Oct 23, 2023
On September 22nd, 2023, Canna Connect and Fizzy THC teamed up to provide an in-depth presentation about cannabeverages - with the support of Greenspoon Marder LLP and Disco Death Records Coffee. Led by David Gonzalez, owner of Fizzy THC, and Head of Growth at Hemp House, participants learned about the history of cannabeverages, the unique Minnesota landscape for cannabeverages, and cannabeverage trends over the last year.
The event was fantastic - the only catch?
People wanted to learn more and people who didn’t get to attend felt like they were missing out on valuable insight, so we decided to put together a resource for all those interested in cannabeverages.
The Rise of Cannabeverages
For all intents and purposes, Cannabeverage’s origin story starts in 2018. While there may be a prelude, the 2018 Farm Bill set things in motion that gave rise to the explosive growth we’re now seeing in the cannabeverage market.
The Farm Bill played a crucial role in creating a legal framework for the production and sale of hemp-derived THC products in beverages. It legalized the cultivation, production, and distribution of industrial hemp, defined as cannabis containing less than 0.3% THC by dry weight, effectively separating it from marijuana's regulatory constraints.
This distinction provided clarity for the industry and law enforcement, allowing businesses to manufacture and market hemp-derived THC-infused beverages, such as infused water, tea, coffee, and soft drinks, across state lines.
In 2020, cannabis-infused beverages saw their first inflection point. With Covid on the rise, people were locked in their homes and hesitant to put any extra strain on their lungs, which made them turn to cannabeverages.
In particular, since shoppers wanted to feel a high and quickly, they turned to 100 mg cannabeverages. Since these beverages are water-soluble (unlike edibles), they were able to give consumers a solid high with a quick onset.
In short, covid created the first spike in demand, as pointed out by Doug Fulton.
While Covid gave some good momentum, it wasn’t until 2022 that the cannabeverage industry started to see the second inflection point - the introduction of Minnesota’s new cannabeverage paradigm.
Why the Minnesota Cannabeverage Market is Unique
On July 1, 2022, the cannabis industry in Minnesota changed forever. On that day, the Minnesota State Legislature did something pretty wild – they actually passed a law that gave the green light to selling stuff with THC in it. Statute 151.72 passed without a single "yay" or "nay" in the GOP-controlled Senate. No debates, no arguments, just a unanimous thumbs up.
Republican Sen. Jim Abeler joked “That doesn’t legalize marijuana… we didn’t just do that, did we?”
It didn’t, then, but it blasted the doors wide open for Minnesota to create the first scalable, profitable, and successful blueprint for how cannabeverages can integrate into people’s everyday lives… and it opened up the door to Minnesota becoming the 23rd state to legalize recreational cannabis a year later.
Aside from the “oopsies”, what makes Minnesota’s market so unique?
One word: Access.
In Minnesota, people 21 and older can get cannabeverages at over 3,000 locations throughout the state. That number is growing.
While breweries were the first to act, pumping out THC seltzers and selling them in taprooms for people to take home, the variety of establishments people can buy cannabeverages at is what makes Minnesota unique.
Whether it’s a bar, liquor store, grocery store, hair salon, chiropractor office, or from your mom (assuming she’s registered with the state), people can get these beverages all over - they can even get them delivered.
How does access to cannabeverages compare to other states?
Well, if you were to head south to Chicago, here’s what your experience would be:
First, you’d have to find a recreational marijuana dispensary. From there, you’d have to walk in, pull out cash, check in, swipe your ID, and get escorted into the dispensary with a security detail. From there, you’d have to order on an ipad or point out the cannabeverage you want, so a worker can head into the back room, and bring it up front to the register for you to check out.
Once you’ve picked out a beverage, then you pay in cash up front, and get the hell out of there before anyone thinks you’re loitering. Oh, and the pricing and taxes are probably higher.
But in Minnesota, I can go shopping for groceries and grab a 4 pack of THC seltzers with my kid standing right next to me.
Which market sounds like a better experience for buyers…
The other nice part about cannabeverages becoming so mainstream, and so part of the culture in Minnesota, is the data retailers have been able to learn from.
What We’ve Learned About Cannabeverage Sales from 2022-2023
With Minnesota’s cannabeverage market booming, we’ve been able to get some valuable insight into shopper buying habits and behavior. We’ve been able to begin answering questions like:
Which brands are people buying the most of?
