The cannabis drinks industry is still in its infancy and showing signs of significant growth. Several major players have entered the market in recent years, and new products are being released on a regular basis. Past focus has been on THC-infused beverages, but wellness benefits associated with CBD has grown interest in these drinks as well.
As the market develops, we can expect to see more innovation and variety in cannabis-based beverages. Let’s take a look at where the cannabis drinks space is heading.
Why are cannabis drinks so popular?
Several traits make cannabis beverages attractive to newcomers: ease of consumption; discreetness; fewer health concerns; and less stigma, as with methods such as smoking or vaping. Cracking open a can is more socially acceptable than sparking a joint or putting oil drops under your tongue. What’s more, for many, the act of consuming a cannabis-infused beverage can simply be more enjoyable than other consumption methods.
Cannabis drinks are a class of edibles, and they have advantages over other edibles. Edibles have a slow onset of effects, which can lead to taking too much or feeling the effects too late, when no longer desired. The onset of effects with cannabis beverages is typically fast as the cannabinoids are mainly absorbed into the bloodstream through the mouth and under the tongue (sublingually), but also in the stomach. This means you feel the effects in real time instead of having to wait, making it easier to find the right dose and avoid over-consumption. Drinks come in a variety of doses—2.5mg–25mg of THC or CBD are common, and the two cannabinoids are often combined in one product.
The general wellness market continues to grow, and similar to gummies and oils, CBD- or THC-infused drinks are filling a demand. Consumers are often looking for drinks low in alcohol, sugar, and calories. Alternative edibles, such as baked goods and candies, are often considered unhealthy due to their high sugar or fat content. Drink labels that advertise claims like “chemical-free,” “all-natural,” or “organic” are big hits with modern consumers.
Additionally, new technologies are emerging to help overcome processing and packaging challenges, and distribution channels such as pot shops, bars, and restaurants, have increased consumer exposure to a range of products.
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Societal and technical barriers for cannabis-infused drinks
It’s certainly not plain sailing for cannabis-infused drinks producers. The early days of the industry saw a host of formulation and packaging issues. Cannabis drink production involves dissolving a cannabis oil in a liquid, and if the resulting oil droplets are too large, it can result in a low potency.
There’s also the issue that some of the oil can be absorbed by the package lining. The combined effect of these two problems leads to concerns that consumers might not be ingesting the level of THC or CBD promoted on the label.
There are also complex regulatory barriers to overcome, including packaging design restrictions. For example, depending on regional restrictions, packaging may need to be child-resistant, opaque, durable, or tamper-resistant.
One restriction hampering Canadian cannabis drink sales is the strict limit on how much can be purchased at a time. Canadian consumers can only purchase up to five 350ml (about 12 oz.) drinks at a time, no matter the THC level. While there are moves to increase the limit, there are concerns that this restriction is preventing shoppers from being able to try new products. Another concern in Canada is the limit of 10mg of THC per beverage—there are fears this level is too low and could drive consumers toward illegal products.
As with any cannabis product, there are safety concerns associated with over-consumption. This is why it’s vital to purchase legal products and check that a brand provides a certificate of analysis for each product.
While the stigma is lower for drinks than for other cannabis products, it’s not completely gone. Even in regions where cannabis is legal, there is still resistance to purchasing and consuming medical and recreational cannabis. As such, it may be a long time before we see cannabis drinks compete with the sales of alcoholic beverages.
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How many people are buying cannabis beverages?
A cannabis beverages report by Headset compares sales to the overall beverages market. It shows slow, consistent growth for cannabis drinks in the US, where they held a 1.1% share of the overall beverage market in January 2022, up from 0.9% in January 2020. Growth has been far more pronounced in the Canadian market due to more recent legalization, with cannabis drinks starting 2020 with under 0.2% of the beverage market, increasing to almost 2% at the start of 2022.
Headset also provides insight into the performance of various product segments with the cannabis drinks market. In Canada, carbonated drinks dominate cannabis beverages with 50% of the market share. Cannabis-infused water is a big seller as well, with 20% of the cannabis drink share.
Things are a bit different in the US, with three segments holding about a quarter of the weed drinks market each: drops, mixes, elixirs, and syrups: 28%; carbonated drinks: 26%; and iced tea, lemonade, and fruit drinks: 22%.
One more interesting trend highlighted by Headset is the price of cannabis-infused beverages. Average item prices in the established US market have decreased slightly in the past two years, from around $14.50 to the $12 mark. Canadian drinks started 2020 at a similar price point, around $16 CAD ($12.30 USD), but dropped dramatically to about $6 ($4.60 USD) by July 2020 and have remained at that price since.
Where is the cannabis drinks market going?
There are a few big players in the cannabis beverages industry, including Keef, Cann, Levia, PTS, and Select, among others. These companies tend to cater to different target markets, of which there are many. For example, Keef’s bright packaging and sugary drinks will appeal to a different audience than Levia’s low-sugar seltzers. One thing the big players do have in common is their ability to secure robust production and distribution partnerships.
The breadth of the drinks industry and room to grow in it means there’s ample room for other companies to come in and shake things up. You only have to look at the lineup for an event like the Cannabis Drinks Expo to see all the new entrants. Smaller companies may struggle with production and distribution, but even if larger companies dominate the market, we could still see demands for unique, small-batch products, similar to trends in the craft beer industry.
As is normal in an industry with multiple small players, there are frequent mergers and acquisitions, as well as alliances, partnerships, and joint ventures. Within the cannabis drinks space, there are lots of product innovation and new technology adoption, particularly in terms of processing and packaging.
The cannabis beverages industry is expected to continue to grow at a significant rate, though how fast it will expand is up for debate. Increased demand due to wellness trends, and increased access from legalization is supported by advanced production technologies and ease of distribution. There are still barriers to overcome including strict rules and regulations, and some remaining stigma, particularly in regions where recreational cannabis use remains illegal. While it will likely be a long time before cannabis beverages truly compete with the alcohol industry, it’s clear that THC and CBD-infused drinks are here to stay.