Dagga-infused drinks are on the way
Marijuana producers are betting that an increasing number of people would rather pour a drink infused with pot
Winnipeg — Marijuana producers are increasingly looking to beverages as products that consumers might buy more of if infused with cannabis.
Green Organic Dutchman Holdings plans to develop a product-testing and manufacturing centre to explore using cannabis in everything from iced teas, juices and sports drinks, the company said on Wednesday. That is just the latest move by pot producers to get a footing in beverages.
While Canada has yet to pass the legislation that will make some forms of recreational marijuana legal in 2018, including dried bud for smoking, firms are already jockeying for position in the potentially lucrative beverage market. Although edible products such as sweets, beverages, ice cream and baked goods will not be legal for at least another year, there has been an "explosion of interest" in them, and six out of 10 consumers will probably choose to consume them, according to a June 5 report from Deloitte.
"Many consumers are used to drinking intoxicants as it is more socially acceptable to smoking or vaping," Jason Zandberg, an analyst at PI Financial in Vancouver, said. "I do believe cannabis-infused beverages will be a strong product category in Canada when this edible category is allowed."
Beer and alcohol makers have taken notice and "are looking into their rear-view mirror" at the potential threat, Charles Taerk, CEO of Faircourt Asset Management in Toronto, said in a June 5 cannabis webinar.
The combined medical and recreational marijuana market could be worth as much as $7.7bn in the next five to seven years, he said.
Last year, Corona beer seller Constellation Brands bought a minority stake in Canopy Growth, Canada’s largest marijuana producer. There will probably be at least one more major tie-up between an alcohol company and a pot producer, Beacon Securities analyst Vahan Ajamian said in a February note.
Green Organic’s move comes amid speculation that the Ontario-based producer is a potential takeover target. Its research centre provides a path for "large-scale beverage companies" to invest in the marijuana market directly or through a joint venture, the company said.
The rise in cannabis legalisation could be bad news for traditional alcohol companies. Retail sales of beer and wine experienced a "sharp decrease" in US states that have legalised medical marijuana, Bloomberg Intelligence analyst Kenneth Shea said in a February 5 report, citing research from the University of Connecticut and Georgia State University.
Winnipeg, Manitoba-based producer Delta 9 Cannabis plans to introduce next week its "Legal Lager", a rye-based beer that has been infused with hemp seed and developed through the company’s partnership with craft brewer Fort Garry Brewing.
While there is none of pot’s psychoactive ingredients in the brew, the hemp gives it "a unique nutty finish", and the plan is to eventually develop nonalcoholic beer that contains cannabis when regulations allow, said Delta’s CEO John Arbuthnot.
"We’re very bullish on the drinkables segment," Arbuthnot said. "We sat down and tried to envision where does cannabis fit into all of our lives and how could we complete cannabis being at a family dinner, and it didn’t seem to be in a joint or a vaporiser or even a brownie."