CBD-infused Beverages Are Gaining Momentum

Amid the COVID-19 crisis, CBD-infused beverages are gaining momentum, and more and more beverage companies are turning to this lucrative business.

The American Trade Association for Cannabis and Hemp (ATACH) has formed a new Cannabis Beverage Council to connect cannabis industry and beverage industry leaders and harmonize cannabis beverage policies in the US. 

“At the repeal of alcohol prohibition in the 1930s, the industry came together to create an industry effort and agree on responsible consumption, policies, and best practices”, said Scott Coors of the Coors Brewing family, calling this a historical moment.

The news comes after Truss CBD, the joint venture between the brewer Molson Coors and Canadian marijuana grower HEXO introduced its first CBD-infused beverage into the US. The testing ground for their new product called Veryvell will be the state of Colorado. Veryvell is already sold in Canada but, unlike the new Veryvell for the US market, Canadian drinks contain THC. The state of Colorado was chosen because of its established regulatory framework. The Veryvell sparkling CBD-infused drinks will be sold through retailers and online in flavors such as grapefruit tarragon, strawberry hibiscus, and blueberry lavender. The retail price for this 20 milligram CBD drink is set to US$3.99 for a 12-ounce can and US$14.99 for a four-pack, which makes it competitive comparing to other CBD-infused drinks.

‘Flying off the shelves’

In January, the British media published that CBD-infused drinks at Her Majesty’s Windsor Farm Shop are “flying off the shelves”. The drinks made by Trip contain 15mg of CBD and are sold online for the price of £17.99 (US$24.68) for a six-pack and £54.99 (US$75.46) for a 24-pack. The drinks come in elderflower mint, peach ginger, and lemon basil tastes, and, among other, are advertised as good cocktail mixers. The first CBD-infused drink in the UK was Green Monkey CBD, launched in 2018 and available only online and in some pharmacies. Now, every British supermarket offers CBD-infused drinks, such as Vita Coco, an orange-flavored drink produced by All Market Europe Ltd. with 20mg CBD in a 330 ml can.

According to the new ‘Functional Beverages Global Market Opportunities and Strategies to 2030: COVID-19 Growth and Change’ report by Research and Markets, CBD-infused functional drinks are gaining momentum. The major global players are The Alcaline Water, Youngevity International Inc., Canopy Growth Corp., Coca Cola, Molson Coors Brewing, Mugglehead, and Creso Pharma. The investors seem to be closely following the consumers’ demand so Alkaline Water Company Inc. shares (WTER) are near the top in its sector, and Canopy Growth shares (WEED) were on a year-to-date gain of 37.2% in January. Corona beer brewer Constellation Brands Inc. has announced it will spend $3.8 billion to increase its stake in Canopy Growth Corp, and Coca Cola is in talks with Aurora Cannabis Inc. to develop the CBD-induced beverages, according to a report from BNN Bloomberg Television.

This is all in line with the previous report by Grand View Research, which estimated the expected rise of the global cannabis beverages market to the size of 2.8 billion USD by 2025, expanding at a CAGR of 17.8%. North America is estimated to be the fastest and largest market over the forecast period. The growth is majorly driven by the legalization of marijuana for medical and recreational purposes. Consumers are shifting their preference from soft drinks to wellness drinks, and the demand for cannabis-infused beverages is mostly driven by millennials.

Novel food limitations

While Democrats’ win in the US elections is driving the hopes of federal legalization that would bring a further boost to the industry, the European companies are bond to European Commission’s novel food regulation with its verification process. However, according to the New Frontier Data research, 23% of EU CBD consumers have already tried a CBD-infused beverage.

