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Commentary: US cannabis beverages, excluding hemp-derived intoxicating products, hit US$952M in sales in 2023, making up 3% cannabis market; hemp-derived THC beverage could reach US$4.1B by 2028 given growing accessibility, current version of farm bill

June 11, 2024 (press release) –

“Minnesotans live in the future” was the most popular quote in the cannabis industry in 2023 after the state legalised products containing less than 10mg of hemp-derived THC per package to be sold in retail stores across the state. According to industry players and retailers in the state, hemp-derived THC products saw incredible growth and overnight success, with liquor stores reporting that up to 10% of their sales were coming from these types of products in the first couple of months.

This was a response to the market created by the 2018 “Farm Bill”. This bill defined “hemp” as products coming from the cannabis plant that contained 0.3% or less THC (Delta-9) by dried weight. The law was the initial catalyst for the growth of CBD products in the US, but it was quickly followed by a second wave of products introducing hemp-derived Delta-8 THC and Delta-9 THC products. There has been little enforcement from the federal government, but a revision of the 2018 farm bill could potentially change the rules. The introduction of "hemp-derived" THC products and Delta-9 THC products has disproportionately impacted the drinks format due to legal definitions and production processes. We estimate the market for hemp-derived intoxicating beverages to be close to USD239 million in 2023 and rapidly growing.

With growing accessibility and the current version of the farm bill, there is a very clear path for hemp-derived THC beverages to reach USD4.1 billion by 2028

Source: Euromonitor International

However, a more restrictive federal or state-by-state environment, or even a full revision of the farm bill, could mean another seismic change for the category.

Cannabis drinks are yet to reach their full potential

Cannabis beverages have rapidly evolved from the bong-water years to a very diverse offering with a lot of flavour and product variety. As it grew, the category developed distinct identities, focusing on demographic targeting, and establishing unique brand propositions. On the one hand, brands like Uncle Arnie’s have focused on high-dosage products catering to experienced cannabis users. In contrast, brands like Cann are focused on attracting "cannacurious" consumers outside of the cannabis community with its low-dose offerings. In 2023, sales of cannabis beverages (excluding hemp-derived intoxicating products) reached USD952 million, making up nearly 3% of the total cannabis market. Surprisingly, cannabis drinks have not become as popular as expected, despite the widespread use of alcoholic beverages for intoxication and consumers' familiarity with the format. The challenging retail landscape in dispensaries, where many consumers are only interested in high-potency products or the lowest price per cannabinoid content, and where it's difficult to highlight brand value, has made it challenging for this product category to grow. Additionally, the consumer that is more likely to go for cannabis beverages is not coming to the dispensary on a regular basis.

Where does cannabis fit in the evolving drinks landscape?

Intoxicating hemp beverages have managed to capture consumers not by attracting traditional cannabis users making trips to dispensaries but rather by appealing to “cannacurious” consumers who want to dip their toes into cannabis without having to change their current path to purchase

Source: Euromonitor International

Although the consumers of cannabis beverages are predominantly millennials and Gen Z consumers, there is also growing generational acceptance of cannabis in the country, resulting in a wider consumer base.

With declining sales of alcohol products in the US and the rise of premium added-value products, from non-alcoholic RTDs and mocktails to functional soda, intoxicating cannabis beverages have an opportunity to carve a very distinctive place in the drinks space. Social and responsible intoxication is the first step, but there is clearly more consumer appetite for anxiety and stress reduction, focused energy, and even pain/exercise recovery – all need states in which hemp beverages (and all cannabis beverages) will start playing an important role.

There is growing consumer demand for these types of products and willingness from the industry to work in a more clearly regulated environment that would allow the category to flourish and allow cannabis beverages to sit alongside other adult-focused products on retail shelves.

Read our article, Global CBD Market 2023: Opportunities Across FMCG, for more on the impact of cannabis in the fmcg space. Watch our recording on the Top Three Soft Drinks Trends in 2024 for more analysis on the drinks industry and learn more about low/no alcohol in the alcoholic drinks industry in our article, Mindful Drinking: No/Lo Comes of Age.

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Dan Rivard
Dan Rivard
- VP Market Development -

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