Seth:

As both the supply and demand for cannabis drinks proliferates, we’re looking at the emergence of a new beverage category so powerful that it’s likely to give the energy-drink explosion a run for its money.

But the question is: What do consumers want, who’s going to give it to them, and how will brands be built along the way? Well, we couldn’t possibly have a better group to explore this with today:

Charlie Reed, Samantha Ford Collins, David Holmes, Kenny Morrison & Erik Knutson are all kind enough to join us to reveal the future of cannabis drinks. We have so many questions – and we hope readers will feel comfortable chiming in to ask their own (as there’s so much we can learn from these folks).

Thank you all so much for being here today. And a big thank you in advance for sharing the full story at eBev on October 30th – we can’t wait to meet you all in Las Vegas.

We thought it would be helpful to start today by learning more about each of you/your brands. What was the initial idea, insight, or motivating factor that led your company to a cannabis drink? And of course, where do you see your brand today/how did it get to this point?

Charlie Reed:

Thanks for having us, Seth! High Style Brewing was born out of our three founders’ shared love of craft beer and cannabis, and their desire to completely disrupt the ‘adult beverage’ category by marrying the two. Understanding the power of expanding consumer choice and the massive interest in the legal cannabis market, they began crafting our line of entirely nonalcoholic, THC-infused craft beers in San Diego, California. Now, about 9 months after our initial launch and with the addition of two new SKUs available throughout our state, we see our brand as a first mover, building a strong customer base that resonates with our craft quality, consistent dosing and brand values. In the next few months, we are thrilled to be expanding our distribution as well as adding new varieties to our product lines as we continue to grow and extend our brand reach.

David Holmes:

Hi Seth, and thanks for including me… The concept for PLNT Blend focused on the using the cannabis (hemp) plant to expand ‘traditional’ functional beverage market. The beverage aisle has changed incredibly over the last 10 years – at one time, it was enough to be delicious.. now consumers also want to know that their drinks are going to do something pro-active FOR their bodies or minds. PLNT Blend started as a collaboration with chefs in an amazing quick-serve restaurant in New York City, and is expanding beyond our current 8 states.

On the more ‘fun’ side of Cannabis, we’re about to launch a THC-infused product in the Northeast. Regulations are challenging, but there’s a great opportunity to convert consumers from the Alcoholic Beverage market with the right messaging. At SpikedSeltzer, we were managed to hit on both ‘fun’ and ‘better for you’ at the same time. When you look at the toxicity of alcohol, there’s a clear opportunity to do the same for this new category.

Sam Collins:

Hi Seth, thanks for having me. Bhang was founded 10 years ago by a brilliant chocolatier named Scott Van Rixel. At the time, the market for edibles was new, and Bhang was the very first to come out with a delicious chocolate that had a nutritional fact panel, product liability insurance and triple verified potency testing. It was revolutionary at the time, and we went on to win 8 Cannabis Cups. With his keen nose for flavor Scott has been constantly experimenting and creating new products.

These days, the Bhang Corporation is more focused on the hemp derived CBD market, and most of our new products are in this space. Functional Beverage is a huge consumer category, predicted to grow to $208.1B by 2024. Bhang believes that CBD will become a huge part of the growth of the functional beverage category, and we have already started innovating here with our partnership with Red Ace beet juice. We make a Beet Juice shot that includes 3 organic beets and 25 MG of hemp derived CBD. It is a fabulous pre and post workout drink to help with athletic performance and recovery. We see a huge opportunity here and will have a robust innovation pipeline of functional beverage.

Kenny Morrison:

We started as Venice Cookie Company in Venice beach 2008, making cookies and infused olive oil. Dennis Hopper’s nurse came into our local neighborhood cannabis collective in late 2009 or early 2010, towards the end of his battle with cancer, looking for a soothing hot cannabis tea. I headed off to Trader Joe’s to grab some ingredients and figure it out. About a week later I delivered tea to Dennis’ door. The THC potency was challenging and mild so I called it Subtle Tea. That was our start in the beverage space. Today Cannabis Quencher is the best selling cannabis beverage in the history of California, and we are launching an RTD version of Subtle Tea to accompany the dry tea as well.

Erik Knutson:

We founded Keef in January 2010 in Boulder, CO and have been selling cannabis infused beverages ever since. We are currently the most widely distributed THC infused beverage in the world (5 states and Puerto Rico). The original motivation was to give patients a liquid delivery vehicle in a fun package and to create a social beverage to replace alcohol.

