Flying high: what will the future of cannabis-infused drinks look like?
As cannabis is gradually legalised across the US, start-ups have scrambled to capitalise on demand with new lines of marijuana-infused beverages. Joe Baker talks to Lyden Henderson, chief operating officer at High Style Brewing, about the regulatory challenges involved with tapping into the THC market, and where it could head in the future.
Image: High Style Brewing
In California, a circle of twenty-somethings swig bottles of beer while relaxing in the summer sun. Instead of alcohol, these beers are infused with THC – the psychoactive cannabis compound powering the fledgling marijuana-infused drinks market.
It’s a scene that San Diego-based High Style Brewing Co. wants to become the norm. The company recently launched Pale Haze, California’s first alcohol-removed, cannabis-infused craft beer. Bottles of the low-calorie, zero-hangover drinks are now wending their way to dispensaries across San Diego and other major Californian cities, including San Francisco, Oakland and Sacramento.
Last year, analysts at Canaccord Genuity predicted that marijuana-infused beverages could become a $600m market in the US by 2022. Revenue from THC-infused beverages could account for $340m of this total, with cannabidiol (CBD) – the non-psychoactive compound alleged to provide numerous health benefits – taking the remainder.
With many state regulations surrounding cannabis still in their infancy, what challenges remain to the so-called ‘drinkables’ industry, and how big a slice will they take from the legal-high pie? With High Style Brewing Co. aiming to expand to more legalisation states this year, we spoke to the company’s chief operating officer, Lyden Henderson, to find out more.
Do you think that ‘drinkables’ like High Style’s Pale Haze will help change people’s perceptions of cannabis?
Absolutely. Drinkables are a much more discrete consumption option than smoking, offer improved onset compared to traditional edibles, and people are already very comfortable using intoxicating drinks in social settings. I think that drinkables will play a major part in general cannabis acceptance, leading to federal legalisation and, eventually, worldwide legalisation of cannabis.
It’s a very natural plant that has a lot of benefits for individuals outside of the intoxicating effects. There are a lot of medical benefits that are now starting to be explored more in-depth, and that's all a part of legalisation. So there are a lot of benefits to the legalisation and we think that the various consumption methods that are available to consumers now really help with that socialisation of cannabis.
With [a] High Style [drink], it looks and tastes like a craft beer, so no one will know you are using cannabis products unless you want them to. Furthermore, our product is a “self-regulating product,” as we like to call it, meaning that consumers should expect to feel the onset of effects within 30 minutes. This rapid-onset of effect was very important to us, as traditional edibles can take up to two hours for consumers to feel effects, which causes many people to get impatient and prematurely take a second dose, resulting in a too intense, negative experience with cannabis.
We felt that this was unacceptable, so it was very important for us to develop a “self-regulating” product, meaning that by the time a consumer is finished with their first High Style, they should know whether their individual tolerance will allow them to have another. This is ideal for social settings or an evening of relaxation, as once you start feeling the effects of the cannabis, you should stay at that level for about four to five hours.
It has been a little bit difficult. One thing that has simplified it for us is the fact that all alcohol is regulated by a federal agency in the US – the Alcohol and Tobacco Tax and Trade Bureau. Anybody who manufactures alcohol and has a federal license for that isn’t going to mess with cannabis because it is still federally illegal, so there is no way that we can actually mix alcohol with cannabis– the licenses just don’t mix.
Essentially, we've got a non-alcoholic product which makes it a little bit easier to get to market. We do still have to go through all the tests to prove that it contains less than 0.5% alcohol, which is the legal designation of a non-alcoholic beverage and also to make sure that it’s clean, safe and pure for our consumers.
What regulatory challenges remain?
As for regulatory challenges getting to market, I would say the biggest issues have really been with the cannabis industry as a whole. It’s a very fledgling market; the state is still working to develop labelling, testing and safety requirements, and a lot of these regulations have actually been updating and changing as we've been producing our beer. This has led to several instances where we've had to relabel products to make them compliant with the Bureau of Cannabis Control and the Manufactured Cannabis Safety Branch here in California.
