Where does cannabis stand in the alcoholic beverage market?

As the laws governing the use of cannabis continue to broaden in the US and other countries, beverage brands are increasingly investigating using the ingredient in products. During 2018 alone, investments in the North American cannabis market topped $10 billion, and that number is expected to grow even higher this year, AP reports.

With more beverage brands including the ingredient in their formulations, it’s a good time to check in on the status of where cannabis stands in the global beverage market.

US, overseas brands making investments

Among the biggest investments into the cannabis beverage industry was Constellation Brands’ $4 billion investment in Canopy Growth Corp. The companies are said to be anticipating Canada’s legalization of edible cannabis, which is expected to take effect this fall. Molson Coors is also working on a portfolio of cannabis-infused beverages in preparation for Canada’s legalization. The firm known for its beer offerings projects that the cannabis drinks industry could hit $3 billion in Canada.

Some products are already on the market, such as Winabis, which combines cannabis (without the THC) with wine. The Spanish product ships within Europe currently and contains 9.5% ABV. Rebel Coast is selling a cannabis-infused wine in California that contains no alcohol at all, while Blue Moon Belgian Wheat founder Keith Villa is creating a nonalcoholic beer that includes five milligrams of THC as part of his new venture, CERIA Brewing.

Other beverage firms in “investigation” mode

Not all beverage companies are ready to invest in the burgeoning cannabis beverage industry, with some still investigating the arena. Anheuser-Busch InBev has invested $50 million as part of a partnership with medical cannabis firm Tilray to study cannabidiol- and THC-infused nonalcoholic drinks. The investments, which AB InBev made through its Labatt Breweries of Canada subsidiary, were part of the firm’s commitment to remain “ahead of emerging consumer trends,” Labatt President Kyle Norrington told the Associated Press.

While some brewers have expressed concern that a legal cannabis industry could hurt beer sales, Brewers Association CEO Bob Pease dispelled that belief in November. Cannabis is "just another product beer consumers can choose to enjoy with their disposable income," he said, adding that in states where cannabis is legal, it is not cutting into sales of craft beer.

Not all brands have “all in” approach

Despite the all-in mindset of some beverage firms, others are still shying away from the cannabis market. In November, Coca-Cola CEO James Quincey told CNBC that he isn’t yet able to guarantee that it is legal, safe and consumable, which means cannabis is “not an ingredient that’s going to work for us.”

In addition, federal law, black markets and restrictive bank rules create challenges for those in the industry. Unless the US government institutes federal legalization of cannabis, the market could remain fractured, and laws could be murky for those entering the industry. Plus, the Federal Communications Commission and Department of Justice aren’t likely to allow cannabis ads on TV or the radio in the near future, which could hurt producers who want to advertise these products.

Some analysts believe the recent passage of the farm bill, which includes legalization of hemp, could offer a legal pathway for US-based cannabis growers. While that will remain to be seen as the laws materialize, it’s clear that beverage producers already have big plans for what could be a huge market if cannabis legalization continues to expand.

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