Seth:

Let’s start looking ahead by thinking about the social discourse around cannabis drink consumption. Can you describe the environments in which you think folks do/will consume cannabis drinks socially?

Charlie Reed:

We have found that our brews and other cannabis drinks are fitting into daily life so seamlessly that it’s almost impossible to predict how commonplace consumption will be in the future. We believe that in the next few years we will see cannabis beverages as fully integrated into society as alcohol currently is, and perhaps even more so, given its major health benefits for many people. Today our consumers are limited to purchasing THC products within our state boundaries and the regulatory landscape is in a state of pretty much constant change. Right now, most folks are consuming High Style brews at home, at social gatherings, on camping trips, etc. but we know that large scale cannabis festivals, restaurants and clubs will continue to redefine what the legal cannabis market looks like for consumers.

David Holmes:

The mainstreaming of Cannabis as an intoxicant has been incredibly fast, but it’s got a long way to go compared to the national favorite… ethanol. My goal is to use flavor, branding and active dosing to make cannabis-powered adult beverages acceptable anywhere that an alcoholic beverage would be.

Kenny Morrison:

Cannabis beverages will be used in the same various settings that other functional and therapeutic beverages are used. I agree with Charlie, cannabis is on the precipice of being very commonplace. The lines will soften between the perception CBD and THC. Legalization and social acceptance teaches people how to use the minimum viable amounts of each molecule, thus lessening the stigma associated with getting “high”. People now microdose. Cannabis role models (like Cheech and Chong) who binged on THC were a byproduct of prohibition. In a post prohibition world, overdoing it with cannabis will no longer be seen as cool and rebellious. Jeff Spicoli is dead.  The future is much more nuanced. I’m personally not a fan of the word intoxicant for an active ingredient that is non toxic and can’t kill you.

Erik Knutson:

It’s been amazing to see the acceptance and inclusion of canna drinks into traditionally alcohol dominated events and social gatherings over the past couple years. From Northern Nights music festival to traditional bar atmospheres (Moe Greens SF), infused drinks work just about anywhere. We are extremely excited excited about the pending implementation of social consumption in Colorado and elsewhere.

Sam Collins:

Absolutely! I already see more and more friends turning to cannabis beverages like HiFi Hops as a non toxic, low calorie substitute for alcohol. The brand Kikoko has done a brilliant job of targeting the tea drinking occasions. I believe the social stigma, particularly around hemp derived CBD and Terpenes is far lower then previously believed, and consumer adoption will be faster and broader then most people anticipated.

Seth:

What about the consumption occasions? Sure, we can imagine folks might want a THC drink to blow off some steam after work, but when else might they reach for a THC or CBD beverage?

Charlie Reed:

Our consumers are constantly sharing with us when they choose to incorporate our brews into their lives and the range is really impressive. Of course, the end-of-day, post-work “wind down” beverage you mentioned is an obvious one, but we are also seeing High Style consumed on outdoor adventures around the campfire, as a light post-work nonalcoholic option, or as a six pack brought to a neighborhood barbecue or family get together. It’s super exciting to see our consumers flex their creativity by integrating our brews into mocktail and even savory recipes, crafting micheladas, infused macaroni and cheese and ceviche dishes. One of our consumers loves to call our Blood Orange Haze her “Mom-osa” and tells us she enjoys them every Sunday at home with her kids. The sky really is the limit when thinking about the potential usage occasions of cannabis beverages.

David Holmes:

We think of PLNT as an every-day drink. It supports balance, and is low sugar, natural, and of course delicious… but we trust consumers to find their own use-case and understand what works for them.   On the THC side, as mentioned, we really think that every alcohol occasion would be an opening for us.

Kenny Morrison:

There’s a common misconception that CBD is “medical” and THC is “recreational”. Some people use CBD for pain relief, sports recovery, or stress and anxiety, others need THC to achieve the same benefits. Other than the varying levels of psychoactivity between the two molecules, their differences are largely an ideological construct.

