Holding Your THC Beverages To "Higher" Standards

THC-infused beverages are on the radar of many breweries right now. This isn't just due to Tuesday's election and the uncertainty surrounding their legal status—it's also because of the significant opportunities they present, depending on the state and route to market. Lately, I've been asked for my thoughts on THC more than any other beverage trend, and while I’m far from an authority on the subject, I think it's time to start laying some groundwork.

In this post, I'll share my high-level thoughts on spinning a THC beverage brand out of a local brewery. Then, with permission from the Executive Director of the Illinois Craft Brewers Guild, I'll share some best practices they've developed, which provide a solid framework for breweries to build around.

On Sunday, I met some neighbors at The Village Tap to watch the Bears game (woof…). I showed up late and while looking over the beer list, I noticed a single THC beverage option at the end. As I looked up from the menu, I noticed the can sitting in front of one of the guys at the opposite end of the table. I asked him if he was into them and he said “nope, first one. I like it, and am definitely starting to feel it.” As Craft Business Daily pointed out yesterday, “Cannabis and THC beverages (note, not necessarily hemp-derived THC) are becoming more mainstream, moving into what Datassential dubs the menu “adoption stage” after the initial inception stage in 2023.

After the game, I met up with my wife around the corner at her friend’s house where at least 12 other moms were gathered around a kitchen island talking about, you guessed it, THC drinks. If this anecdotal span of 2 hours was any indication, I agree that full blown adoption is indeed happening wherever these are 𝚕̶𝚎̶𝚐̶𝚊̶𝚕̶ not illegal. There’s no doubt in my mind that there’s something big here, but can local craft breweries be successful long term?

Steamy Hot Takes 🔥

Craft beer got a nice long head start from 2010-2015 before there was enough capacity to meet the explosive demand and before global breweries eventually stormed in with their checkbooks and muddied things up. Those were the glory days in part because it wasn’t overcrowded and “the big guys” were ignoring the IPA phenomenon. With so much available capacity chomping at the bit now, from the large and small brewing operations, to all the non-alcoholic beverage companies, that delayed reaction is not going to happen with THC drinks. Or is it?

Large companies like AB, MolsonCoors, Constellation, Heineken, Coke, and Pepsi have to be chomping at the bit, waiting for their lawyers and distributors to gain legal comfort to move forward. These big suppliers probably have brands built and ready to deploy, if and when they’re given the green light. When this happens, the category will go from 0 to 100 before our eyes, becoming as competitive as craft beer ever was, but almost instantly.

The Trump victory however, and especially the GOP’s control of congress, could actually slow down progress of federal reform. If left in the hands of individual states, that’s a big blow to big Canna, but could provide local breweries in cannabis-friendly states with that crucial extended runway to the extent that their distributors will touch it. There will still be competition from big Cannabis, if they don’t run out of money first, but this could keep big beer and certain others at bay for the time being.

If the flood gates do open soon, with widespread legalization, my questions shift to whether “local” be able to premiumize itself and compete against the scale of big beverage companies in the same way it’s been able to (somewhat) do with beer? Or will THC drinks be like Hard Seltzer, where national brands dominate the category in the way that White Claw and Truly did? Remember, local didn’t get any head start with Hard Seltzer and they generally got run over. That’s a risk and scenario I think about a lot.

I believe there are indeed ways that local can carve out a place regardless of timing, if executed thoughtfully, with an eye to quality and gaining trust of their local base. Their strategy must position themselves in a way that global brands cannot, OR at least get the massive head start in this crucial “adoption” phase. Regardless, nobody is going to find long lasting success in this space without stringent best practices behind the scenes.

Best Practices - State Guilds Stepping Up to Help

I can’t speak for other states, but the Illinois Craft Brewers Guild has been incredibly helpful preparing it’s members to enter this space as they simultaneously work with beer distributors and state legislators to carve out clarity in the law. In the meantime, the Guild wants its members to be good actors in the space and hold themselves to high standards. To help facilitate what that includes, they recently shared the following best practices with members and gave me permission to share wider. Big shout to our Executive Director, Ray Stout. Yes, Stout.

1. Understanding the Legal Framework

1.1 Regulatory Compliance

• Familiarize yourself with the State and Federal Hemp regulations governing the production and sale of hemp-infused products, including allowable THC levels (up to 0.3% THC on a dry weight basis for hemp products).

