Canopy Growth to Launch Cannabis Beverages in US in 2021
Canopy Growth Corporation will bring its THC-infused beverages to the U.S. in 2021 through a partnership with New York-based cannabis firm Acreage Holdings, the two companies announced Thursday.
In a news release, Canopy and Acreage said the products are expected to debut at dispensaries in California and Illinois next summer, and that “sessionable” drinks would be the preliminary focus.
THCnet understands that Canopy’s Tweed carbonated drinks and Houseplant sparkling waters — which contain between 2 mg and 2.5 mg of THC — will be the first beverages made available in the U.S. in 2021, however entirely new brands could also be developed for adult-use markets.
Recall that Canopy is 38.6% owned by New York-based alcohol firm Constellation Brands and has an agreement to purchase Acreage Holdings for around $900 million when once cannabis laws in the U.S. are loosened.
The three companies intend to use their collective expertise to take leading position in a nascent U.S. cannabis beverage market.
According to Acreage’s interim CEO Bill Van Faasen, the company is “already working” on its ability to create THC-infused drinks, which could require the multi-state operator to outfit facilities in California and Illinois with dedicated production and packaging equipment.
Asked what capabilities Acreage might already have to make beverages, spokesman Howard Schacter would only say that the company has not previously participated in the cannabis drinks space and that it would be “ramping up” its efforts in the coming months.
THCnet understands that Constellation Brands will not initially play a role in the actual manufacturing process of the THC-infused drinks, however its knowledge of making beer, wine and spirits is expected to be a pivotal asset as Acreage lays the groundwork for production.
According to Canopy CEO David Klein, Constellation provided expertise to the cannabis firm when it was building out its beverage manufacturing facilities in Canada.
“There’s a very symbiotic relationship and we think that we’re going to be able to unlock a lot of value over as a result of that,” he told Yahoo Finance on Thursday.
Since launching THC-infused beverages in Canada in March, Canopy has sold over 1.5 million cans, according to Klein, who has previously said the company is actively looking to recruit beer drinkers with its products.
“There’s an awful lot of units to be had by sourcing a small share from the beer market,” he told investors and analysts in March.
Canopy currently controls about 70% of the cannabis infused drinks market in Canada and owns the top 5 SKUs at retail. Its offerings are priced between $3.99 and $4.99 per container, and the company has sold 1.5 million cans since March.
By comparison, a total of 4 million cannabis beverages were sold across the entire U.S. market in 2019.
Canopy's chances of dominating the U.S. market will largely depend on whether marijuana is made federally legal, something Klein believes could happen by 2022.
“Like everyone else, we have to distribute through dispensaries,” he told Yahoo Finance. “We’re hopeful that any sort of federal legislation to decriminalize or legalize cannabis allows for interstate commerce and allows for wider distribution.”
Indeed, a patchwork of state-by-state marijuana laws in the U.S. currently prevent cannabis companies from transporting their products across state lines.
That’s stunted the potential growth of THC-infused drinks sector in the U.S., since production and distribution is expensive and retail opportunities are limited.
Additionally, the U.S. supply chain for cannabis-infused beverages is still a work in progress. A robust cold chain distribution network hasn’t been built, and many dispensaries have not been designed to feature refrigerated sections.
That has made it difficult for first movers to build a category when consumers are used to shopping the refrigerated sections of grocery or convenience stores for beer and other beverages.
Nevertheless, Canopy and Acreage are poised to invest behind the development of a category that cannabis research firm BDSA pegged at $60 million in 2019.
The good news for both companies is that 43% of alcohol drinkers also consume cannabis, according to BDSA, suggesting that potential demand for THC-infused beverages already exists.