Cannabis Drinks Take Hold

Beverages containing THC are growing rapidly and gaining increasing consumer support as awareness and availability expand.

Las Vegas dispensary Planet 13 recently unveiled Dazed Lounge (pictured), a speakeasy-style venue that serves a wide variety of cannabis beverages. Along with THC sodas and sparkling waters, the venue offers alcohol-free specialty drinks that contain THC.
Las Vegas dispensary Planet 13 recently unveiled Dazed Lounge (pictured), a speakeasy-style venue that serves a wide variety of cannabis beverages. Along with THC sodas and sparkling waters, the venue offers alcohol-free specialty drinks that contain THC.

 The cannabis drinks market is growing at an explosive rate. The segment is expected to be worth more than $3 billion globally by the end of 2024, according to research firm Fortune Business Insights, and it’s projected to top $117 billion in 2032, led by North America, which dominates the global market for cannabis drinks. While CBD has gotten a lot of attention as a drink ingredient in recent years, its cannabinoid sibling THC is surging in popularity in the beverage space these days. 

Much of the domestic growth for cannabis-infused drinks can be traced back to the 2018 Farm Bill, which legalized industrial hemp with a Delta-9 THC concentration of 0.3% or less. In layman’s terms, that means hemp-derived, low-dose THC is federally legal, so states that haven’t passed their own recreational cannabis laws are permitted to sell products made with hemp-derived THC. And while some states are introducing legislation to stop the sale of hemp-derived THC at the state level, others are embracing the category and the new products and consumers that come with it. The result has been a multitude of new alcohol-free seltzers, sodas, RTDs, and spirits containing THC flooding the market. Many of them also contain CBD, but THC has become the ingredient of choice for most producers looking to strike it big in the cannabis beverage space. 

The legalization of hemp-derived THC had other effects too. Along with breaking down federal barriers and declassifying hemp as a controlled substance, it also opened the door for cannabis drinks to be sold in channels that had previously been illegal—namely liquor, convenience, and grocery stores, all channels that are critical to the alcohol market. Myriad off-premise spirits, wine, and beer retailers across the country now stock a full roster of cannabis drinks in their stores, creating a one-stop shop for consumers. That, coupled with the growing population of people decreasing their alcohol consumption, has created a ripe landscape for cannabis drinks marketers.

“The cannabis-infused beverage market has evolved rapidly, driven by expanding legalization, product innovation, and the emergence of the hemp-derived segment,” says Keef Brands chief revenue officer Blake Patterson. Keef is a market leader in cannabis drinks with a portfolio that includes a variety of sodas and sparkling waters containing 10-mg. of THC each ($5-$10 a 12-ounce can), as well as mocktails with 100-mg. of THC ($15-$20 a 12-ounce bottle). “With more states legalizing cannabis, these drinks have gained mainstream acceptance, attracting both health-conscious consumers and those seeking an alternative to alcohol. The perception of cannabis as a drink or cocktail ingredient has become more mainstream and accepted over the last few years. It’s now seen as a sophisticated wellness-oriented alternative to alcohol, appealing to a broader audience.”

As the market for cannabis drinks expands rapidly, a new category of alcohol-free spirits made with low-dose, hemp-derived THC is emerging. These products help bridge the gap for cannabis consumers who also enjoy specialty cocktails.
As the market for cannabis drinks expands rapidly, a new category of alcohol-free spirits made with low-dose, hemp-derived THC is emerging. These products help bridge the gap for cannabis consumers who also enjoy specialty cocktails.

Education Efforts

The stigma that used to surround cannabis drinks is greatly diminished, and most THC beverage marketers say the biggest barrier now is a lack of education. Patterson notes that consumer response to Keef products varies widely based on how familiar individuals are with cannabis products. Keef drinks are sold in ten states plus Puerto Rico and Canada, and the company’s hemp-derived line is sold in an additional five states. So while the drinks are visible in cannabis-friendly states nationwide, consumer awareness is still growing. 

“Keef has made an effort to focus on education, not only on the consumer side but also at the dispensary and bud-tender level to ensure customers know exactly what they’re ingesting and what to expect after consuming our products,” Patterson says. “The growth of the hemp-derived cannabis market is exposing new customers to the category, particularly in states that will not have a regulated cannabis program any time soon. Clear labeling, low-dose options, and positive branding also help to reduce the stigma and appeal to a broader audience.”

Cann is another leading cannabis drinks brand, offering a range of RTD-style flavors. The core line includes Grapefruit-Rosemary, Blood Orange-Cardamom, and Lemon-Lavender, as well as seasonal flavors, each made with 2-mg. of THC and 4-mg. of CBD ($50 a 12-pack of 8-ounce cans). Complementing those are a variety of different Cann packaging sizes with different cannabis potencies. Cann is sold direct-to-consumer online with shipping to 33 states and is also available on- and off-premise in 16 states, with more markets coming.

