It was only a few years ago that the hemp-derived THC beverage market started to take shape in the United States. While our team (Amherst Brands) has been servicing the hemp industry for 7+ years, thc beverages were nothing more than an afterthought, and they were seldomly seen on shelves up until recently.
In November, 2022, we were approached by a major thc beverage brand that had only participated in regulated cannabis markets. Much like us, they caught wind of a significant opportunity in the state of Minnesota, based on new regulations that made it possible for pretty much any type of retailer to carry THC beverage. This unprecedented regulatory event effectively green-lit the sale of hemp-derived delta-9 THC in ingestible formats, including beverages and edibles such as gummies. The laws stated that beverage brands could have up to 10mg of hemp-derived delta-9 thc in a beverage, with serving limits of 5mg of d9 thc per serving.
At this point, nearly everyone participating in the hemp industry understood the rules permitted under the 2018 Farm Bill when it came to infusing delta-9 thc in ingestible products. In so many words, the Farm Bill states that a product is considered a federally legal industrial hemp product if the total concentration of d9 thc is below 0.3% per serving on a dry weight basis. Everyone in the hemp industry was creating edibles with concentrations of 10mg, 15mg, even up to 100mg of delta-9 thc in certain single serve products (think brownies and cookies).
If you've put 2+2 together at this point, you've probably realized that Minnesota is only the tip of a gargantuan iceberg when it comes to a total addressable market for hemp thc drinks, sodas, seltzers, cocktails, lemonades, teas and so much more. If you don't get it; under 2018 Farm Bill rules, a D9 hemp seltzer born in Minnesota could essentially go nationwide both in wholesale and ecommerce.
But the truth is, very few people were taking a hard look at the beverage category until Minnesota paved the way for real brands to start taking a whack at the opportunity in front of them.
At this point, we brought on our first major beverage brand and began go-to-market efforts. Almost immediately, our sales of hemp derived, psychoactive beverages in Minnesota took off like a rocketship. I'd like to say that it was all our excellent salesmanship that was responsible for the immediate pop in sales, but I think it was primarily fueled by the PR campaign that was almost "mistakenly" created by statewide and regional news outlets.
Before long, every person that read the news in the state of Minnesota realized something that, for many, never even crossed their radar. You could buy weed drinks at a liquor store, a convenience store or even a grocery store. Not only did these news articles inform the public of access but it also educated citizens within the state.
I would argue that a large portion of the general public had no idea you could buy hemp products that "get you high". Now, the cat was out of the bag, and the demand for beverages came with it.
For nearly one year, Minnesota stood on it's own as an incubator for new hemp beverage brands. Nearly EVERYONE got their feet wet in Minnesota. At Amherst Beverages, we took our hemp beverage sales efforts to one of our most successful and lucrative states; Texas. Having participated in hemp product sales in Texas for nearly 7+ years under the Amherst Brands banner, we have built a lot of relationships in the state. We thought it would be a slam dunk. However, it was far from it. It took us almost a year to make any significant traction.
Eventually, however, Texas distributors began to see what was happening in Minnesota and orders of pallets for beverages coming from Lonestar State. Many of these orders were "test" orders. One mixed pallet of each flavor to start. But eventually, over a few years, one pallet turned into 10, turned into 20 and so on.
This dynamic began picking up in many states across the country. Essentially, beverage and alternative products distributors were looking at the opportunity playing out in Minnesota and said, "I want a piece of this".
The success of hemp THC beverages in Minnesota created a domino-effect on the supply and demand side. Brands began popping up like weeds. In the state of Minnesota, no distributor with a bit of risk appetite could ignore it. Liquor stores and bars had a green light at the regulatory level and customers understood that the products were available. Not just available, they were everywhere. If you go to Minnesota, you almost can't miss it.
As more brands came into the mix, the fish bowl started to get a little crowded, and out-of-state expansion became strategically advantageous for the brands with bigger dreams.
At the end of 2023 and into 2024, some major off-prem liquor retailers began to enter the arena. The biggest and most notable being Total Wine & More. When they dipped their toes into the market, that sent a tidal wave across the industry. It was the first big, mainstream retailer to say "I am ok with this and I see an opportunity here". This was followed by a wide variety of other mainstream retailers that began to carry thc drinks, such as BevMo by GoPuff.
This is only a small part of a much larger story that is still in the Prologue. The conclusion is, the opportunity is vast and stakeholders are finally seeing it. I think that we will see continued growth through 2024 with numbers that will likely double in 2025, pending favorable Federal Farm Bill updates.