Do people prefer 5 mg options, 10 mg options, or something else?
Are people buying more single cans or multi-packs?
Are people buying more seltzers, sodas, or something else?
We’re just beginning to scratch the surface, but we’ve been able to find so far that can be critical information for cannabeverage brands and businesses.
As a side note, these data findings come directly from Hemp House retail and online sales, with over 15,000 shoppers, and over 100,000 transactions.
Cannabeverage Sales Growth
If we look at January to August, we can see beverage sales up around 75% at Hemp House, which is a promising sign. Reason being, Minnesota instated a cannabis tax of 10% in July, and it did not waiver sales growth. We see cannabeverages showing consistent growth as they become more ubiquitous and socially acceptable.
So we know Minnesotans are buying, but what do they look for when they buy?
One big component in the buying decision is dosage.
Cannabeverage Dosage Sales
At the time of the analysis, 5 mg beverages were moving the most but there are some things to consider. First, 5 mg options are amongst the most common options, which suggests people would be prone to buy them. On top of that, halfway through the year, Minnesota instituted a cap on cannabeverages - they can be no more than 10 mg THC.
With that cap, 50 mg cannabeverage sales fell off, and more people started to indulge in 10 mg options. If we review this data a year from now, it wouldn’t be surprising to see 10 mg cannabeverages being the most common in the Minnesota market.
However, there is something else to consider.
There’s still healthy demand for lower dosage cannabeverages: 1-4 mg. In particular, those who are ‘cannacurious’ tend to start small and ramp up. Or, they find that sub 5 mg is the right dosage for them.
There’s a reason Cann became the biggest cannabeverage company in the world - they understood there’s a sizable market for low-dose options.
Cannabeverage Drink Type Sales
For the sake of simplicity, we grouped ‘social tonics’ with seltzers, even though they may be considered different. Additionally, we grouped mocktails, cold brews, kombuchas, and other specialty drinks under ‘other’.
But it’s no surprise seltzers still reign supreme.
Like the dosages above, seltzers are the most common option for people to choose from. Breweries can pump out seltzers much easier than sodas or other types of drinks. Seltzers were also the first to penetrate the market in Minnesota and they’re the first type of beverage most cannabis users try. They’re also the healthiest, mostly.
So it makes sense why Seltzers would have the biggest piece of the pie.
However, sodas and ‘other’ drinks are gaining steam.
On top of sodas being delicious, there are now more low-sugar options that appeal to consumers, driving more sales.
Separate from sodas, Minnesota has seen innovation in the variety of drinks offered. Brands like Gus Dean Coffee invented THC Cold Brews, we’ve seen Live Resin drinks from Granny’s, and even cannabis + adaptogen combos from brands like BLNCD.
Our hypothesis? The seltzer reign may be waning.
Cannabeverage Quantity Sales
Roughly 4 out of 5 sales are for single can sales as opposed to multi-pack sales - at least at dispensaries. At a dispensary, that makes sense. You normally reach into a cooler that has individual rows, as opposed to grabbing 4 packs off the shelf, like you might at a liquor store.
But there’s an important trend to note here.
Cannabeverages are still so new to most Minnesotans that they’re still in the exploratory phase. Meaning, most people would rather try 4 different cannabeverages than buy a 4 pack of a single flavor.
That’s not a bad thing, it’s an opportunity.
If consumers are still cannabeverage-promiscuous, that means it’s an opportunity for brands to separate themselves from the pack and find creative ways to build a loyal customer base.
We’re still waiting to see who comes out as the Red Bull of cannabeverages.
Wrapping it Up
In summary, the Canna Connect Lawnch and Learn event on September 22nd, 2023, offered valuable insights into the world of cannabeverages. Originating from the 2018 Farm Bill, the industry has seen explosive growth, driven further by the COVID-19 pandemic and unique accessibility in Minnesota, where over 3,000 locations offer cannabeverages.
Data from 2022-2023 highlighted trends: 5 mg dosages are popular, but 10 mg options are gaining ground due to a THC cap. Seltzers dominate, but sodas and innovative specialty drinks are emerging. Most consumers prefer single-can purchases, presenting branding opportunities.
In conclusion, Minnesota's cannabeverage market thrives, offering insights and promising growth as it continues to evolve.