CBB// When we talk about this industry, Chris, what are we talking about in terms of economic scale?
CL// The data is still a little spotty and subject to interpretation, but we think the hemp industry as a whole is somewhere around $30 billion, so that’s nothing to sneeze at. And by some estimates, the hemp-beverage industry is on par with the craft-beer industry right now. The numbers are still a little soft because this is a brand-new industry; gathering data is sometimes very difficult. But anecdotally, what we can say is that for one of our liquor-store partners in Minnesota, 15 to 20 percent of their sales are hemp beverages. We’re hearing that distributors are having upward of 30 percent of their sales be hemp beverages right now.
And what is really lost, I think, with this challenge that we’re facing is the opportunity. This is a brand-new industry, only a couple of years old, in an underregulated category where there is nothing that compares to it. This is not hard seltzer. That is alcohol in a different form. This is not wheat toast when we’ve all been eating white toast. This is a brand-new thing, and it is still capturing the imagination and the consumer dollars of millions of adults. So, what’s at risk is not so much the size of the category now, but what the size of the category could be in two years, five years, 10 years. So, the stakes are very, very high.
CBB// Talking with beer brewers at the Hemp Beverage Expo, it’s been incredible to see how impactful some of this has been for their business. I had one brewer tell me that they had been able to add to their multi-state distribution footprint because they had a line of those beverages, and it was just very efficient for [the distributor] to take on the beer brand and the THC beverage brand—and in fact, they reported that they were even selling more barrel-aged stout. And we have seen even major retailers like Total Wine take over aisles, end caps, and other kinds of very significant real estate within their stores. To add to this, let’s be honest: Wine is not a growing category right now, either.
CL// The can manufacturers that are in our group—a significant portion of their business is hemp beverages. Sure, they’re doing alcohol and nonalc as well. But this is the growing category, and we see people who are buying new equipment, investing in new employees.
Hopewell Brewing in Chicago is a great success story, a microbrewery downtown. They had not added a new employee for so many years. They were able to add two new employees and do a second production run per day for these hemp beverages.
The other thing that I want to point out is that for craft-beer manufacturers, first of all, you have the competitive advantage of already having the infrastructure in place. But the second thing is that this brings the rest of your portfolio to the distributor and to the retailer. It also brings the consumer into places that they ordinarily wouldn’t go: There’s some data that’s suggesting that the folks who are going into liquor stores to buy hemp beverages are first-time consumers at that liquor store, so they might pick up some other stuff along the way. And I think that when you are adding a hemp beverage to your line of products, you’re not foregoing your craft-beer heritage. You are really just adding a cherry on the top or icing on the cake, or whatever metaphor you want to use, to help get those other products into the store. It’s really amazing what this is doing for the existing craft-beer industry.
CBB// I think the other piece—as a corollary to that because so much craft beer is focused on on-premise—is taproom consumption. Having this category of beverage for those who are not beer consumers or not even alcohol consumers opens up this avenue to have a beverage and be social in this kind of taproom environment. That is absolutely crucial in a lot of places now, especially as people’s consumption habits around this are changing. We love to pigeonhole consumers. We love to think, “Oh, you are a consumer of this, or you’re a consumer of that.” And the reality is that lots of us are consuming lots of things.
But maybe we talk about why—because you are the president and founder of the Hemp Beverage Alliance and not the “Hemp-Derived THC Product” Alliance—what is it in particular about “beverage” that you think makes a compelling delivery mechanism for this hemp-derived THC, versus some other delivery mechanisms?
CL// We are intentionally the Hemp Beverage Alliance for a couple of reasons, and the primary one is that “beverage” is a specific stakeholder group. Our members are sometimes beverage and other product manufacturers, but overwhelmingly, these are folks who are focused on beverage—whether they were former brewers or they’re distributors or retailers. But by focusing specifically on beverage, we’re very focused, and that allows us to move with purpose a lot more effectively. And what we’re seeing here is the value of hemp beverages.
