Pot growers are betting on drinkable weed

Source: Bloomberg

Jun 10, 2018

Forget the ol’ puff, puff, pass. Marijuana producers are betting that an increasing number of people would rather pour a drink infused with pot.

Canadian company The Green Organic Dutchman Holdings plans to develop a product-testing and manufacturing centre to explore using cannabis in everything from iced teas to juices and sports drinks. That’s just the latest move by pot producers to get a footing in beverages.

Another producer, Delta 9 Cannabis,plans to introduce next week its Legal Lager, a ryebased beer that’s been infused with hemp seed. While there’s none of pot’s psychoactive ingredients in the brew, the hemp gives it “a unique nutty finish,” and the plan is to eventually develop non-alcoholic beer that contains cannabis when regulations allow, said Delta’s CEO John Arbuthnot.

Canada’s senate passed a legislation making recreational pot legal just this week, but companies are already jockeying for position in the potentially lucrative beverage market. Although edible products, which could include hard candies, beverages, ice cream and baked goods, won’t be legal for at least another year, there’s been an “explosion of interest” in them, and six out of 10 consumers will probably choose to consume edible products, according to a report from Deloitte.

“Many consumers are used to drinking intoxicants as it is more socially acceptable to smoking or vaping,” Jason Zandberg, an analyst at PI Financial in Vancouver said. “I do believe cannabis-infused beverages will be a strong product category in Canada when this edible category is allowed.”

Beer and alcohol makers have taken notice and “are looking into their rear view mirror” at the potential threat, Charles Taerk, chief executive officer of Faircourt Asset Management in Toronto, said. The combined medical and recreational marijuana market could be worth as much as $10 billion (Rs 52 crore) in the next five to seven years, and there are some studies that suggest sales of cannabis-infused beverages will outstrip traditional soft drinks by 2030 in convenience stores, he said.

Last year, Corona beer seller Constellation Brands bought a minority stake in Canopy Growth Corp, Canada’s largest marijuana producer. There will probably be more tie-ups between alcohol companies and pot producers.

The rise in cannabis legalisation could be bad news for traditional alcohol companies. Retail sales of beer and wine experienced a “sharp decrease” in US states that have legalised medical marijuana, according to Bloomberg Intelligence.