CEO and co-founder Jake Bullock says Cann really took off when it was able to enter traditional retail channels. “THC-infused drinks are meeting consumers where they are: in the alcohol aisle of their local store,” Bulluck explains. “Cann is now sold alongside beer, wine, and spirits in retailers across the U.S. This is a significant change from when THC beverages were only available to consumers at a small number of marijuana dispensaries. Currently, Cann is sold at more than 3,000 retail stores.”

Bullock adds that his products are doing well because they contain both THC and CBD, and that education efforts are focused on making consumers understand both ingredients and how they complement each other. “THC drinks are finally delivering on the promise that many thought CBD drinks would five years ago,” he says. “They’re drinks that help you unwind at the end of a long day and that you could easily swap out for a glass of wine or a cocktail. THC and CBD have more fun when they’re together. We think you’ll see these drinks everywhere alcohol is available and everywhere that people are socializing.”

The loosening of restrictions on where cannabis drinks can be sold has been the biggest game changer for Xander Shepherd, co-founder of Artet. His company makes a range of THC Spritz cocktails in flavors like Chamomile-Lemon, Strawberry-Ginger, Grapefruit-Rosemary, and Mango-Ginger, each containing 5-mg. of THC and 5-mg. of CBD ($19 a 4-pack of 8-ounce cans), as well as a large-format aperitif with 5-mg. of THC per serving ($40 a 750-ml.). The lineup has distribution in six markets, with more planned, and Artet self-distributes in five additional markets, along with online sales nationwide in states where that’s legal. Shepherd notes that the low dosage of THC and CBD has helped make Artet products approachable for newcomers to the cannabis drinks sector.

“We wanted to create a more sessionable and social product,” Shepherd adds. “For our category, it’s about product channel fit, and the channel has really evolved from when we first started. Our products show up in channels where people are coming with intent to purchase beverages—liquor stores, bars, and restaurants—allowing us to work with partners in traditional distribution to reach customers more efficiently and cost effectively.”

Shepherd created Artet with two cousins, taking cues from the alcohol industry. The aperitif is inspired by Aperol and intended to be used in similar applications, and Shepherd notes that it’s a botanical-forward spirit. Meanwhile the line of cannabis Spritzes evoke the now popular alcohol RTD segment. Education is top-of-mind for him and his business partners too, and he says many of the company’s brand decisions are made with raising consumer education and awareness in mind. 

“The benefit of our products is that they allow for the on-premise to be more inclusive,” Shepherd explains, adding that low-dose cannabis beverages allow alcohol-free consumers to have a drink in their hand at social occasions and monitor the effects of that drink as their occasion progresses. “We’re seeing pretty radical changes in adoption and acceptance of THC and cannabis in general, and the more people engage with cannabis in formats that are comfortable to them, the more people’s perceptions will change. And those perceptions have dramatically improved as we align to channels that make the most sense.”

Artet offers THC Spritz drinks and a large-format aperitif (pictured) to appeal to the cocktail crowd.
Artet offers THC Spritz drinks and a large-format aperitif (pictured) to appeal to the cocktail crowd.

Inspired By Alcohol

Pamos is another cannabis drink brand that evokes modern cocktail culture. The company offers two cannabis spirits—one with 2-mg. of THC and 2-mg. of CBD ($40 a 750-ml.) and another with 5-mg. of THC and 2-mg. of CBD ($45)—as well as a line of RTD-style Spritz cocktails that mimic popular alcohol drinks, including Strawberry Margarita, Peach and Guava Bellini, Mai Tai, and Long Island Ice Tea, each available with either 2-mg., 5-mg., or 10-mg. of THC plus 2-mg. of CBD ($24-$28 a 4-pack of 7½-12-ounce cans). The products are available in more than 40 states through direct-to-consumer sales and in 18 states at traditional retailers.

CEO and founder David Mukpo says the brand was built to be sold alongside alcohol on retail shelves and notes that the growth trajectory for Pamos shifted dramatically when it moved from only being sold in dispensaries to the traditional retail model. He adds that the 750-ml. cannabis spirits products, which contain no alcohol, are also gaining traction on-premise, which is boosting overall brand awareness. In addition, Mukpo notes that the use of both THC and CBD together in the drinks makes them more enjoyable. 

“Ultimately, Pamos is something that can sit on a bar cart next to your favorite alcoholic beverages to give consumers another option,” Mukpo says. “The stigma that existed years ago is rapidly changing, and that’s heavily tied to the normalization of the category through mainstream channels and positioning these beverages as a lifestyle choice. We believe Pamos belongs anywhere and everywhere alcohol is currently available for purchase. The next year will drastically change the perception and availability of hemp-derived THC beverages.”