It really makes sense when you frame it like this. If you go to Grandma’s for Thanksgiving with a one-hitter, you might be frowned upon. If you take a four-pack of hemp beverages, nobody’s going to bat an eye. And as much as our society has embraced Cannabis sativa L.—and we have, to a large degree; it does not have the negative stigma that it used to have—there is still and always [will] be a little bit of apprehension about the traditional method of consumption via smoking. And vaping kind of falls in line with that.
By having a beverage, it’s more social. I don’t want to call it more discreet, but it’s more acceptable. And the other important thing is that it allows you to manage the way that you consume. We don’t go out to a bar and do Everclear shots. That’s the most efficient way to get drunk, but people are like, “I want to manage my intake.” I’m going to have a light beer, maybe, and I have two light beers. Or maybe I’m sitting in the backseat of the car—I’m going to have two strong ales. But by having beverages in a container that’s got water in it, you are in a better position to manage your consumption, manage intake, and manage your experience.
CBB// Regulation is something that most people don’t love talking about. It can be a pain in the ass. But in this case, it should be said that the Hemp Beverage Alliance and all the producers that support it strongly believe in regulation—sensible regulation that balances consumer accessibility with product safety and integrity and age-gating and all the other things. Outline what you see as some of the challenges of regulation and what kind of regulation you believe needs to be in place for this category to truly thrive.
CL// First of all, the Hemp Beverage Alliance absolutely supports smart regulations that protect consumers, ensure product integrity, and empower consumers to make smart choices. That goes without saying, the basics that you’re talking about: making sure these products are age-gated because they have the potential to intoxicate; making sure that the labels are accurate and what is on the label is actually inside the can; making sure that we’re not marketing toward children; and making sure that these products are tested to make sure that there are no contaminants in them and that the milligram counts are accurate, etcetera.
Now, this is table stakes for the craft-beer industry. But you’ve been around for a lot longer than we have. This is a brand-new industry from scratch, and so what we’re asking for I don’t think is anything really out of the ordinary. It’s something that allows our industry to grow and, again, it creates that consumer confidence. We also are one of the few organizations that feel that we should be taxed—a reasonable taxation system that allows for states to create regulatory frameworks and monitor it because a regulation that isn’t enforced isn’t really a regulation. So, we want to make sure that we are good actors, and we want to be able to stand by everything, we want to make sure that the reputations of the people who are selling and distributing our products are bolstered. And that comes only with having a regulatory framework that we all are playing by. It only takes a couple of goofballs to ruin it for everybody, and having some good, solid regulations is going to help get those folks out of the industry.
Now, I will say the regulations as they currently stand vary from state to state. Minnesota has one set of regulations that’s different from what you’ll see in Tennessee or in Washington or in Louisiana. And that’s okay. We see this with beer or with alcohol. The federal government has general oversight via the TTB, but then the legislation and the rules as they relate to alcohol largely fall to the states and even further down to the community level. We see this as no different. There’s no reason why we can’t play by those rules as well, but we do need that base level of rules that everybody’s following.
CBB// Let’s talk about what the path forward looks like now, with this bill reopening the government and that language that now sets a clock ticking on this federal legalization. Talk about what that would mean with that current language and how the industry is looking to move forward over this next year.
CL// If you look at the legislation, you’ll see that it is very hastily crafted and with a specific endgame, which is to destroy this category. It does establish a 0.4 milligram per-serving [limit] per 12-ounce can. But that’s kind of the equivalent of saying, “Yeah, you know, we can have all the craft beer you want—it just has to be 0.5.” Okay, some people would drink it, but not a lot of people.
The legislation as it stands allows for a one-year implementation period, so it’s not a full-stop ban. The beverages you’re enjoying today are the same beverages you’ll enjoy next week, next month, and throughout next year as well. Rather than take this as a wind-down period, I think everybody in the industry is taking this as, “We have a one-year opportunity to get a federal regulatory framework that works.”
The one thing that you need to do is go to Minnesota, and [see that] it’s no big deal. It is just another product on the shelf or on the menu that is responsibly enjoyed by adults, and people just move on with their lives. We had a symposium last year in Minnesota, and some of the regulators did some keynote speeches for us, and they’re like, “We don’t understand why other states don’t just regulate this and move on.” Because it has just been insinuated into the fabric of adult enjoyment, really, without incident. So, I think by putting together a regulatory framework in the next 12 months, which is absolutely doable, we’re going to be able to push back against this ban and get regulations in place that work. The interesting thing—and we all know this about our government—nobody does anything until there’s a deadline. And now we have a deadline, and I think that folks are really going to rise to the challenge and make it happen.
