Cannabis-infused beverages are swiftly making their mark alongside traditional alcoholic drinks, and a recent panel discussion at the Benzinga Cannabis Capital Conference shed light on this burgeoning industry.
Moderated by Gerald Pascarelli, CFA senior VP, Equity Research at Wedbush Securities, the ‘Booze And Bud: Friend Or Foe’ panel delved into the current state and prospects of this rapidly growing sector.
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Beverages: The Fast-Growing Segment
“Beverages are still one of the fastest-growing form factors in cannabis,” noted Chris Walker, president and CCO at Hoodie Analytics. Although they currently account for less than 2% of sales in an average dispensary, cannabis beverages are gaining popularity, particularly among new and affluent customers, offering significant growth potential, he said.
Branding And Price Stability
Paul Weaver, director and head of cannabis at the Boston Beer Company Inc. SAM, discussed the company’s foray into the cannabis beverage market. The company launched its THC-infused TeaPot brand in Canada and has plans for the U.S. market.
Weaver emphasized the advantages of cannabis beverages over traditional forms due to their branding and price stability. He pointed out, “Beverages have an advantage over traditional cannabis forms due to their branding and price stability.”
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Challenges And Opportunities
Camilo Lyon, CIO at Curaleaf Holdings, Inc. CURLF acknowledged the challenges in the industry, including the costly production and distribution of beverages across different states. However, he said he sees potential in the normalization of cannabis beverages, especially among older demographics and those seeking alcohol alternatives. Lyon noted, “Beverage production and distribution in different states come with prohibitive costs, hampering a massive rollout.”
Tiffany Chin, co-founder at Death Row Records Cannabis highlighted the social aspect of cannabis consumption and its potential expansion into sports venues through partnerships with cannabis beverage brands. Chin, who has been working with Snoop Dogg for over 12 years anticipated “partnerships with cannabis beverage brands becoming sponsors in these facilities.”
On-Premise Consumption And Revenue Generation
The panel also discussed the possibility of on-premise cannabis consumption, similar to traditional alcohol sales in bars and restaurants. Lyon pointed out that “as the stigma around cannabis diminishes, and consumers become more curious, on-premise cannabis consumption could gain traction.”
Weaver raised intriguing questions about the business model for bars and restaurants regarding the sale of cannabis beverages, hinting at the potential of cannabis beverages extending beyond branding and sponsorship to actual revenue generation for businesses.
The Power Of Brands
The discussion highlighted the significance of branding in the cannabis beverage industry. Strong branding creates a unique value proposition that consumers are willing to pay extra for. According to the experts, the challenge lies in providing a consistent brand experience and expanding into international markets as cannabis gains legal status in more states and countries.
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The Role Of Delta-9 THC
The panel addressed the different THC content in cannabis-infused beverages, emphasizing the importance of safety and proper testing in the industry. They also pointed out the success of brands offering beverages with lower THC concentrations to cater to new consumers looking for an elevated experience without the intensity of higher THC doses. Standardization and safety were highlighted as critical in a market with unregulated products.
Overcoming Challenges: The discussion delved into the challenges facing the cannabis beverage industry, including the impact of oversupply on pricing and potential down-trading. However, the industry is evolving, with a growing product portfolio to cater to a broad range of consumer demographics, said Walker.
The Illicit Market Dilemma
The proliferation of the illicit cannabis market raised concerns, especially in certain regions. Enforcement was deemed crucial in cracking down on illegal operators to create a safer, regulated environment.
As the discussion provided a comprehensive overview of the challenges and opportunities in the cannabis-infused beverage industry; branding, product safety, and regulatory enforcement emerged as key factors for success.
Image by Benzinga
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