“Minnesotans live in the future” was the most popular quote in the cannabis industry in 2023 after the state legalised products containing less than 10mg of hemp-derived THC per package to be sold in retail stores across the state. According to industry players and retailers in the state, hemp-derived THC products saw incredible growth and overnight success, with liquor stores reporting that up to 10% of their sales were coming from these types of products in the first couple of months.
This was a response to the market created by the 2018 “Farm Bill”. This bill defined “hemp” as products coming from the cannabis plant that contained 0.3% or less THC (Delta-9) by dried weight. The law was the initial catalyst for the growth of CBD products in the US, but it was quickly followed by a second wave of products introducing hemp-derived Delta-8 THC and Delta-9 THC products. There has been little enforcement from the federal government, but a revision of the 2018 farm bill could potentially change the rules. The introduction of "hemp-derived" THC products and Delta-9 THC products has disproportionately impacted the drinks format due to legal definitions and production processes.
With growing accessibility and the current version of the farm bill, there is a very clear path for hemp-derived THC beverages to reach USD4.1 billion by 2028
Source: Euromonitor International
However, a more restrictive federal or state-by-state environment, or even a full revision of the farm bill, could mean another seismic change for the category.
Cannabis drinks are yet to reach their full potential
Cannabis beverages have rapidly evolved from the bong-water years to a very diverse offering with a lot of flavour and product variety. As it grew, the category developed distinct identities, focusing on demographic targeting, and establishing unique brand propositions. On the one hand, brands like Uncle Arnie’s have focused on high-dosage products catering to experienced cannabis users. In contrast, brands like Cann are focused on attracting "cannacurious" consumers outside of the cannabis community with its low-dose offerings.
Where does cannabis fit in the evolving drinks landscape?
Intoxicating hemp beverages have managed to capture consumers not by attracting traditional cannabis users making trips to dispensaries but rather by appealing to “cannacurious” consumers who want to dip their toes into cannabis without having to change their current path to purchase
Source: Euromonitor International
Although the consumers of cannabis beverages are predominantly millennials and Gen Z consumers, there is also growing generational acceptance of cannabis in the country, resulting in a wider consumer base.
With declining sales of alcohol products in the US and the rise of premium added-value products, from non-alcoholic RTDs and mocktails to functional soda, intoxicating cannabis beverages have an opportunity to carve a very distinctive place in the drinks space. Social and responsible intoxication is the first step, but there is clearly more consumer appetite for anxiety and stress reduction, focused energy, and even pain/exercise recovery – all need states in which hemp beverages (and all cannabis beverages) will start playing an important role.
There is growing consumer demand for these types of products and willingness from the industry to work in a more clearly regulated environment that would allow the category to flourish and allow cannabis beverages to sit alongside other adult-focused products on retail shelves.
Read our article, Global CBD Market 2023: Opportunities Across FMCG, for more on the impact of cannabis in the fmcg space. Watch our recording on the Top Three Soft Drinks Trends in 2024 for more analysis on the drinks industry and learn more about low/no alcohol in the alcoholic drinks industry in our article, Mindful Drinking: No/Lo Comes of Age.