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Cannabis Beverages Building U.S. Share From A Small Base

April 5, 2022

Cannabis beverages are a growing category of interest in the legal cannabis industry and companies both big and small are working to develop products that can appeal to new consumers and carve out a niche in the rapidly destigmatizing market. As recreational cannabis legalization spreads to more states—18 states have legalized as of this writing, with some markets slated to launch sales within weeks—marketers are looking to cannabis beverages as a product type that can be integrated into group social activities and recapture the dollars of younger consumers who are opting to spend less on beverage alcohol than previous generations.

Rapid advancements in cannabis extraction and infusion technology, as well as increased investment in quality ingredients and production, has led to an unprecedented plethora of cannabis drinks options in the U.S. and Canada, though these options are frequently restricted to a small subset of markets due to the federal prohibition on transporting cannabis across state or national lines, making it prohibitively expensive to serve multiple markets.

The segment’s growth has been slow but steady in the U.S., rising from 0.9% of the total legal cannabis market in January 2020 to nearly 1.2% by December 2021, according to cannabis market research company Headset. The top 10 drinks brands in the U.S. collectively sold approximately $150 million worth of product over that period. The number of distinct products has grown as well with California at the epicenter—from approximately 300 cannabis beverage options in January 2021, the count catapulted close to 600 over the course of last year.

One of the top brands is Los Angeles-based Cann, which is entering new markets as sales continue to rise. Launched in 2019, the brand took off rapidly, becoming the top cannabis drink in California by February of last year, with nearly $2 million in monthly sales at that time, according to Headset. Sales tripled over the course of 2021, according to the company, as Cann partnered with Green Thumb Industries to bring its line of low-dose tonics to Illinois consumers. The brand, which retails at around $24 a six-pack of 8-ounce cans, also entered the Massachusetts and Arizona markets over the past year, and recently announced a $27 million series A funding round, with its backers including celebrity investors like Nina Dobrev, Gwyneth Paltrow, Kate Hudson, Baron Davis, and Adam Devine.

Other leading cannabis beverage players in the developing U.S. market include Major, Ceria Brewing, Keef Brands, Ray’s Infused Lemonade, Stillwater Brands, and Dixie Elixirs and Sips. We’ll take a look at a number of the top beverage brands across both the North American THC and CBD categories in upcoming editions of SNDC.—Danny Sullivan

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