Boston Beer Co isn’t ready to mass-produce hemp drinks in the US — yet

BOSTON BEER
Boston Beer Co. shares thoughts on cannabis drinks 🍹

What happened: Beer sales are declining, especially among Gen-Z — and that’s left big beer companies scrambling for ways to continue growing. 

They’re especially looking to cannabis and hemp-derived drinks, as the switching costs for consumers who are used to getting a buzz from a can are low. 

Cannabis, the thinking goes, can offer a similar social lubricant, but without the hangover. But Sam Adams maker Boston Beer Co says the time isn’t right, at least yet. 

What they’re saying: “If we saw that the opportunity was there where we felt we could scale a profitable business in that space in the United States, we are prepared to do so. We just haven’t seen that at this time,” Michael Spillane, the incoming CEO of the Boston Beer Company told investors. 

And: “And I would just add to that that also we follow very closely the legalities across the U.S. and we will always put that in front as part of our biggest part of our decision. So as that evolves, we will continue to look at it,” founder James Koch added. 

Back up for a second: Companies are able to isolate THC from hemp, defined legally in the US as the cannabis plant with less than 0.3% THC, and create products with the exact same cognitive effects as cannabis you’d buy in a dispensary and sell them nationwide. 

It’s an extra step to get the same desired ingredient that Congress created via the Farm Bill, though cannabis is still federally illegal.

Still for big, publicly traded companies, dealing with the regulatory hurdles of cannabis, or even hemp, just isn’t worth it yet. 

But Boston Beer Co has led its competitors in marketing THC-infused drinks. They offer TeaPot, a line of cannabis-infused iced teas in Canada. 

Their strategy for now seems to be to test the product in the fully legal Canadian market, and then wait for US regulations to catch up. It’s a similar strategy that Budweiser maker AB InBev tried in a partnership with Tilray, but that was ahead of its time — the deal was killed in 2022. 

Pabst Blue Ribbon also offers PBR-branded cannabis seltzer in California through a licensing deal with Pabst Labs, but doesn’t seem to be making the jump to nationally marketed hemp drinks yet. 

For now, startups like Cann, CanTrip, and Cycling Frog will use the regulatory uncertainty to their advantage, and may make prime acquisition targets once the big players want in. 

Watch: Our interview last year with CanTrip CEO Adam Terry here. 

And more: Koch’s full quote from the earnings call is interesting, in how their distribution and wholesale partners suddenly have changed their tune on hemp-derived drinks thanks to declining beer sales.

But, Koch is quick to point out that the Farm Bill only got reauthorized for a year — and that lawmakers can wipe out the nascent hemp-derived drinks space when they renegotiate the bill later this year.

-JB

Editor’s note: This has been updated to reflect that Pabst licenses its name to Pabst

“In Q3 2024 we talked about how assuming a “reversion to the mean” for MSO profits was like assuming that a journeyman shooting guard would start to revert to Steph Curry’s three point accuracy,” writes Jerry Derevyanny in his yearly letter to Bengal Capital Investors.

It’s worth reading the letter in full for a contrarian take on MSOs and the cannabis industry. Read it here.

Kentucky bill banning hemp drinks passes key committee 🥤

A bill that would ban intoxicating hemp drinks passed a key Senate committee, and now heads to a full vote today. The bill would effectively kill Kentucky’s hemp industry, some industry participants and advocates warn. Many states, including California, are cracking down on intoxicating hemp products. Read more. Kentucky company Cornbread Hemp is advocating for its customers to email their Senators ahead of the vote, here. And check out our interview with Cornbread Hemp founder Jim Higdon here. 

A Michigan cannabis strain tested at 41% THC, but some are skeptical 👀

Frogurt, a strain grown by Endo in Michigan, tested at 41% THC. But that’s led to some skepticism among members of Michigan’s grower community — most commercial strains top out at around 35%, though higher-potency strains can command higher prices. Read more.

Another crop of cannabis earnings for you:

• TerrAscend reported its full-year and fourth-quarter results on Thursday. For the full year, the company reported a $72.7 million net loss — down from $82.3 million last year — on $306.7 million of revenue. For Q4, a $30.2 million net loss on  $74.4 million of revenue. Full results here. 

• Jushi Holdings reported its full-year and fourth-quarter results. For the full year, the company reported a $48.8 million net loss on $257.5 million of revenue. For the fourth quarter, a $12.5 million net loss on $66 million of revenue. Full results here. 

• Ayr Wellness reported its full-year and fourth-quarter results. For the full year, the company reported a $362 million net loss on $463.6 million of revenue. For the fourth quarter, the company lost $164 million on $114 million of revenue. Full results here.

Cannabis and cancer 🌿

Cancer patients who use medical cannabis report a “significant” improvement in their symptoms, despite the fact that insurers don’t reimburse costs for cannabis. The study was conducted on 220 adults with cancer enrolled in Minnesota’s medical cannabis program. Read the full study results here from the journal Cannabis.

Cannabis and the brain 🧠

A new study published in JAMA found that lifetime cannabis use is negatively associated with working memory. Check out the full results here.

The Cultivated team is saddened to hear that Superette is shutting down. Superette was a chain of high-concept dispensaries around Toronto with 1950s styling. Very cool stores, but maybe a little bit ahead of its time…

Cannabis prices are plummeting in Massachusetts, according to the state’s Cannabis Control Commission report. When sales were first legalized in 2018, one gram of cannabis cost about $14.09. As of April, a gram is about $5.36 — that’s over a 60% decline. 

Read the full report.

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