WORKWEEK

Boston Beer Is Joining Canadian Cannabis

So, I admit. I was a cannabis beverage skeptic. 

Not about the product itself, I love cannabis beverages – Cann’s lemon lavender is absolutely incredible. I will be the first in line to purchase a pre-flight cannabis drink at the airport, too – hello airplane jitters 👋. 

But, I had my hesitations about the product category’s success in general. Plenty of cannabis beverage companies are trying to replace alcohol. 

And that’s totally fine, except for the price. You’re often paying much more per milligram of THC than you are for the same alcoholic content. It can be hard for alcohol drinkers to justify the sharp price increase. 

Let’s dive into it a little more, though: 

Let’s start with the recent announcement by The Boston Beer Company. 

In July, their cannabis-infused iced tea line, TeaPot, will hit the Canadian market in select provinces. Each 12-ounce can is going to have 5 total milligrams of THC. 

“Each can is precisely dosed for social gatherings with friends and family,” said Paul Weaver, Director, and Head of Cannabis at Boston Beer Company. 

I had a brief Twitter conversation with Bryan Fields the other day, who posted a joke about cannabis beverages being a fad when this news came out. I told him I somewhat agree, but could he explain further? 

He told me he was joking, that he’s actually quite bullish on beverages. I read the article and some other comments in the post – and then my perspective began to shift. 

Boston Beer is entering a ripe market with TeaPot. The infused beverage share in Canada has grown nearly 850% since 2020, according to a recent Headset report. 

It’s twice the size of the beverage market in the United States. 

So, that alone is enough to shut me up about the cannabis beverage market’s future. The Canadian market isn’t nearly as successful as the American market, in terms of sales and individual company profitability, yet it’s seeing this success with beverages. 

It’s incredibly exciting to see the cannabis beverage category take off up north. 

Though the category’s success is smaller in the States, 4% of American cannabis consumers prefer cannabis beverages over other form factors. With 4.7 million consumers in the U.S., that’s approximately 188,000 consumers who prefer beverages. 

And, 30% of these consumers drink beverages. It’s not their preferred method, but they drink them. That’s 1,410,000 people, using the 4.7 million figure.

That sounds like 🤑 to me. 

What I’m thinking 🧠

With all of that being said, the category is small. Mighty, but small. That means there could only be a few leaders in the space who are really reaping the lucrative benefits. 

As it stands, the American industry is still fragmented. It’s a pain, but it actually gives many brands less competition – aside from the brands that enter multiple markets. In my opinion, the state-by-state gives brands in small categories like beverages more leverage, and we’ll see competition skyrocket upon federal legalization and interstate commerce. 

It will also be interesting to see top players like Boston Beer Company enter a federally legal space, Canada, and whether or not they will upset the sales of smaller beverages already existing in the market.

Los Angeles Just Revamped Cannabis Licensing and Social Equity 

Los Angeles has revised its cannabis policy so business license application processing and approval timelines can speed up. It will mandate timelines for L.A.’s Department of Cannabis Regulation (DCR) to process license applications and modifications. 

It will also establish a new window for social equity verification. This window will open on May 26th for 60 days. Applicants will have new criteria to qualify as social equity applicants. 

As it pertains to social equity – California applicants and beyond feel this is long overdue. 

As far as the licensing process goes, I guess it’s a good thing that the licensing process is becoming more efficient, also – though I have a hard time imagining anyone wanting to enter the California market right now,  simply because it’s so challenging. 

But man, do I admire those folks who want to do it. 

There are 506 L.A. businesses in the process of securing provisional licenses. Things like this always remind me that for most of us, we’re in this space because our passion drives us. Challenges like this become worth it. 

“Overall, the ordinance will help create clearer licensing guidelines and a more efficient process for license approval and modification,” said Ariel Clark, a partner at L.A.-area law firm Clark Howell.

Let’s chat about social equity. California’s social equity program has been met with much criticism, and a report published last year by the California Cannabis Industry Association concluded: “California’s cannabis social equity programming is not working as intended.” 

The California Cannabis Equity Act provided millions of dollars in grants to Los Angeles, Oakland, Sacramento, San Francisco, Humboldt, Mendocino, and Long Beach counties. 

Here are a few major takeaways from the report:

• 82% of equity operators in Oakland claimed to make less than $50,000 in gross receipts the prior fiscal year
• Mendocino equity applicants must have “very low” or “extremely low” income. This means a personal income between $20,000-$50,000 annually depending on the household – many equity applicants make more than this 
• Los Angeles’ social equity program is entirely unclear, resulting in entrepreneurs having more questions than answers 

What I’m thinking 🧠

The Los Angeles licensing process should alleviate some of the competition between the illicit market and the legal market. 137 shops in L.A. were unlicensed as of 2020, decreasing from 286 in 2019. 

But, adding more legal licenses doesn’t fix the root problem: sky-high taxes and barriers that make it nearly impossible to exist as a legal operation. Simply adding more licenses to the market won’t fix the tax problem – and Gov. Newsom’s recent proposal isn’t actually fixing it. 

As it pertains to social equity, applicants feel it’s long overdue. In my opinion, along with actually distributing the funds, one of the most important improvements California can make is to increase its transparency toward social equity applicants. 

In L.A. in particular, it’s unclear how many social equity licenses have been awarded or where that money is going. It’s hard to address a problem if we don’t even know where the dollars are going.

Social equity applicants deserve to reap the benefits of the program installed to help them, and with transparency. 

Welcome to Legalization, Rhode Island

Rhode Island just legalized cannabis for adult use yesterday – making it the 20th U.S. state to do so! 🥳

Starting December 1st, licensed retailers can begin selling recreational cannabis. Adults over the age of 21 can possess up to one ounce. Also, adults can cultivate up to three mature plants at home. 

Rhode Island’s new law includes provisions for people who have been jailed for cannabis in the state. Rhode Island has already found approximately 27,000 cases eligible for expungement, with some cases dating back to at least 1977. 

“Social equity has been a top concern for us throughout this whole process. Senator Miller and I represent some of the communities that have suffered disproportionate harm from prohibition for decades, resulting in generational poverty and mass incarceration. The starting line isn’t the same for people in poor, urban, and minority communities, and they deserve support to ensure they get the full benefit of participating in legalization. I am grateful to my colleagues in the General Assembly for recognizing the importance of expungement of criminal records and equity in licensing because they are absolutely critical to ending prohibition fairly,” said the bill’s sponsor, Rep. Scott A. Slater. 

There will also be a set number of licenses reserved for social equity applicants. 

Legalization in Rhode Island, was, of course, met with some criticism. The Rhode Island Police Chiefs’ Association said the law doesn’t address driving under the influence of cannabis or public consumption – creating a “public nuisance.” 

There are approximately 20,000 registered patients in the state of Rhode Island. Of course, the number of cannabis consumers is likely much larger, accounting for consumers in the illicit market. 

The surrounding states are a huge reason behind the official legalization. State lawmakers acknowledge that Rhode Islanders can drive to Massachusetts, Connecticut, and even New York to access cannabis. 

Gov. Dan McKee said this bill “successfully incorporates our priorities of making sure legalization is equitable, controlled, and safe.” 

What I’m thinking 🧠

I hope that Rhode Island analyzes the social equity problems in California and aims to do things differently. As the state’s rollout with “the biggest and best” social equity programs, only for them to fail, states like Rhode Island truly do have the chance to be the one that changes the narrative and provides a solid program.