- Canopy Growth will be launching cannabis-infused beverages in legal use markets in California and Illinois through its partnership with Acreage Holdings, the companies announced on Thursday.
- In Canada, where cannabis beverages are legal, Canopy 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 Beverages has a 39% stake in Canopy Growth, and has spent about $4 billion in its investment in the company.
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 with THC-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 beers will build brand recognition for when the cannabis versions can be sold in more places, as well as bring funding and the supply chain for 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 been a drag on Constellation's balance sheet — including representing a reported $31 million loss in the most recent quarter, according to the company's earnings on Thursday — the beverage giant has replaced the cannabis company's C-suite in preparation for a beverage launch. After firing co-founder Bruce Linton, Canopy's CEO David Klein took the helm after previously serving as Constellation's CFO and Mike Lee, who also previously worked at Constellation, is now Canopy's CFO. Canopy's Chief Insights Officer Chris Edwards also hails 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 choose whether to legalize recreational cannabis in their states.