Oct 17, 2023 - News

Minnesota's THC beverage market moves beyond seltzers

Illustration of the impression of a marijuana leaf filling up with green, bubbly, sparkly liquid.

Illustration: Brendan Lynch/Axios

As the hemp-derived THC beverage market becomes saturated with seltzers, local makers are finding other drinks to mix THC with β€” from coffee and kombucha to soda and mushroom elixirs.

Why it matters: Whether fruity or flavored with terpenes, seltzers have dominated the industry since initial legalization in July 2022. Starting with a different product gives new businesses a chance to differentiate themselves in a crowded but growing market.

Plus: The innovation can bring an entirely new group of consumers that may not be interested in sparkling waters.

Catch up quick: When hemp-derived THC edibles were first legalized in the state, seltzers were the "low-hanging fruit," said Shawn Weber, president of the Minnesota Hemp Growers Cooperative and owner of Crested River Cannabis Co.

  • The drinks required few ingredients β€” largely carbonated water, THC emulsion, and some flavoring β€” and were familiar due to the popularity of alcoholic seltzers like White Claw.

What's happening: The saturation left a gap in the market for other drinks, with several beverage makers telling Axios they made their own products partly because they'd be one of the first in their category.

  • Gus Dean launched Blueberry Kush in August, a caffeinated cold brew infused with 10 milligrams of hemp-derived THC and CBD per can, after a fellow business owner pointed out that the local market didn't have a THC coffee, Dean told Axios.
  • Cultivated CBD's THC-infused fruity sodas, which expanded into hundreds of stores this month, were more advantageous to distributors and retailers when they released earlier this year because they stood out, owner Anthony Newby said.
  • Cocktail company Dashfire created their THC coolers, which come in flavors like margarita but don't contain alcohol, because they were a natural extension of their existing product lines, co-owner Lee Egbert told Axios.

Reality check: Several Twin Cities retailers told Axios that seltzers are by far still the most popular THC drink among their customer base, pointing out that the drinks appeal to those wanting lower calories, sugar, and carbohydrates.

  • "Seltzers can be generic, but people aren't reaching immediately for stuff like soda, no matter how tasty it is," St. Paul Cannabis owner David Mendolia said.

What's next: Expect more innovation outside of seltzers as the market continues to expand, Weber said.

  • Still, he warned, companies may begin to drop off β€” "If you're not changing, you're dying," he added.
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