Dive Brief:
- Canopy Growth will belaunching cannabis-infused beveragesin legal use markets in California and Illinois through its partnership with Acreage Holdings, the companies announced on Thursday.
- 在加拿大,大麻的饮料是合法的,可以opy Growth has sold more than 1.7 million cans of drinks including Tweed's Houndstooth & Soda and Bakerstreet & Ginger. It has a 74% market share, and owns five of the top six SKUs in the category, the company said.
- Cannabis-infused beverages have long been thought to be the next big thing, especially since alcohol consumption has been waning, but legal gray areas around cannabis have slowed introduction. Alcohol giant Constellation Beverageshas a 39% stake in Canopy Growth, and has spent about $4 billion in its investment in the company.
Dive Insight:
Ever since Constellation Brands first invested in Canopy Growth in 2017, the big question has been when cannabis beverages would get onto shelves in the United States. Today, the question has been answered.
What those beverages will be and whether they will be like the ones in Canada are the next looming ones.
According to the press release, Canopy Growth and Acreage are looking to bring a "sessionable infused beverage offering" to the U.S. that is similar to current beverage alcohol serving sizes. There currently are THC-infused beverages in the United States, but many of them are high-dose items geared to experienced users, with more than 50mg of THC. Canopy's Tweed beverage line, in contrast, has 2mg of THC. Tweed is also the No. 1 brand in Canada during the last 26 weeks, Andrew Rapsey, the company's global head of beverages,said in a previous interview. Consumer research suggests seven in 10 people who have bought Tweed would purchase it again.
Another issue that comes up is how, precisely, Canopy and Acreage can get cannabis-infused beer to consumers in the U.S. The market is currently small because of the tight controls on cannnabis products, which vary between states, counties and cities. Food and beverage products that include marijuana or CBD derived from hemp are not legal across the board. And other cannabis beer companies have had problems finding a large market. Ceria Brewing Co., started by former Blue Moon brewmaster Keith Villa, launched in 2018 withTHC-infused Grainwave and Indiewave. This year, Ceria began focusing on nonalcoholic and non-cannabis versions of the brews. Villa told The Denver Post that a nonalcoholic version of these beerswill build brand recognitionfor when the cannabis versions can be sold in more places, as well asbring funding and the supply chainfor wider cannabis distribution.
Acreage has several cannabis brands and dispensaries, and it also has been licensed the rights to Canopy's U.S. beverage line. This gives Canopy's beverages a clear and relatively unobstructed path to market, even if that market is small.
Canopy's beverages also have the strong expertise of Constellation Brands behind them. While Canopy has so far beena drag on Constellation's balance sheet— including representing a reported $31 million loss in the most recent quarter, according to thecompany's earnings on Thursday— the beverage giant has replaced the cannabis company's C-suite in preparation for a beverage launch.After firing co-founderBruce Linton,Canopy's CEO David Kleintook the helm after previously serving as Constellation's CFO and Mike Lee, who alsopreviously worked at Constellation, is now Canopy's CFO. Canopy's Chief Insights Officer Chris Edwards alsohails from Constellation. This slate of expertise was invaluable in a quick beverage launch in Canada, Rapsey said.
With an already successful launch in Canada, Canopy has many lessons under its belt that it can bring to its U.S. launch next year. And there is plenty of time for the U.S. market to get bigger. Next month, voters in Arizona, New Jersey, South Dakota and Montana will be able to choosewhether to legalize recreational cannabisin their states.
