It’s Now or Never for Cannabis Drinks

Cannabis, marijuana, weed, pot, hemp, the devil’s lettuce — call THC products whatever you like, but they aren’t going away any time soon. And once again, they have the alcohol industry on edge. Since Colorado and Washington legalized recreational marijuana in 2012, fears have swirled about cannabis stealing share from alcohol. Those fears never fully materialized, but this time, things feel different. Now, consumers can drink their weed.

Since the passage of the 2018 Farm Bill, hemp-derived THC has been legal in the U.S., allowing breweries and beverage companies to flood the market with THC-infused drinks. Unlike cannabis-derived THC, the products don’t need to be sold in licensed dispensaries; they line the shelves of Total Wine, retail distribution stores, and even convenience stores.

The influx of brands has split the industry — some warn of market erosion, others tout booming sales potential. The THC drinks category is undeniably exploding, but with legislation still pending and regulators scrambling, can said growth predictions hold up? If it’s going to happen, now’s the time.

How Did We End Up Here?

For those unfamiliar with THC legislation, it can be puzzling to see cannabis drinks in liquor stores — especially since recreational marijuana is still federally restricted and remains illegal in 26 states. But the answer lies in one detail of a single piece of legislation.

In December 2018, Congress passed the Agriculture Improvement Act, better known as the Farm Bill. Aimed at stabilizing the U.S. farming industry, it also notably removed hemp — defined as cannabis and derivatives of cannabis with low levels of delta-9-tetrahydrocannabinol (THC) — from the definition of marijuana in the Controlled Substances Act. As such, hemp-derived THC became legal nationwide, provided Delta-9 content stays below 0.3 percent on a dry weight basis.

That “dry weight” rule is a crucial component in the proliferation of THC beverages. A 12-ounce can weighs approximately 340,000 milligrams, meaning it could legally contain over 1,000 milligrams of THC — far more than the less than 10 most actually have. Many refer to the stipulation as a loophole; Cannabis journalist and author of the Cannabitch Substack, Jackie Bryant, prefers the term “poorly written law.”

“The hemp industry is simply taking advantage of a moment,” she says.

Unlike marijuana-derived THC, which faces tight regulation and dispensary-only sales, hemp-derived THC’s only real restriction is the 0.3 percent threshold. The result: a massive influx of new brands, reflected in attendance at the Hemp Beverage Expo. From only a few hundred in 2024, attendance was up over 500 percent at this year’s expo in Atlanta.

Kate Miller, CEO of Miss Grass, a THC company selling hemp-derived gummies and dispensary-regulated flower, says barriers to entry for hemp THC brands are virtually non-existent. “You could launch a brand tomorrow and take out a Meta ad,” she says.

But easy entry and actual consumer demand aren’t the same thing — and the former may be driving growth predictions more than the latter, stoking the alcohol industry’s fears in the process.

Who Do These Products Target?

Considering the rise of THC drinks and persistent claims — accurate or not — that alcohol consumption is falling, it’s tempting to link the two. But this is more correlation than causation. The sober-curious crowd fits neatly into the target demographic, but the majority of brands aren’t positioning these drinks as alcohol replacements.

Credit: MXXN

Take MXXN, a California-based cannabis spirits company founded in 2020 by alcohol industry veteran Darnell Smith. It offers four traditional spirit replacements — Barbados Blanco, Jalisco Agave, London Dry, and Kentucky Oak — each with 4 milligrams of THC per ounce. Smith frames MXXN not as anti-alcohol, but pro-choice.

“I look at hemp-derived THC as an opportunity to offer consumers choice in a way that acknowledges the things driving that choice,” he explains. “But you will never catch me saying I’m anti-alcohol. … People can still participate in both.”

Nowadays, launched in April 2023, became the first THC-infused spirit available nationwide. Initially aimed at sober- and canna-curious consumers with low-dose options, co-founder Justin Tidwell says they quickly saw demand from a broader audience, prompting higher-dose products and RTD cans.

“We’re proud to have kept THC approachable for first-time drinkers, while also catering to regular consumers,” he says. “Flexible dosing allows newcomers to ease in with low doses, while more experienced users can enjoy a higher potency.”

