The cannabis industry is booming and everyone is taking notice. The one industry that has taken the most interest is undoubtedly the beer industry. For many reasons stemming from market share competition and consumer trends, many major companies such as Constellation Brands (Budweiser, Corona, etc.) are getting in on the action.
Many “big beer” conglomerates and craft beer companies that occupy states where marijuana is legal are looking to use the legalization to their benefit. These companies have been gobbling up cannabis production companies with the plan to develop cannabis-infused beer varieties. Billions of dollars have already been poured into this new market niche – what do consumers think and how has the market responded? Let’s take a look and find out.
Who Started the Cannabis-Infused Beer Craze?
Many beer drinkers were first introduced to the cannabis-infused beer style from notable brewer, Keith Villa, cofounder of Ceria Brewing Co. in Colorado. Keith has Ph.D. in brewing from the University of Brussels and was the brewer behind MillerCoors’s Blue Moon Belgian Wheat. (the beer that sparked big beer conglomerates to pay big bucks to acquire craft breweries to diversify their craft beer product portfolios). Villa produced the first known cannabis-infused, nonalcoholic beer called Grainwave Belgian-Style White Ale which created an amazing buzz with the craft beer and cannabis communities in 2018.
The reason that cannabis-infused beers are nonalcoholic is that the Alcohol and Tobacco Tax and Trade Bureau (TTB) legally prohibits making beer that includes both alcohol and THC. Of course, there are many state-driven legalities where nonalcoholic beer isn’t regulated by the TTB. As recreational cannabis has become available in more states, brewers have started to merge their hops with cannabis to create interesting blends.
Why Are Cannabis-Infused Beers So Hot Right Now?
Beyond Villa’s efforts, breweries have taken multiple approaches to cannabis-inspired beer. Some have infused IPAs with non-intoxicating CBD, the plant derivative popular in healthcare products. Others evoke cannabis with hemp extracts, highly pungent hop varietals or organic compounds called terpenes, which give plants their characteristic aromas. The newest wave of cannabis-infused beverages include a mixture of THC and CBD that are closer to a hard seltzers than a craft beer.
The key factor that is causing these beverages to explode on the market right now is due to microdosing. These lower-dose drinkables allow people to have more than one beverage in a single sitting, leavin the drinker feeling relaxed without being intoxicated. This is a big factor that has caused the market to heat up and more casual drinkers to take notice.
Which Companies Are Getting In On The Action?
The biggest brand that has put their hat into the ring is notably Constellation Brands with their 38% stake purchase in the Canadian cannabis company, Canopy Growth in 2018 for $4 billion. No other beer company is more invested in making cannabis-infused beer a success than the company that supplies the world with Corona, Modelo Especial, Negra Modelo, and Pacífico, Ballast Point, and Funky Buddha beers.
This strategic play was meant to help Constellation Brands to gain on the cannabis market as soon as it becomes legal in the US. In the meantime though, even with stronger-than-expected quarterly earnings, Constellation took a $484 million loss from its holdings (ouch). To some, this signals that this industry niche is in trouble, but analysts at Constellation aren’t too worried with the short term losses. This is because they have plans to launch cannabis-infused beverages, edibles, and vape products in the near future that they hope will help them make up for lost ground (and then some).