An emerging beer category incorporates cannabinoids as well as malt and hops, but not necessarily alcohol. Is it smoke and beers or the cannabis market's next big thing?
In 2016, General Washington's Secret Stash from Dad & Dude's Breweria in Centennial, Colorado, broke new ground as the first (and only) federally-approved beer with cannabinoids from industrial hemp, each pint infused with 4.2 milligrams of non-psychoactive CBD and 6.5 percent alcohol by volume (ABV).
San Diego-based Cannabiniers acquired Dad & Dude's in February 2019, adding it to a portfolio of brands that includes cannabis-infused teas, coffees, sparkling waters, and topicals. The company has also introduced non-alcoholic, THC-infused beers in Nevada and California with its Two Roots Brewing Company. With three year-round styles in cans -- Enough Said Lager, New West IPA, and Tropical Infamy Wheat, each with 5 milligrams of THC -- the brewery's website touts its beer as a vehicle for THC that "takes effect in minutes and dissipates within 90 minutes of the last swallow."
Two Roots is obviously thinking big: In 2018, the brewery announced a strategic brewing agreement with an upper end of 50,000 barrels annually. At the same time, the company is seeking $15 million in outside funding to underpin a multi-state expansion and more acquisitions following an undisclosed but "significant" capital raise in 2018, says Maikel Van de Mortel, Cannabiniers' executive vice president of marketing.
Van de Mortel says Two Roots uses contract brewers in both Nevada and California, then removes the alcohol with a proprietary process and adds THC in-house. Two Roots-branded CBD beers will hit the market by fall 2018, he adds.
The global cannabis beverage market is forecast to grow from $1.57 billion in 2018 to $5.04 billion in 2026, according to research from Reports and Data, a healthy compound annual growth rate of 15.4 percent. The report estimates CBD products will account for 56 percent of sales in 2026. Zenith Global sees the U.S. CBD beverage market growing at an even faster clip, ramping up from $227 million in 2019 to $1.4 billion in 2023.
"CBD is leading the pack," says Van de Mortel. "Obviously, it is very much being taken note of by various different industries, especially the alcohol industry."
A big factor, he adds, is more and more people think alcohol "is not a healthy intake, whereas a lot of people are seeing benefits to THC."
But Cannabiniers is not alone in this nascent category. Because of the state-by-state nature of cannabis reform, there are first movers in other legal recreational states. Also in California, Lagunitas launched Hi-Fi Hops, "THC-infused hoppy sparkling water," in 2018, and San Diego-based High Style introduced two non-alcoholic, THC-infused beers in late 2018.
Outside the Golden State, Arvada, Colorado-based Ceria Brewing Co. went to market with its state's first THC beer in late 2018. Portland-based Coalition Brewing brews CBD-infused beers, including Two Flowers IPA, the first in Oregon when it launched in June 2018. Other breweries, including New Belgium Brewing Company, have put out federally-approved beers made with hemp seed, stalk, or oil, as those ingredients aren't controlled substances.
High Style works with a local brewery with excess capacity to make its non-alcoholic base beers for three products, with 10 milligrams of THC in each 12-ounce bottle of Pale Haze, Grapefruit Haze, and Blood Orange Haze.
Lyden Henderson, High Style co-founder and COO, describes the beers' effects as "uplifting, fairly clear-headed, and euphoric, great for outdoor activities. There's no hangover. It actually hydrates you a little bit."
Since THC is forbidden by federal law in beer -- or any other product, for that matter -- High Style's unnamed contract brewer "came up with a pretty revolutionary method for extracting the alcohol," he notes. "It's proprietary and it's their own method."
High Style is licensed manufacture the final products in house by adding THC distillate and a proprietary blend of terpenes to create a product with THC distributed evenly throughout. "We use nanoemulsified THC that suspends equally around the beer," Henderson explains. "You're getting an equal dose in each sip."
That means the drinker isn't experiencing a big lag between finishing a High Style and getting the full effect, he says. "I think we've all had a bad experience having too many edibles because they took too long to kick in."
And the market reaction to the flavor of High Style's beers has been "overwhelmingly positive," Henderson adds, as its distribution map has grown to nearly 50 dispensaries all over California.
Twice in a blue moon?
In Colorado, Keith Villa, best known as the brewmaster who came up with Blue Moon Belgian White at Coors Field's SandLot Brewery in 1995, is leading the charge for THC-infused beers with Ceria Brewing.
When cannabis was illegal, Villa stayed away from it. After recreational marijuana went legit in Colorado in 2012, he didn't want to smoke it. He wanted to brew beer with it. "I started experimenting," says Villa. "I found you could do homebrews with cannabis. It worked."
Like other homebrewers, he would simply mix some cannabis flower in with the fermentables. "The heat from the brewing activated the THC," he says. And because it was alcohol-soluble, the THC "stayed in the beer."
After retiring from MillerCoors in late 2017, Villa and his wife and Ceria co-founder and CEO, Jodi Villa, decided to turn the concept into a business with Ceria.
"The first thing we found out is you can't just brew beer and add cannabis to it," says Villa, noting that federal law doesn't allow THC in anything and state law forbids products with both alcohol and THC. "It became clear to us we had to remove the alcohol to make a cannabis beer."