“Consumer interest in cannabis beverages has been steadily growing, and we felt the time was right to meet that demand, coupled with a maturing supply chain that we could rely upon.”

Across the hemp-derived THC market, it’s seasoned cannabis consumers — not cautious newcomers — driving sales, especially for high-potency drinks sold in hemp shops, convenience stores, and specialty liquor stores.

Credit: Nowadays

Journalist Bryant calls it “the myth of the canna-curious” — the idea that there’s a legion of would-be weed drinkers just waiting to be introduced to THC. In her opinion, it’s not new users who are the target audience, it’s cannabis consumers — and regular ones at that. And Miss Grass’s Miller agrees.

“[I]t’s actually more experienced consumers driving velocity right now,” she explains. “These consumers already have a relationship with the plant.”

A Perfect Storm Has Formed

There’s no denying consumers are interested in THC drinks. According to Fortune Business Insights, the cannabis beverage market was valued at $2.04 billion and grew to $3.09 billion last year. From 2024 to 2032, it’s projected to grow at a compound annual rate of 57.5 percent to hit $117.05, with the U.S. expected to hold over $81 billion of that market share.

“I think drinks exploded because they’ve become the point of access for those in non-legal states.”

That growth potential prompted actor and cannabis entrepreneur Seth Rogen’s brand, Houseplant, to launch THC seltzers in the U.S. in December 2024, five years after debuting in Canada.

“Bringing Houseplant’s THC-infused Sparkling Waters into the U.S. was always the goal,” says co-founder and CEO Michael Mohr. “Consumer interest in cannabis beverages has been steadily growing, and we felt the time was right to meet that demand, coupled with a maturing supply chain that we could rely upon.”

That supply chain is another reason timing matters — and why now is such a crucial moment.

Credit: Houseplant

While alcohol distributors were slow to embrace THC beverages, the tides appear to be turning. BRĒZ and Cann have signed with alcohol distributor Hangover Street Ltd Co, Wynk partnered with United Distributors in Georgia in November 2024, and Reuters reports Constellation Brands is weighing its options for hemp-derived cannabis drinks.

But it’s overall access that may be the biggest driver behind the category’s success. With marijuana still federally illegal, hemp-derived THC offers consumers in non-legal states a way to buy THC products freely — and it’s no coincidence those exact markets are where these drinks sell best.

MXXN thrives in North Carolina, where recreational use is banned and medical access is minimal. Smith says states like North Carolina and Minnesota, which have embraced on-premise service, give bartenders a new category to work with. Nowadays sees similar success in Florida and Texas, despite both states’ staunchly anti-weed stance.

“I think drinks exploded because they’ve become the point of access for those in non-legal states,” says Bryant, who’s based in California. “Drinks are fun every once in a while, but if I have access to other things, why would I reach for them often? That said, if I lived in Idaho and couldn’t go to a dispensary, I would absolutely be drinking these.”

If these markets continue to restrict marijuana use — and hemp-derived THC remains federally legal — the category will surely continue to grow. The question is by how much.

The Market Is Going to Grow — in Unexpected Ways

It’s easy to be amazed by growth predictions — a 57 percent compound annual growth would be eye-popping in any category. It’s what’s driving so many brands to enter the market right now. But realizing those numbers hinges on one massive assumption: that Americans will fall in love with THC drinks at scale.

“To a certain extent, I think some of these growth predictions are wishful thinking,” Bryant says. “Sure, there will be a bump from new consumers. But the premise of these numbers is relying very, very, very heavily on the assumption that there are a massive amount of Americans who are unrealized weed lovers.”

While the industry disagrees on how big or fast growth will be, almost everyone agrees on one point: Regulation and further legislation — short of outright bans — will only strengthen the industry. The evolution might not be linear on a state-by-state level, but as long as it remains federally legal, there’s no stopping the category’s growth.

“These brands have captured this moment in time with regulatory freedom,” says Miller. “Now, there are also people from beer, wine, and spirit companies seeing great growth opportunities and rallying behind it. That isn’t to say there won’t be hurdles in the future, but at this point, the cat is too far out of the bag.”

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