infused cannabis drinks. Distribution is a serious challenge for developing brands, however. Because of federal restrictions, cannabis cannot be transported across state lines. The entire production chain must be done in a single state, from the growth and cultivation of the cannabis plant to the final sale. So how do companies get around federal relations?

In 2018 Colorado passed HB 1295 which declared that foods and beverages containing hemp oil are “unadulterated” and legal to sell in Colorado. Illinois, Texas, Florida and Indiana have similar laws on the books allowing for CBD-ingestible products. The Cannabis Beverage Association, a trade association, was recently established to represent and advocate on behalf of the producers and consumers in this rapidly growing business segment.

Ever since the CBD and cannabis industries have skyrocketed in popularity, attention and revenue, large beverage companies have been enticed to get involved. Partnerships are being established by some of the biggest brands in the beverage industry today. Heavyweights like Molson Coors Beverage Co. and Anheuser-Busch InBev have formed partnerships with cannabis brands. Molson Coors formed a joint venture for non-alcohol hemp-derived CBD beverages with HEXO to explore distribution opportunities in Colorado.

"CBD beverages are a growing segment within the non-alcohol beverage category and provides us an opportunity to build capabilities in Colorado," Molson Coors President of Emerging Growth, Pete Marino said in a statement. "We chose Colorado because of its established regulatory framework for CBD, and we plan to approach any opportunities in full alignment with our commitment to commercial responsibility, transparency and compliance."

A study from A.T. Kearney found 30 percent of Americans are willing to try a cannabis-infused nonalcoholic beverage. That’s a huge market. Coca-Cola and PepsiCo are exploring CBD-infused wellness drinks but won’t say any more than that for the moment. Anheuser-Busch InBev has partnered with Canada's Tilray to research non-alcohol beverages containing THC and CBD. Ocean Spray launched a cannabis and sparkling water beverage following an already launched “Mindfully Herbal Tonics” brand drink called Atoka.

Demand is expected to surge for usage of the drinks in medical purposes because of the non-psychoactive properties of CBD. CBD-infused beverages tend to be associated with health and wellness. Consumers are considering CBD drinks as wellness and anti-inflammatory products, similar to kombucha—a probiotic drink. Waiting on the sidelines are national chain retailers like Target and Walmart who, while anxious to stock CBD beverages, are cautiously waiting until these products are legal federally.

COVID-19 doesn’t appear to be hurting sales of cannabis-infused beverages. According to data released by research company Headset, there has been a 14 percent increase in sales, up from merely 1 percent of the market. These crucial findings are grabbing the attention of attentive investors.

Beverages are a far more natural way to consume cannabis, and that is fueling the excitement around the industry potential. Consumers are increasingly exploring non-alcoholic beverages when looking to unwind after a hard day and on weekends. CBD-infused beverages can provide them with a healthier alternative, while still offering the relaxation effect of alcohol.

The U.S. beverage industry includes a plethora of carbonated beverages, energy and sports drinks, coffees, juice, tea, wine, liquor, dairy and non-dairy beverages and water (both bottled and enhanced/fortified). Major product beverage categories have been projected to surpass $170 billion in sales by 2024! That’s a chunk of change! The industry provides roughly 250,000 jobs and brings in a substantial annual revenue. CBD producers are reaching out, contacting and recruiting experienced beverage industry executives to help launch their new CBD and/or cannabis-infused creations.

THC- and CBD-based products currently dominate the market, but research is only just starting to scratch the surface of understanding all the naturally occurring compounds in cannabis—not to mention all of the combinations of flavonoids and terpenes. If you haven’t joined the craze yet, grab a cannabis-infused drink and raise a glass to the healing wonders of plant medicine. And chill out naturally. There is a lot more to come in the cannabis beverage industry.


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