Will Cannabis Beverages Cannibalize Beer Sales?

By: Briana Tomkinson

Cannabis was legalized in Canada a year ago; however the production and sale of edibles, in-fused beverages and tinctures, remained illegal—until now.

  The first legal cannabis-infused drinks and edibles are expected to hit shelves as early as De-cember. Many have been designed to produce a high mimicking the effects of alcohol in terms of onset, intensity and duration.

  While the federal government officially legalized edible cannabis products on Oct. 17, produc-ers still need to obtain Health Canada approval, a process that industry insiders expect to take a minimum of 60 days.

  Some products will include only CBD, a non-intoxicating compound found in cannabis, while others will have THC, the psychoactive compound in marijuana that produces a “high.”

  According to a report from Deloitte, the cannabis-infused beverage market will be worth an estimated $529 million per year in Canada, most of which will be on top of existing cannabis spending. Deloitte predicts sales of these beverages will come at the expense of beer, wine and other alcohol as “cannabis-curious” customers experiment with marijuana instead of booze.

  The Deloitte report notes that alcohol and tobacco companies are looking for opportunities to enter the legal cannabis industry to avoid losing market share. Pharmaceutical companies are also entering the market, as consumers turn to CBD oil and cannabis to self-medicate.

Mild High Aimed at New Cannabis Consumers

  Deloitte predicts cannabis-infused beverages will appeal to older, often female, Canadians who are concerned about the adverse effects of alcohol and are interested in trying cannabis yet are turned off by the idea of smoking it.

  Most producers of THC-infused drinks are aiming for a formulation that triggers a high within about 15-20 minutes and lasts no more than a few hours. This effect is in contrast to most cannabis edibles and oils, which are slower to take effect and produce a high that can last as long as six hours.

  Unlike beer or wine, there’s little risk of a hangover from cannabis beverages. Some varieties can also boast they are low-calorie drinks, which could appeal to more diet-conscious con-sumers. Prices are expected to be similar to that of craft beer; however, the beverages can on-ly be sold at legal cannabis outlets, not grocery stores or alcohol retailers.

  In October, Ontario-based Canopy Growth Corp announced the launch of 13 cannabis-infused drinks, some boasting as few as five calories per serving. The drinks range from pure distilled cannabis, intended to be mixed with sodas or other beverages, to pre-mixed blends of canna-bis with tonic, ginger ale, cola, soda and fruit-infused sparkling water.

  Unlike some legal producers in the U.S., Canopy Growth’s lineup focuses on low-dosage bev-erages with an effect similar to that of a single beer or mixed drink. According to the Ottawa Citizen, while Health Canada allows a THC concentration of 10 mg per package, 10 of Canopy Growth’s 13 products will have 2.5 mg or less, producing a mild high aimed at appealing to inexperienced cannabis users looking for an alternative to alcohol.

  Truss Beverage Company has also announced it will be ready to release cannabis-infused beverages in December, including CBD-infused spring water and THC-infused drinks. Compet-itor Fluent Beverage Company said it would be prepared to release CBD-infused beverages but is still working on formulations with THC. 

Beer Brands Push Into Cannabis Beverages

  Ever since Canada legalized the sale and consumption of cannabis, big beer companies have been teaming up with cannabis companies to develop cannabis-infused beverages.

  Canopy Growth, for example, has benefited from billions of dollars of investment from U.S.-based Constellation Brands, maker of Corona. Truss Beverage is the product of a joint venture between Molson Coors and cannabis producer Hexo, and Fluent Beverage is backed by An-heuser-Busch, who has partnered with British Columbia-based pot producer Tilray.

  In June, Bloomberg reported that Molson estimates cannabis beverages will make up 20-30% of Canada’s legal cannabis market. However, a report by Deloitte estimated drinks make up just 1% of sales by value and volume in U.S. states where pot is legal.

Marketing, Labeling Restrictions on Cannabis Beverages

  If cannabis beverage producers want to steal market share from beer and wine, they need to overcome the strict limitations on marketing, packaging, labeling and distribution imposed by Health Canada.

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