CBB// When you look at the public polling on the issue of cannabis, marijuana in general, THC, the numbers in favor of it among the American population are overwhelming. Culturally speaking, cannabis consumers span the entire political spectrum.
CL// Going to Minnesota is really what demonstrates what it means, and what it means is no big deal. And I think this is the big takeaway. This is just another beverage in the portfolio of adult beverages that people are gravitating toward, that they’re enjoying, that they’re willing to pay for.
And I can go into the myriad benefits of these hemp beverages, if you’ll indulge me. We had 600 people at an all-you-can-drink festival up in Minnesota last year—four hours, all you can drink for $30 or whatever it was. As the afternoon wore on, it got quieter. When the event was over, everyone just left. There were no fights. There was no, “Hey, I want to stay.” Everyone just left politely. The place was cleaner than it was when we opened it. So apparently, if anything, these drinks make you a tidier person. The only thing that was dramatically different was that the lady who had the beignet food truck right outside the exit left with a very, very big smile on her face.
And we’ve seen this anecdotally in bars that are serving these products, where bartenders actually like these because it does chill people. It’s a drink of moderation, and it’s a drink that is enjoyed in such a way that these people aren’t just walking around like zombies. You’re drinking them to the level that you want to enjoy them, then you stop drinking them. So, there are a lot of really good stories out there about these products.
I want to circle back to what you said earlier. As Bob Galligan from the Minnesota Craft Brewers Guild always says, everybody deserves a bar stool, whether that’s an alcoholic drink, a nonalcoholic drink, a THC drink. We want to bring people back into the bars, back into community, back into conversation. That has repercussions that go beyond bottom lines for craft brewers; it has implications for society—the more that we can get together and talk and hear opposing views and have spirited debates and third spaces that we all feel safe and comfortable in, the better off we are as a society. This brings a whole bunch of people into the brewery who ordinarily wouldn’t be there.
CBB// I agree with you, and I think we need to use all of these beverages geared toward socialization out in a public space and keep breaking people out of the tighter and tighter digital bubbles that we have built for ourselves—or, I should say, that a tech industry that loves our attention has built for us and built in such an addictive way.
But let’s zoom out here. What are the next steps for people in the craft-beverage industry, the craft-brewing industry, consumers who are motivated—what can we do to help over this next year, with this clock ticking?
CL// First and foremost, for the craft brewers who are listening, talk to your guild. Talk to your state guild, see if they are involved, and see if you can get more involved with your guild to help push this forward in your state and on the federal level. If your guild is not involved, or if you want to get more involved, consider joining the Hemp Beverage Alliance, hempbeveragealliance.org. You can even just sign up for our mailing list to get more information. If you don’t want to write us a check, just shoot us an email even, and we’ll help you out the best we can if you’re interested in getting involved in the production or the advocacy for this category.
For consumers, this is the hard part. The biggest thing you can do right now is go buy yourself a hemp beverage. These are delightful products. Start low, go slow, but dip into this category and see if it’s something that you like, and talk to your retailers about stocking them if you really want to be an advocate. Talk to anybody who is an elected official, whether it’s your mayor, your state representative, your governor, your president—depending on how much access you have—tell them that you enjoy these products and you want to keep them around.
That’s really the long and the short of it. The category is booming, it’s moving. There are a lot of smart actors, but we need everybody pushing and doing the right thing, and every little bit helps. I cannot stress the importance of getting involved at the big advocacy level. But even those little advocacy things as simple as just buying a product, and maybe posting on Instagram how you enjoy them, can go a long way toward moving the needle.
We have edited this conversation for clarity and length.
Hear Here!
Listen to the full conversation, which goes deeper into legal situations for hemp-derived THC drinks and into their place within the craft-beverage space, on Craft Beer & Brewing Podcast Episode 449.