It’s been a little bit of churn from a regulatory perspective, but we’ve had great experiences working with both of the regulating bodies. As soon as we were notified of the updated changes to the label requirements, we quickly got in touch with the regulating bodies and got our new label designs approved.
So it has been a process, but it’s nothing that I wouldn’t expect from launching a new product in a new product category. My team has done a great job of taking everything in stride and being able to be respond rapidly to the state as they develop their new regulations. Naturally, they are concerned about a new product-type and want to be cautious, so we're doing everything that we can as a company to ease their minds and work through their concerns to ensure that we've got a consistent and safe product for our consumers.
Where do you see the cannabis infused drinks market heading in the future?
I see rapid expansion of the cannabis-infused drinks market for a few reasons. The first is that once you create a proper emulsification of your THC that can be well suspended within a liquid, you are able to achieve the quicker uptake time that I was describing - in the sub-30 minute range. That’s a big deal for people who are using cannabis - being able to get that quick feedback on their dosage, and whether or not the dosage is adequate for them.
The other reason is because it is just a much more social way to enjoy cannabis. I could smoke a joint in my house or outside with friends, but if I go to a bar everybody around me is going to know I’ve consumed a joint. THC can cause people anxiety sometimes, so if you’re already having anxiety about people knowing that you're stoned, that can have a multiplicative effect on your anxiety. But if you’re drinking a THC beverage you are not going to have any [odour] on your breath, you’re not going to smell it on your clothes, you'll be able to consume it in a way that makes you feel comfortable, and people only know that you’ve consumed THC when you want them to know.
The efficiency of the delivery method of drinkables, as well as the discretion and the social acceptance of the method of consumption - those are the main reasons why we are going to see the market expand rapidly over the next 15 years while we speed towards federal legalisation.
And I do expect that it probably will be the largest category within cannabis products, as far as the psychoactive is concerned. For THC, I see sales of drinkables probably dwarfing all other types of sales. It probably will eventually dwarf flower, oil vaporiser cartridges, and even regular edibles.
Do you think drinks companies need to start looking into creating their own cannabis-infused products to stay competitive?
Obviously, not every drink company is into making intoxicating beverages, but for a well-rounded portfolio I think that any company would probably be a little remiss at not having a cannabis-infused line, whether its THC or if that’s federally or internationally illegal, CBD, because a lot of people appreciate the [health] benefits of CBD. I think that cannabis-infused beverage lines probably are a necessity for any major beverage manufacturer in the next few years.
Are there any reasons why companies might still be reluctant to jump into the market right now?
The reason why I think a lot of companies would be staying away from it right now (or at least keeping arm’s length transactions with cannabis companies for R&D) is because it is still federally illegal. Moving cannabis over state lines is a federal offense. I think most large manufacturers are staying back from it for now, just because the market isn’t mature enough to necessitate their moving into it.
Larger manufacturers don’t need to be getting into that right now because they can’t realise the economies of scale that they need to make a profitable line. I think that what they are doing is letting us small manufacturers do a lot of the formulation for ourselves and navigate through the regulatory landscape and then once they are able to ship this product across state lines, giving them economies of scale, I think we will see them acquire a lot of intellectual property.
Your focus is on craft beer. However, are there other drinks that could benefit from THC infusion in the future?
I would love to have a THC-infused kombucha – I’m not really seeing that on the shelves right now. One of the issues with that lies in the need for the constant refrigeration of kombucha, and [the] infrastructure is maybe not there in California for constant refrigeration throughout the supply chain. A large subset of cannabis users are also very health-conscious people and kombucha obviously is [part of that].
I think we're probably going to see a decrease in sugary beverages. In the medicinal days of cannabis here in California, there were a lot of very sugary cola knock-off beverages that used a lot of sugar to mask the taste of THC in it. As more research is going into the THC distillate, we're able to hide that cannabinoid flavour, so it’s not requiring producers to use as much sugar in their recipes.
That’s giving us the benefit of producing healthier drinks for consumers while also giving them what they want - where it’s less about sugar and THC content and now it can be about drinking a beverage that you are enjoying the flavour of as well.