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article imageBrewing a cannabis alternative — the rise of beverages

The following story is sponsored content from Tidal Royalty.
The development of cannabis beverages continues to capture the attention of investors, and business leaders within the industry see a lot of potential in the space.
“You have to look at beverages as the most likely breakout product category going forward,” says Tom Adams, principal analyst of the BDS Analytics industry intelligence branch, about what investors and industry players should expect next from the cannabis market.
In the past year, big-name alcohol brands and even soft-drink producers have made headlines with their interest — and investment — in marijuana-infused drinks. The options are varied. Think everything from an IPA-inspired, non-alcoholic cannabis beer to CBD-infused “wellness beverages.” As for the payoff, investment bank, Canaccord Genuity, predicts the industry could be worth $600 million USD by 2022.
Is there consumer demand though?
For more mainstream audiences, smoking could be an intimidating or unappealing way to embrace recently-legalized cannabis. But, for consumers already used to enjoying alcoholic drinks, a cannabis beverage might be an easier way to enjoy the substance. And, having a social alternative to wine, beer, and spirits could be an attractive new leisure-time activity.
One thing to consider, says Jessica Lucas, vice president of BDS Analytics’ consumer insights division, is that many consumers haven’t even considered replacing alcohol with cannabis. Rather, she told attendees at the recent Arcview Investor Forum in Las Vegas, consumers view alcohol and cannabis as being options for different settings.
Cannabis beverages may thus be a missing link — even the key to increasing market interest in cannabis for adults who don’t smoke or don’t want to only smoke.
But, there are some kinks to work out. The idea is not as simple as say, brewing non-alcoholic beer and then adding cannabis, according to Adams.
“An issue which actually has to be solved with beverages — if they're really going to take off — is the fast onset and rapid wear-off,” he says. “People don't want to sit down to have an alternative to a beer, and not feel it for an hour. They also want it to go away in two or three hours so they can either have another one, or wrap it up for the night and go to bed.”
Michael Hayford, CEO and founder of Lighthouse Strategies, a cannabis portfolio management company that owns Two Roots Brewing, may have a solution.
“It’s micro-infused, fast-acting, rapid dissipation, designed to be a sessionable beverage,” he said between Arcview events. “I can drink two, three, or four.” Herb magazine just named Two Roots one of the best cannabis beers in the world.
The promising beer is also now available in America’s first cannabis speakeasy. Dana’s Place in Las Vegas will feature Two Roots products alongside a bevy of other cannabis beverages. The cozy bar sits within the Las Vegas ReLeaf dispensary, just 500 feet off the Strip. Each beer on tap at Dana’s Place contains less than half a percent of alcohol and 5 mg of THC in each can.
Hayford believes there are two types of cannabis beverages. One to be imbibed for effect — say, a high-potency shot of active cannabinoids — and another to enjoy for “the pleasure of consumption, socializing,” he says, echoing Adams. They both believe most consumers will prefer to have a number of beverages over a certain span of time, just like alcoholic drinks.
These are “two completely different markets,” Hayford adds.
That’s good news for Lighthouse Strategies, which recently closed its strategic private placement for US$5,000,000 of Series A membership units with royalty financing company Tidal Royalty.
“Our enthusiasm for infused beverages has only grown since we initially announced this transaction,” says Paul Rosen, Tidal Royalty’s CEO and Chairman. “We’ve seen continued market uptake for this category. We believe that Lighthouse has all the pieces in place to be a market leader in this space.”
The enthusiasm for the space is catching, and BDS Analytics’ Tom Adams believes sessionable consumption is the future of mainstream cannabis. “There are technical problems to be solved,” he concedes. “But if they can be solved … the cannabis industry shows enormous potential.”
For insights on the legal U.S. cannabis industry, financing for cannabis companies and more, sign up for Tidal Royalty’s bi-weekly newsletter.
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