James B. Francis, CFA
Chief Research Officer, CRB Monitor
The last few years have featured an influx of companies seeking to produce, either directly or through acquisition, cannabis-infused beverages. In fact, a recent report published by Brainy Insights stated that the cannabis-infused beverage industry is expected to grow “to $2,598 million in revenue per year by 2028 (from $598 million in 2020)…with a CAGR of 24.5%.”
We have seen several types of companies enter the cannabis drinkables space: from Tier 1 pure play cannabis-related businesses (CRBs), to large beverage companies, to more ancillary providers. The one common theme is the expectation that demand for beverages that are infused with cannabis, both THC and CBD, will eventually explode.
In fact, the single largest investor in a Tier 1 cannabis business is Constellation Brands, Inc. (NYSE: STZ), the beverage giant that is famous for its popular brands like Corona, Modelo Especial, and Robert Mondavi. In 2017 Constellation purchased 20% of Tier 1A CRB Canopy Growth Corp. (TSX: WEED) for $4 billion, and this ownership stake expanded to about 40% of Canopy in 2020. Canopy’s extensive participation in the beverage world includes such products as Quatreau, a line of premium 20mg CBD-infused sparkling waters that come in many flavors. Quatreau is one of many beverage-oriented subsidiaries of Canopy Growth.
To the chagrin of investors, Canopy’s stock has been on a downward trajectory over the last few years, and it is unclear whether Constellation will remain committed to them for the long haul. With that said, in February 2022, it was announced that Constellation was in merger talks with another mega-player in the beverage industry, Monster Beverage Corporation (Nasdaq: MNST). If that business combination were to materialize, there would likely emerge a new force in the cannabis beverage space that hits the energy drink market. And if Monster were the dominant company, they would instantly be added as a Tier 1B CRB in CRB Monitor. Stay tuned!
Other representatives from the Big Beverage sector that have made inroads in cannabis include Heineken N.V. (AMS: HEIA), Molson Coors Beverage Company (NYSE: TAP), and Pepsi, Inc. (Nasdaq: PEP). Their bet is that CBD (and in some cases, THC) will become staples in the beverage world, and will be marketed alongside the bourbons, the cabernets and the IPA’s.
More interesting cannabis beverage news: In January 2022, Tier 3 CRB Anheuser-Busch InBev SA/NV (NYSE: BUD), makers of Budweiser, Becks, and Corona (outside the US), announced that it would be ending its partnership with Tier 1B CRB Tilray Brands, Inc. (Nasdaq: TLRY). At the time the arrangement was announced (2018), AB InBev and Tilray pledged to invest $50 million (63.4 million Canadian dollars) in the venture called Fluent Beverage Co. Each company would have a 50% ownership interest in this Canadian company, which plans to market beverages infused with both THC and CBD.
But hold on! CRB Monitor has determined that while this announcement looks like a death knell for AB InBev’s foray into cannabis-infused beverages, they will, in fact, retain an ownership stake in Fluent Beverage via their subsidiary, Labatt Breweries. According to the announcement, “Tamar Nersesian, communications director for Labatt Breweries of Canada, stated that Fluent Beverages ‘will now operate as a wholly owned subsidiary of Labatt and that Tilray will serve as Fluent’s co-manufacturing partner.’”
Given that Labatt is a wholly-owned subsidiary of AB InBev, that exposure to cannabis still exists, and for this reason we will keep AB InBev in CRB Monitor as a Tier 3 CRB.
Tier 1A and 1B CRBs
Many Tier 1 CRBs participate in the cannabis-infused beverage industry, largely through their licensed subsidiaries. Here is a sampling of some of the larger cannabis beverage-producing CRBs:
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CRBM Tier |
Ticker |
Company Name |
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1B |
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1B |
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1B |
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1B |
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1A |
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1B |
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1B |
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1A |
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1B |
Source: CRB Monitor
Tier 2 & 3 CRBs
CRB Monitor has identified more than 50 companies that derive revenue from the cannabis-infused beverage industry. These companies are not “plant touching” businesses, and their products are manufactured using CBD (not THC). CRB Monitor places these businesses in either Tier 2 or Tier 3, depending on the percentage of cannabis-related revenue relative to overall revenue. Here is a sampling of these companies with cannabis beverage connections:
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CRBM Tier |
Ticker |
Company Name |
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2 |
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2 |
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2 |
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2 |
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2 |
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3 |
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3 |
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3 |
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3 |
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3 |
Source: CRB Monitor
Are Beverages the Future of Legal Cannabis? We think they might be.
It could be argued that one logical path to universal acceptance of legal cannabis is through the beverage industry. There are several possible reasons for this:
- Drinkable forms of cannabis could, with the appropriate licensing, be served in bars and restaurants and sold at liquor stores, alongside traditional beverages.
- Consumers might find cannabis-infused drinks more socially acceptable than flower, vapes or edibles.
- Beverages are more conducive to social situations, where smoking is restricted.
- Large beverage companies have the capital and the resources to develop better tasting and more marketable cannabis-infused beverages, that would potentially have broad appeal with consumers.
This view is echoed in a recent article by Stinson Carter of Fatherly.com; in it he predicts strong growth in the space and calls THC-infused beverages “a natural progression of cannabis products in the culinary and mixology space, and the growing popularity of non-alcoholic alternatives.”
For the above reasons, and depending on legalization in the near future, we see significant potential for the growth of cannabis-infused drinks, as their popularity expands beyond the current cannabis-user demographic.
About CRB Monitor
As the “gold standard” in cannabis market intelligence, the CRB Monitor database is the essential tool for financial institutions, businesses, and investors who need to remain up-to-date on critical information related to the global cannabis ecosystem. CRB Monitor’s database covers more than 56,000 licensed Tier 1A cannabis businesses, including details on more than 87,000 ultimate beneficial owners of CRBs and more than 148,000 cannabis licenses. In addition, we maintain daily information on more than 1,700 publicly-traded cannabis-related securities and more than 1,400 issuers.
CRB Monitor provides cannabis data solutions for some of the largest financial institutions in the world.
We not only provide this essential data, but we work with our clients to establish a cannabis policy that captures their individual needs related to cannabis compliance. Cannabis policy depends on several critical elements that can only be found in CRB Monitor:
- Rules-based definition of Cannabis-Related Business
- CRB Monitor Risk Tier Classification
- License data – geography, status, type, classification
- Cannabis Linked Sector (CLS)
- Complete corporate structure for Tier 1 publicly-traded issuers and their subsidiary businesses
Wondering what a Tier 1, Tier 2 or Tier 3 CRB is?
See our seminal ACAMS Today white paper Defining "Marijuana-Related Business" and its update Defining "Cannabis-Related Business"