Sam Collins:

This is a great question. Understanding the consumer usage occasion is key to creating a successful product and campaign. At Bhang Corporation we have used the broader consumer macro trends to guide us into several categories of innovation. For beverage specifically we are currently focused on the “functional beverage” category. The occasions we have identified for our Beet Juice drink are energy boost pre athletics and recovery post athletics. Our new tier will focus on broader occasions utilizing CBD and Terpenes and will include healthier, refreshing energy drink substitutes focused on specific needs like: relaxation, rehydration, focus, etc.

We are also working on a line of Coffee drinks in partnership with Oceana Coffee which will Target the various coffee occasions with additional functional offerings. Ultimately what these have in common is that we are offering a healthier, tastier substitute for soda, coffee or other day time drinks.

Seth:

While there’s enough demand for many profitable cannabis drinks businesses, and we know product quality is a constant focal point…the “winners” of the cannabis drinks race will the ones who build great brands. I know this is something each of you is keenly aware of; can you tell us a few of the pillars of your brand, “who” you’re speaking to, and why your brand resonates so well with your core?

David Holmes:

I’m happy to use BMA’s forecast 😊! I never could have expected that the first ‘category’ that my partner and I created would go from zero to $900mln in 6 years, so my macro guess isn’t the one to wager on.. That said, if we can get clear FDA guidance on Hemp/CBD, and a flattening of Federal restrictions on Cannabis (THC), $5Bln in 2023 could be light by half! It’s really all down to how easily we can all reach the market.

Charlie Reed:

Our brand is committed to quality sourcing, consistent dosing, sustainability and a “best in craft” mentality. We do not cut corners at any point in the brewing or manufacturing process in efforts to ensure our consumers have a positive, trusted experience with our products. Through our brand, we are pushing for the normalization of cannabis with every label, event and social media post – why should this be treated any differently than alcohol? We feel that our transparency, lifestyle-focused marketing and clear messaging are all speaking to our consumers who range from the “cannacurious” to the craft beer connoisseur, to the person looking for a subtle way to consume in a familiar 12 ounce amber bottle. By tackling the stigma around cannabis head-on and providing a range of products that fit a wide range of needs. For some, the key selling point is that these are nonalcoholic options that actually taste like beer and are brewed in the same way. For others, it’s the quick onset (15-30 minutes) of effects that beverages provide. For another group, it’s the subtlety and comfort provided by holding a beverage in a social setting, and for some, it’s just an excellent way to consume cannabis. It truly runs the gamut.

Kenny Morrison:

Agreed David, it’s really all down to how easily we can all reach the market.

Sam Collins:

When I came on board at Bhang we made the decision to really nail down the brand essence and promise of the Bhang brand. Now that we have done that we are working on bringing that to life through our brand voice. With the tremendous amount of consumer opportunities in this industry it quickly became clear to us that we would need to create, partner with or acquire new brands to speak to some of these other consumers. So I guess in short what I am saying is it is more important to have a strong brand voice targeting a specific consumer group, then a watered down voice that supposedly speaks to “everyone”. In my opinion when you try to speak to everyone no one listens.

Seth:

Time to have some fun and use your crystal balls! In 2018 the global cannabis drinks market was $1.5 billion. A major research firm recently predicted it will be $5 billion by 2026. Based on what Beverage Marketing Association is seeing, we think they’re wrong — we think it’ll pass the $5 billion annual pace (~$417mm/month) by April 2023. Feel free to mark our words and mark the date! When do you think it’ll hit this size, and what do you believe could be the size of a mature cannabis drinks market?

Charlie Reed:

Given the uncertainty in the market right now, I would say this really depends on how quickly we see states (and eventually the federal government) legalize recreational cannabis consumption. The 2020 elections will likely be an interesting litmus test on the issue as we are already seeing many candidates express their stance on the issue.

Kenny Morrison:

I started my company in 2008, and living in my California bubble, I never thought it would take this long. My crystal ball was taken from me by a DEA agent in a smash and grab raid back in 2015. Sadly, they never returned it…   :  )

Erik Knutson:

The biggest driving factor to that growth resides with the Feds unfortunately. In order for that type of growth to occur domestically we will need to see FDA approval of CBD as a nutraceutical ingredient approved for use in beverage and the States Act to pass. Internationally, I think the growth opportunity is definitely there, that said US movement will help drive it much quicker.

Sam Collins:

I don’t have a crystal ball, but I sure hope you are right!

For questions or comments please visit: 

https://www.linkedin.com/posts/seth-hillstrom-70802025_cannabis-ebev-thc-activity-6575407051160252417-swC5/

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