THC drinks made it out of the dispensary. While only in select geographies, Americans are gaining access to psychoactive drinks in places previously unimaginable – like grocery stores, bars, and liquor stores. The 2018 Farm Bill opened the door to hemp products with no more than 0.3% delta-9 THC, and drinks under this threshold can have enough milligrams of THC to provide a psychoactive experience.
Emboldened by new state regulations and continuing permission of low-dose THC drinks outside of dispensaries, 2023 has been a year of proliferation for the category. Minnesota has been a particularly influential state, and cannabis brands entering the hemp space – like Keef and Cann – further push the trend forward.
While synthetic cannabinoids from hemp may be on the chopping block come the next Farm Bill, naturally-derived delta-9 THC in quantities under 0.3% will likely stay legal. The next Farm Bill has been delayed into 2024, giving the industry as it exists today another year to make sales and gain a foothold. With THC drinks in channels with comparable alcohol products, more and more consumers will be introduced to cannabis through drinks, making this a game-changing trend in cannabis adoption. Let’s explore the trend.
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The Legal Landscape and Market Evolution
What Will the Farm Bill Do to Hemp-THC Drinks?
The next Farm Bill and potential regulations that come from it will deeply influence the hemp space. Currently, a wide variety of synthesized cannabinoids exist alongside naturally-derived CBD and THC. Without regulation of these products, business owners can get involved and reach consumers via online and brick-and-mortar channels. Some states have banned these hemp-derived THCs – especially in the Western U.S. and in some East Coast states. And now, the next Farm Bill will decide if synthesized cannabinoids can stay.
Hemp advocates have long been asking for the 0.3% delta-9 THC threshold to be raised to 1% to make it easier to avoid “hot crops” (crops that exceed the 0.3% delta-9 THC limit). However, such advocacy is not concerned with protecting the synthetic THC loophole. In a scenario where hemp can contain up to 1% delta-9 THC, it could keep the low-dose psychoactive hemp market open for business as long as the cannabinoid is naturally derived delta-9 THC from hemp.
The Current Legal Landscape of Hemp-THC Drinks
As of October 2023, eight states have enacted legislation that regulates hemp-derived THCs to some extent: Iowa, Kentucky, Louisiana, Minnesota, New Hampshire, Ohio, South Dakota, Tennessee, and Virginia. Hemp-THC drinks are permissible in these state landscapes, but milligrams are capped in Minnesota (10mg per package), Louisiana (8mg per package), and Virginia (2mg per package).
In unregulated states, THC drinks can be bought online and offered in select brick-and-mortar establishments like smoke shops and convenience stores. In most states with unclear or unenforced rules on hemp-THC, consumers also enjoy access. In Illinois, for example, the Department of Agriculture has stated that hemp-synthesized THC is illegal. Despite this, it is widely sold in Chicagoland, as the Department of Agriculture has little to no means of enforcement. Alcohol store chain Binny’s began selling hemp-THC drinks in November 2023, signaling continued normalization and permission of these products.
The Hot Bed of Hemp-THC Drinks: Minnesota
Minnesota shocked the cannabis world when it “accidentally” legalized THC edibles in July 2022. Hemp-derived THC in 5mg doses (up to 50mg per pack) was given the green light, resulting in a boom of low-dose ingestible products –from standard drinks and gummies to novelties like popcorn and fudge. Because retailers need not obtain a license to sell low-dose hemp-derived THC, 5mg edibles proliferated in convenience stores, smoke shops, and other small, local retail channels.
In May 2023, Minnesota became the 23rd state to legalize adult-use cannabis, and the program, as it’s spelled out in the bill, looks very promising for maximizing market potential. Instead of crushing the emerging hemp-derived THC and CBD edibles market, it strengthened it, allowing retailers- including liquor stores – to sell “lower-potency hemp edibles” with 5mg THC (from hemp) and 25mg CBD. Allowing psychoactive cannabinoid beverages to be sold in liquor stores is giving them a chance to shine in a channel more mainstream than dispensaries and more suitable for its format.
A Better Channel for THC Drinks
At the dispensary, consumers are faced with a decision – purchase a 4-pack of 5mg drinks for $20, or a 10-pack of 10mg gummies for $15. The economics of purchasing by milligram tips in favor of gummies every time. However, in a liquor store, it’s not so unusual to spend $20 on a pack of craft beverages. Within a channel of a similar format and price point, THC beverages have a real opportunity to shine. This will further normalize THC beverages and cannabis use at large and is poised to generate more revenue than states that leave hemp-derived THC in a gray area or keep all THC locked within the dispensary channel.
Industry Leaders Enter the Space
2023 saw a wave of cannabis brands expanding into the hemp-derived THC market. Brands like Cann and Keef have now ventured into producing hemp-derived THC beverages after gaining popularity in the dispensary.
Why choose to sell hemp over cannabis? Even in states where both are legal, it always costs more to produce, distribute, and sell cannabis products than it is for hemp products. Cannabis is both federally illegal and highly regulated by states. Without being able to deduct business costs on federal taxes (often referred to as the issues with “280E”) while also having to pay hefty licensing fees and expensive infrastructure, maintaining a cannabis company is a costly endeavor. Businesses accustomed to operating in the cannabis space are happily jumping on the opportunity to operate with less expense through hemp-derived delta-9 THC.
Keef brought its tasty THC sodas outside of the dispensary channel with delta-9 THC drinks from hemp. Only available in brick-and-mortar retailers in Minnesota, Keef was able to enter the state before the state’s recreational cannabis dispensaries opened by opting for hemp-derived THC. With hundreds of other drinks brands from local operators, Keef stands as a long-standing cannabis drinks pro in Minnesota.
Cann’s transition into hemp-derived THC was seamless. The product already promoted microdoses of THC with 2.5mg to 5mg per can, making it easy to sell products under 0.3% delta-9 THC. Cann is sold via its online store, and is making its way into brick-and-mortar retailers. The brand made the news in November 2023 for landing distribution in Minnesota’s Total Wine & More, a major liquor chain in the state.
Implications of Cannabis Brands Entering the Hemp-THC Drinks Space:
- Market Expansion: By entering the hemp-derived THC space, brands can reach a wider audience, including consumers in regions with restrictive cannabis laws. Beyond drinks, many cannabis brands have opted to introduce a hemp-derived offering, including STIIIZY, Cookies, and 1906 New Highs. This grows the consumer base regardless of the pace of cannabis legalization.
- Consumer Demand: The growing interest in hemp-derived THC beverages reflects a consumer open to diverse and legally accessible cannabis products. Especially as alcohol consumption trends downward, consumers looking for mind-altering experiences now have drinkable cannabis to swap in.
- Innovation and Product Development: Established cannabis brands bring expertise and innovation to the hemp-derived THC market, potentially elevating product standards and experiences for consumers.
- Competitive Advantage: For cannabis brands, expanding into hemp-derived THC products provides a competitive edge, allowing them to capitalize on emerging market opportunities while leveraging their established brand reputation.
Published: 12/18/2023
