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Cannabis Drinks Gaining Traction From A Small Base

November 29, 2022

Cannabis beverage sales climbed 40% over the last two years as the category continues to gain mainstream appeal, according to a new report from market research firm Headset. The category remains small in both the U.S. and Canada but is growing quickly. It has risen from 1% of overall legal U.S. cannabis sales in January 2021 to 1.4% in October 2022. In Canada, the rates are slightly higher, having risen from 1.4% to 1.9% over the same time span.

Those big-picture numbers belie the variation between state markets. The top market for cannabis beverages, by share of sales, is Washington State, where they made up 2.8% of purchases. That was followed in the U.S. by Oregon at 1.8% and California, riding the national average at 1.4%. All three West Coast states have some of the oldest recreational markets in the country, pointing to the time it takes for consumers to develop interest in cannabis beverages. By the same token, booming newer markets like Illinois and Michigan ranked near the bottom of the pack, at 0.8% and 0.4%, respectively.

The picture may look very different in a year, however, as cannabis drinks sales growth in Michigan far outpaced that in any other market through the first ten months of 2022. From its admittedly small base, sales there grew 272% over the last year, followed by Massachusetts at 53% and Washington at 15%.

U.S. consumers are split fairly evenly in their preference for the THC levels of their drinks over the first ten months of the year. 39% of purchases were for products containing 10mg of THC. Higher concentrations are also popular, with 14% of purchases falling between 25-100mg and 22% of purchases going for 100mg products. 23% went to low-dose 0-5mg drinks.

The preference toward high-potency products shows in the top sellers in the U.S. Among iced teas and lemonades, Major captured the top spot with its Pacific Coast Blue Raspberry Fruit Drink (100mg), while Sinners & Saints led among sports and energy drinks with its Amp’d Hot Cinnamon Energy Tincture (100mg), and Stillwater Brands had the best-selling mixer or dissolvable with its Ripple Dissolvables 10-pack (also 100mg).

Demographics skew younger and heavily female in the drinks category compared with the general cannabis market. Millennial women buy the most beverages, accounting for 28.3% of purchases. They are followed by millennial men at 17.9%. Gen X follows with percentages in the mid-teen percentages and the Baby Boomers trail at around 7% for both men and women. Gen Z consumers are currently contributing the least, due to the lower population of Zoomers of legal purchasing age and their penchant for vapes and concentrates.

“Beverages are a small but rapidly growing product category in the industry,” Headset noted. “Beverages have the potential to attract new consumer groups who may not tend to purchase the traditional inhalable product categories. There is a lot of opportunity in cannabis beverages, especially during a time when people are drinking less alcohol, particularly in the U.S.”

Boris Jordan, chairman of multistate operator Curaleaf, agrees that beverages continue to hold massive potential in cannabis. In September, Jordan predicted that beverages could attain a 50% share of the total category within five to 10 years.—Daniel Marsteller

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