VCs and private equity investors are fueling the potentially $20 billion low dose THC beverage boom

• VCs are pouring cash into low dose THC drinks, betting big on the booming category despite wider cannabis market struggles.

• Retailers like DoorDash and Total Wine are on board, fueling sales and investor excitement.

• Backers see it as the next craft beer, with potential to hit $20B and reshape booze and cannabis habits.

A new crop of investors are betting on entrepreneurs and brands in the growing market of low dose THC beverages, dispelling some widespread notions that capital has dried up in the struggling cannabis industry. 

The beverage category, which is exploding in several states like Minnesota and Florida, is attracting strong interest from venture capital and private equity firms — and their cash.

Cultivated has uncovered tens of millions of dollars actively chasing hemp-derived THC and traditional cannabis beverage plays, through interviews with key investors. The fizz has bubbled up despite escalating restrictions on hemp-derived products and outright bans in some key markets, including California, Texas and Tennessee.

“Consumers are buying this hand over fist,” investor and Delta Emerald Ventures Founder Ian Dominguez told Cultivated. “This is what the industry has been waiting for.”

Big market shifts fuel investment 

InvestBev fields about three pitches a week from prospective hemp beverage brands. The Chicago-based private equity firm has raised nearly $200 million from family offices, institutional investors and other high net worth individuals.

The vast majority of its $500 million in assets under management are tied to barreled whiskey distillates, but managing general partner Brian Rosen is on the hunt for another THC beverage play.

The company was an early and big backer of Cann, one of the most well known THC beverage makers in the space.

A push to carry these types of products by regional liquor stores, such as Binny’s Beverage Depot in the Midwest, and national chains such as Total Wine & More, has significantly increased profit margins, an appealing development for investors like Rosen.

Mainstream national retailers, such as tech giant DoorDash and the parent of Edible Arrangements, have also recently entered the fray.

Greater consumer adoption has coincided with product availability and generational shifts in alcohol and cannabis consumption. DoorDash last month highlighted a 19% sales jump in hemp-derived, federally compliant THC drinks and edible orders from December to the end of January, following an eye-opening announcement it would start delivering these products in early 2025.

InvestBev prioritizes route to market, core audience, purchasing metrics, and marketing strategy, Rosen said.

“I'm not so concerned about finding the right play as I am promoting it the right way,” he told Cultivated.

From mid-caps to low dose

Aaron Edelheit was an investor in small to mid-cap stocks and real estate.

In 2019 he made his first investments in cannabis stocks, largely prompted by his own positive experiences with low dose THC products.

The self-described workaholic utilized gummies to help manage bouts of insomnia.

“A low dose gummy or a low dose beverage has been life altering for me,” Edelheit said. He’s the CEO of Mindset Capital, which may have the most hemp beverage investments of any venture capital firm in the country.

“I’m a big advocate for this. I think it’s good for society,” he said.

Value investing

In early 2022, following the drastic decline of weed stocks, Edelheit launched a dedicated cannabis fund, driven by his belief in the undervalued potential of the sector.

In January 2024, the Santa Barbara-based financier launched a VC fund to strictly back hemp beverages, a category he believes will ultimately destigmatize THC and normalize widespread adoption while lowering alcohol and opiate use.

The beverage fund, which exceeds $10 million, has invested in 10 portfolio companies, including Cann and Trail Magic in Minnesota, the birthplace of the hemp beverage boom. The fund’s largest stake is in Uncle Arnie’s, a leading brand in the hemp and regulated cannabis market.

“I think this is a massive total addressable market expansion for the cannabis industry,” Edelheit asserted. 

‘Bigger than craft beer’

Dominguez, the Delta Emerald Ventures founder, has seen big retail shifts in Florida since moving there two years ago. Two of the state’s three largest liquor chains now sell hemp-derived beverages. Independent grocery stores and select bars do as well.

Curaleaf, one of the state’s largest medical marijuana retailers, opened a West Palm Beach store in April that only sells hemp-derived products.

The company’s CEO, Boris Jordan, indicated the company plans to expand the concept statewide as it evaluates other markets, Cannabis Business Times reported.

“We think this category will be bigger than craft beer in 10 years,” said Dominguez. 

The Miami-based VC utilizes proprietary behavioral data to capitalize on major consumer trends.The firm has invested in five undisclosed beverage brands and is actively looking to expand the portfolio.

Delta Emerald is looking to back brands and operators throughout the supply chain, evident by its investment in Vertosa, which creates ingredients for infused products. A few years ago Vertosa became cash flow positive, a result of its inroads in the hemp industry, Dominguez said. 

The VC’s other industry investments include Happy Cabbage Analytics, wholesale service provider Nabis, and Vangst, which lists cannabis jobs and offers other industry staffing services. 

Bullish on bevs

Listen Ventures is a consumer-driven VC, identifying cultural shifts and linking them with entrepreneurs and brands fueling change.

The Chicago-based firm has generated insights, like consumer behaviors and preferences,  from an in-house study of 571 THC beverage drinkers. “It's really important for us to create direct inroads to consumers,” Ellen Wilcox, who leads the firm’s research, said.

Listen Ventures, which has nearly $200 million under management, is in its fourth fund. It backs 10 to 15 companies per fund, which are highly concentrated in early-stage consumer product companies.

The firm’s managing partner and founder Jeff Cantalupo told Cultivated that they’ll be “actively investing” in the THC beverage category in their current fund.

Its first investment in alcohol alternative beverages was Go Brewing, a non-alcohol beer company that launched a delta-9 beverage brand in January. It has also backed Miss Grass, which sells hemp-derived gummies and regulated cannabis products.

The VC recently invested in two additional hemp-derived THC companies, according to Cantalupo. He’s very bullish on the hemp beverage category as it continues to chip away at the $40 billion licensed cannabis industry and $260 billion alcohol sector.

“If there’s no major regulatory oversight from the federal side this should be $5 to $10, maybe $20 billion industry over the next five to 10 years,” he said.