In early 2018, they started a craft brewery in Arvada, Donavon Brewing, largely to test recipes and provide raw materials for Ceria. "It helps," says Villa. "To develop the recipes, I would have had to use a contract brewer. We figured the best way to do it was to open a little craft brewery."
Donavon brews several alcoholic beers, including a Vienna-style lager and a wine-beer hybrid with Chardonnay grapes, along with non-alcoholic feedstock for the Ceria catalog. The first style to launch in December 2018 was Grainwave Belgian-style White Ale, with 5 milligrams of THC in each 10-ounce aluminum bottle. "We started with Belgian White because that was my claim to fame," says Villa.
A West Coast IPA with 10 milligrams of THC and a lager with 2.5 milligrams round out Ceria's offerings. Villa says the THC nanoemulsion typically takes effect in 10 to 20 minutes, noting, "It almost mimics the timing of alcohol going into your system after you drink a beer."
He describes three hurdles bringing Ceria to market: taste; water-soluble THC; and branding.
"Making a non-alcoholic beer that tasted good was a huge ordeal," he says of the first hurdle. Brands on the market "lack flavor and they lack body. There's a bunch of different things they lack." So he drew on his education at the University of Brussels and developed recipes for some "great-tasting brews" sans booze.
He cleared the second hurdle -- the need for water-soluble THC in non-alcoholic beer -- by finding an unnamed supplier of a raw material he mixes with THC distillate for a perfectly clear, tasteless, odorless dose. "We take the distillate, add it in, mix it up, and add that to the beer," says Villa, noting that he contracts with Keef Brands as his cannabis co-packer in Colorado to add the distillate to the beer.
From his experience with Blue Moon, he knew branding was critical for consumer packaged goods. Trinity Brand Group of Berkeley, California, had done work for Blue Moon in its early days, and they developed Ceria's look and logo (the head of Ceres, the Roman fertility goddess, with a laurel wreath of hop cones and cannabis leaves, which, as Villa notes, "are actually cousins" in an evolutionary sense.)
Ceria sold its first batch of THC-infused beer in four hours when it launched in late 2018. "We were ecstatic," says Villa. "Since then, we're in a lot of dispensaries in Colorado and have plans to enter the Nevada market and the California market [in September 2019]."
Canada is also on the list; its drinkables market opens up later in the year. Since kid-friendly products like sugary sodas will be forbidden, Villa sees beer as a natural for a cannabis beverage.
The out-of-state play involves finding a local contract brewer willing to install a dealcoholizer and a cannabis co-packer to infuse the beer with THC. "A lot of breweries have slowed down drastically where they're looking for new revenue streams," says Villa of finding willing brewing partners.
"The bad part is you've got to do it in every state where it's legal," he adds, pointing out a twist: "You can't cross state lines with cannabis, but you can cross state lines with non-alcoholic beer."
Henderson says High Style is "actively talking to licensees in other recreational markets" in the U.S. and looking to expand into Latin America as cannabis laws change. "We'd like to eventually be an international brand."
On the horizon
Villa says he thinks cannabinoid-infused beers have a bright future. "Smoking is becoming more and more socially unacceptable. We saw right away that beverages, especially beer, made sense to a lot of people."
He adds, "You can't toast with a gummi or a chocolate. You toast with a glass." Thus, Ceria's motto: "Cannabis pro Omnibus," or "Cannabis for All."
There's also something to be said for a delivery method that's fast-acting but not long-lasting. "We've chosen purposely to stay on the low-dose side," says Villa, hyping Ceria's lager for football season. "If you're watching the Denver Broncos, you can drink three, four, five of those and still stay in control." But two of the 10-milligram IPAs are probably more than enough for most anyone.
Villa calls CBD is a "gray area" until the FDA announces a ruling, but allows, "We may get into the CBD market, depending on what the FDA says." He's gotten such great feedback on Ceria's flavors, that he's launching a THC-free line of non-alcoholic beers under the brand in the near future.
In San Diego, High Style is bringing extraction in-house in the near term, after sourcing from strategic partners since the brand's launch. "I'm really looking forward to being vertical," says Henderson. "From that point on, we'll be using distillate that's been extracted in our own facility."
The plan is to continue working with a contract brewery and not bring that in-house, partly due to the price of real estate in San Diego. "Breweries take up a lot of floor space."
It remains to be seen if beer drinkers will gravitate to a non-alcoholic product. Could the future hold alcoholic beers with THC?
"I'd be hopeful we could get to that level as people understand the plant and its properties more," says Henderson. "I've crossfaded too much before between the two substances [THC and alcohol] and it's not fun."
He's also dubious the federal government would allow a 10 percent ABV double IPA with 20 milligrams of THC anytime soon. But all laws aside, there's clearly a market for THC-infused alcoholic beer -- just go to any show at Red Rocks and you'll see plenty of people with a joint in one hand and a beer in the other.
The science on the interaction between alcohol and THC in the body offers a clue: A 2015 study published in Clinical Chemistry found "[a]ny dose of alcohol combined with cannabis significantly increases levels of THC in blood." Essentially, those who consumed THC after a single drink had roughly 10 to 50 percent more THC in their bloodstream than those in the control group who got a non-alcoholic placebo.
The science makes good sense to those with firsthand experience. Red Rocks tradition or not, it's usually best to err on the side of caution.
Eric Peterson is editor of CompanyWeek and BreweryWeek. Reach him at firstname.lastname@example.org.