Bayou City Hemp Co. is also committed to sessionable cannabis beverages. The company makes a variety of THC drinks that CEO Ben Meggs says are designed to be responsible and stackable, which is where he says the future of cannabis drinks is headed. Bayou City markets beverages under the 8th Wonder label, including the 8-mg. THC seltzer Wonder Water ($19 a 4-pack of 12-ounce cans) and the 2-mg. THC seltzer line Lil Bit ($16 a 4-pack of 7½-ounce cans); the Howdy label, which spans 2½-mg. THC seltzers ($17 a 4-pack of 12-ounce cans) and 5-mg. THC lemonades and teas ($18 a 4-pack of 12-ounce cans); and the Beach Break label, a portfolio of sparkling drinks with 5-mg. of THC ($18 a four-pack of 12-ounce cans). Along with online retail, the drinks are sold in Texas, Louisiana, Tennessee, Florida, and Alabama, and the company plans to add six more states before the end of the year. In addition, because Bayou City offers most of its drinks in draft format for the on-premise, Meggs says that in Texas, on-premise sales make up 30% of the company’s business. 

“The evolution has happened very quickly, but it’s still incredible to think we’re at the beginning of the curve,” Meggs says. “A full spectrum THC product that allows people to control their experience while being on the low-dose side of the equation puts us at the center of where this industry is going. The category is exploding and we’re going to see all types of experimental products coming, and we think people will like what we’re prepping for release. People definitely get it and they want more—more flavors, more variety, and more dosage options. This is definitely the future.”

Cann has a varied portfolio of RTD-style THC drinks (pictured) and is sold both online and in retail stores.
Cann has a varied portfolio of RTD-style THC drinks (pictured) and is sold both online and in retail stores.

Branching Out

Cannabis consumers also want variety in where they can consume the drinks in this emerging category. The space for THC beverages is expanding rapidly, and the number of venues, both on- and off-premise, that sell cannabis drinks is growing apace. The restaurant and bar scene has been slower to adapt to cannabis trends, and while some mainstream venues offer THC seltzers, many do not. Rather, these drinks have a stronger showing in cannabis-centric concepts, from dispensaries to consumption lounges. 

The dispensary Planet 13 Las Vegas recently opened the on-site Dazed Lounge, which allows guests to consume cannabis beverages on-site in a speakeasy-style space accessible through a hidden door. Senior marketing manager Cait Smith says drinks, in particular, are doing well at Dazed Lounge because of their familiar consumption format and lower THC dosing options, which give people more control over their experience. Dazed Lounge offers cannabis sodas and sparkling waters ($10), as well as zero-alcohol cocktails that contain THC ($15-$35). “We use a THC distillate to keep the ‘weedy’ flavor to a minimum so the great flavor of the cocktail can shine,” Smith says. “THC drinks are a great alternative for those looking to have an elevated experience without the smoking and coughing.”

Of course, the off-premise retail sector is where cannabis cocktails are gaining major traction, and the segment has a presence in all manner of stores, from large chains to independents. Total Wine & More sells a wide variety of THC beverages across the country, where legal. Similarly, Spec’s Wine, Spirits, & Finer Foods offers hemp-derived THC drinks in Texas and ABC Fine Wine & Spirits sells them in Florida. At ABC, executive vice president of sales and distribution Dave Larue notes that, while many consumers still have questions about them, the hemp-derived THC space is quickly becoming normalized in beverage stores.

“We started selling these products only within the last couple of months and we currently have around 30 SKUs,” Larue says, adding that his team seeks brands that focus on consumer education, responsible packaging, and responsible selling strategies. “Sales have been consistent week to week, and we expect substantial growth as guests become more educated and comfortable with how these products affect them.”

Larue says ABC has stopped selling CBD drinks entirely, as they underperformed, and instead is focusing on hemp-derived Delta-9 THC infused beverages. The company’s top-performing labels include Pamos 5-mg. shots ($5), Find Wunder Sessions 5-mg. Blackberry Lemonade ($21 a 4-pack of 12-ounce cans), and Howdy 5-mg. Lemonade ($22). ABC will soon add 10-mg. products through partnerships with brands like Cheech and Chong THC drinks, Tilray, and MadTasty.

“These products have a long way to go to be fully mainstream, but people seem to be warming up to consuming them either as a replacement to alcohol or as a supplement,” Larue says. “We believe the THC beverage category is as much of a sure thing as we’ve seen in a long time, as long as regulations don’t disrupt growth and as long as the sale of these products is treated responsibly. A lot hinges on legislative changes nationally and state by state. It’s very interesting to see the demographical range that THC beverages have had in Florida, and I assume nationally. Everyone is drinking them. There’s no stereotype.”