Civilized Food & Drink Print

Cannabis is poised to be a massive opportunity for beverage companies

Cannabis cocktails
Illustration by  Dale Crosby Close
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Yes, cannabis cocktails are a thing. In the US, scenester bars like Los Angeles’ Employees Only and the vegan Mexican restaurant Gracias Madre are combining CBD extracts in mezcal and whiskey cocktails. But this might prove to be a short-lived transitional moment as the cannabis beverage industry evolves and moves toward replacing alcohol as the intoxicant of choice for enlightened consumers. Entrepreneurs, cannabis producers, and major players in the alcoholic beverage industry are aligning themselves to take advantage of the moment when cannabis-only beverages grab market share from beer, wine, and spirits brands and convert alcohol sippers into cannabis quaffers.

When US-based Constellation Brands invested $245 million to own 9.9 percent of Canopy Growth, Canada’s largest cannabis grower, it was clear the beverage behemoth saw the wisdom in creating strategic synergy with the emerging psychoactive substance. Constellation produces and imports some of the world’s biggest beverage brands, including Robert Mondavi wines, Svedka Vodka, and Corona beer. Other beverage companies are positioning themselves to get into the Canadian production and distribution chain. Southern Glazer, America’s largest liquor distributor, partnered with Canadian cannabis producer Aphria to create Great Northern Distributor. And Canada’s other major cannabis producer, Aurora, purchased 25 percent of Edmonton alcohol retail chain Liquor Stores N.A. Ltd., which is retooling its business to distribute cannabis and add an additional 50 retail outlets to its already 230 across Western Canada. Its new name is Alcanna, a combination of the words “alcohol” and “cannabis.”

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With $22 billion in annual alcoholic beverage sales in Canada, companies that can convert alcohol drinkers to cannabis drinkers stand to benefit immensely. But to take a percentage of this market, the industry will need brands that resonate with consumers and slot into existing behaviours. Many existing cannabis beverages take between 45 minutes and 2 hours to take effect, so the first hurdle is creating a drink that can alter the mood as quickly as alcohol.

Ontario-based Province Brands is in the R&D phase of creating a beer brewed from the cannabis plant and has fast onset and offset. Province founder and CEO Dooma Wendschuh has outright called his beer an “alcohol killer.” He’s quick to point out that this isn’t a substitute for traditional beer, but an entirely new beverage category unto itself. “We’re creating a new brewing tradition,” Wendschuh says. “And it slots right into how we like to consume both beverages and cannabis.” The beer is produced from the stalks, stems, and roots that are the by-product of the cannabis flower harvest. It contains no alcohol, and will be brewed in rapid-onset recreational strength, and a long-lasting medicinal version.

The US provides some useful case studies in the cannabis beverage category. Since 2009, Colorado-based Dixie Brands has been selling a popular line of THC-infused berry flavoured beverages called Dixie Elixir available in Colorado, California, Arizona, and Nevada and has expanded to Australia. They recently raised four million dollars, led by Canadian Venture Firm Hillcrest Merchant Partners. Santa Monica-based Tinley beverage company has developed a THC-infused “margarita” that’s completely alcohol-free, though it recreates a margarita flavour thanks to tequila and lime extracts. In addition to the margarita they produce a line that will appeal to home mixologists, including amaretto, whiskey and rum extracts. Tinley CEO Jeff Maser says, “The inspiration came about three years ago when I realized that I love the taste and experience of liquors and ready-to-drink cocktails but I strongly prefer the health benefits and wellness benefits of cannabis over alcohol.”

Being seen as a less harmful alternative to alcohol might be the secret to the cannabis beverage category’s success. While for years light beer has played the health card to varying degrees of believability, cannabis beverages have more science on their side with many studies pointing to lower levels of driving impairment, addiction, and other negative health effects. Brands that lean into this entirely might have the advantage. As of the end of July in the US, Heineken-owned Lagunitas is releasing a cannabis beverage that is the epitome of less is more. Called Hi-Fi Hops, it is inspired by the flavour profile of an IPA and is technically a sparkling water, with zero calories, zero carbs, and zero alcohol. It comes in five-milligram and 10-milligram doses of THC in 12-ounce cans decorated in millennial-friendly metallic purple and silver.

Will Stewart, Vice President of Communications at Hiku brands, points out that a significant portion of potential cannabis consumers in Canada are going gravitate to the consumable cannabis category. “Smoking is really frowned upon here,” says Stewart. “One of the things you constantly hear is, ‘I don’t want to be a smoker.’ I think over time edibles and beverages will become the prefered way of consuming cannabis.” Only time will tell if Canadian consumers will drink to that. With a cannabis cocktail, of course.

This story is part of our Civilized series from our September 2018 issue. Click here for more content from the series.