• Ensure compliance with local statute or ordinances regarding the production and sale of hemp derived THC products.

1.2 Tracking and Reporting

• Implementing a tracking system for raw materials and finished products, taking this step will help you remain in compliance when a regulatory framework is created for these products. As a baseline we recommend keeping the same level of records for THC beverage production as you do with beer production.

2. Sourcing Quality Ingredients

2.1 Hemp and THC Sourcing

• Partner with hemp growers or emulsion manufacturers who provide a full panel test performed by an accredited third-party analytical testing laboratory to ensure high-quality THC content and purity. While there are several intoxicating hemp products available to use in your beverages under the current regulatory conditions, we encourage members to use “natural” products rather than those derived from a chemical reaction, also known as converted or isomerized THC.

• Partner with hemp growers or emulsion manufacturers who provide a full chain of custody tracking to ensure the natural hemp emulsion is naturally extracted from hemp.

2.2 Ingredient Selection

• Choose complementary ingredients that enhance the beverage’s flavor profile, such as fruits, spices, and natural sweeteners, while considering potential interactions with cannabinoids.

• Do not mix intoxicating hemp products in alcoholic beverages.

• While coffee or tea can be a beverage ingredient, intoxicating hemp beverages should not be mixed with enhanced caffeine drinks designed to deliver a specific, often higher caffeine dose.

• Be sure to use a preservative or pasteurize your hemp beverage. There is no alcohol in a hemp beverage to kill bacteria, yeast and mold.

3. Safety and Quality Control

3.1 Comprehensive Lab Testing

• With each batch conduct third-party lab tests to analyze potency, contaminants (pesticides, heavy metals, solvents), and microbial activity.

3.2 Beer Line Maintenance

• Early research circulated by the Brewers Association shows that a small amount of THC intoxicants can remain in beer lines after use. Conduct a full chemical cleaning of beer lines when switching between THC and non-THC products or consider dedicating beer lines to THC and non-THC products.

4. Quality Assurance Programs

• Develop a stringent quality assurance program encompassing ingredient sourcing, brewing processes, and final product testing to ensure consistency and safety.

5. Packaging and Labeling

• Clearly label THC content, serving sizes, and dosage. Include warnings regarding consumption, especially for inexperienced users. Include a lot code on every can.

• Display the following language on each container intended for retail “the product does not claim to diagnose, treat, cure, or prevent any disease and has not been evaluated or approved by the United States Food and Drug Administration (FDA) unless the product has been so approved.”

• Display the following language on each container intended for retail: “Keep this product out of the reach of children.”

  

6. Consumer Education

• We encourage members to print QR codes on each package or on menus to direct consumers to the batch level results of independent lab testing.

• Provide educational materials to inform consumers about responsible consumption, including onset times and effects, to promote safe usage.

7. Marketing Strategies

• Foster trust by being transparent about sourcing, production methods, and product testing in your marketing material.

• Market all intoxicating beverages exclusively to individuals over the age of 21.

8. The Sale of Intoxicating Hemp Beverages

• Intoxicating hemp beverages should not be sold to anyone under the age of 21 for on or off premise consumption. Age verification must be completed by showing valid state or federal identification before a sale can be made.

• Any ecommerce sales requiring delivery or shipping of hemp beverages to consumers must be done so using age verification requiring an identification and signature at the point of delivery ensuring recipients are over the age of 21.

• Request that retailers do not merchandise intoxicating hemp beverages immediately adjacent to non-intoxicating beverages to ensure clear separation from a customer standpoint.

9. Continuous Improvement

• Stay up to date on evolving regulations, industry trends, and consumer preferences to adapt practices accordingly. The landscape of this industry is changing rapidly.

10. Ensure You Are Insured Appropriately

• Both as a manufacturer and retailer it is important to understand the insurance landscape around intoxicating THC beverages. Reach out to your insurance agency to ensure you are appropriately covered from an insurance standpoint.

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That’s a lot to chew on and I feel like I’ve barely touched on anything I want to talk about. Interested in more THC thoughts? Vote below👇🗳️ and consider a premium subscription to Beer Crunchers. Want to be a guest contributor to help me spread some knowledge? Let me know: doug@beercrunchers.com 🍻🍃