While the UK was still part of the EU, Green Monkey was the first to enter its market with its carbonated CBD drink, Marley Mellow introduced CBD-infused tea, and Humphrey’s offers CBD-infused fruit juices. Love Hemp launched the first spring water infused with CBD hemp droplets in the amount of 2mg. Botanic Lab’s Dutch Courage CBD drinks are now also available at regular supermarkets in the UK. Even after the Brexit, the UK decided to keep the EU’s novel food regulation but on a national level. When the expiry date for applications in the UK ends on the 31st of March, it is to be expected to see the first legal CBD-infused drinks being sold in Europe.

There are presently no legal CBD-infused drinks on the EU market because the European Commission has issued no such authorizations so far. After the European Commission accepted the rule of the European Court of Justice and started resuming the novel food applications, it is also to be expected that the first legal CBD-infused beverages will soon appear on the shelves in the EU.

The biggest problem with the registration of water-soluble solutions as novel food are nanoemulsions, which fit under special regulations. In the novel food safety assessments, nanoparticles need to go through special safety assessment. Because of their stability, the expiry date of such emulsions is shorter than with other products, six months up to a year at most.

In the EU, companies are trying to find ways to bypass the novel food regulation. One such example is a Dutch company that is producing their beverages using ‘pharma-grade cannabis oil’, marketing their 10 ml full spectrum CBD sparkling water as a product seemingly following the same regulations as GW Pharmaceuticals’ Epidyolex. However, the term ‘pharma grade’ implies that a company produces raw material intended for the pharma industry or the medicine itself, not food or beverages. Needless to say, the authorizations for pharma-grade products are even more difficult to obtain than those for novel food. The term ‘pharma grade’ is often misused or misplaced in the cannabis industry. In reality, this term has no valid market meaning. Cannabis companies claiming they are distributing or producing ‘pharma grade’ products are almost always stating false information, using it as a marketing tool.

CBD-infused beverages: Diverse offer and emerging markets

At the global level, producers are using different technologies for a variety of beverage products, both alcoholic and non-alcoholic. Spanish producer CannaWine has acquired global popularity when it made a breakthrough in the Californian market with its CBD wine. In Hong Kong, Oh CBD Beer, Young Master Brewery, and recently Yardley Brothers are offering CBD craft beers. Also, with the rising trend of healthy living, non-alcoholic CBD beer is getting more popular, so CERIA Brewing Company, the makers of the non-alcoholic craft beer developed in 2020 by Blue Moon, now offers it through Amazon.

In the emerging South African market, which opened up after the decriminalization of cannabis for personal consumption in September 2018, products containing CBD must contain a maximum dose of 20mg. The rule was set in May 2019, when the minister of health enabled non-prescription access to certain cannabidiol (CBD) products with the publication of a 12-month “exemption notice” on these products. Further amendments were undertaken earlier in 2020 making CBD a legal product in the country. Following these new developments, South African wine, cider, and spirits company Distell recently announced it will soon be able to offer CBD-infused drinks, after taking a 20% stake in cannabis wellness business RETHINK. Distell is confronting the impact of a new alcohol ban in South Africa, the third to be implemented since March last year as part of coronavirus restrictions.

The lipstick effect and pressured parents

The alcohol ban is not the only reason consumers turn to CBD-infused beverages during the coronavirus crisis. As Prohibition Partners revealed in their report published in May 2020, CBD-infused beverages fall under the lipstick effect of this crisis. It is the theory that assumes the consumers will buy luxury goods even if there is a crisis, but these goods will be more budget-conscious than luxurious. Cannabis-infused drinks seem to be an ideal example of this. In the periods of self-isolation, consumers turn to home entertainment and in-home socializing. Also, there is a shift in usual roles for working parents, who, according to the research, account for almost 70% of people who reported that they were likely to buy more infused products in the coming months. Presented with simultaneous roles of workers, teachers, and parents, they need an outlet to provide a form of escapism or herbal self-medication in the times of crisis.

Reviewed by Sasha Bajilo, founder of ILESOL Pharmaceuticals, an industrial scale producer of CBD products and formulations. Expert on Hemp/Cannabis policy, member of the Croatian Ministry of Health regulatory commission for medical cannabis.