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Interview :
WHAT ’ S HOLDING BACK CANNABIS BEVERAGES ?
Jason Vegotsky
Legal cannabis racked up more wins on Election Day 2022 . Voters in both Maryland and Missouri approved recreational pot . Altogether , 21 states now have such laws , despite the substance remaining federally illegal . And while legalization efforts fell short in Arkansas , North Dakota and South Dakota , Colorado voters decriminalized psychedelic mushrooms in yet another sign of shifting attitudes towards recreational drugs .
What does all this mean for the alcohol industry ? Like beer , wine and spirits , cannabis is a social substance , common at get-togethers , often alongside alcohol . Many brands have already launched cannabis beverages , whether with THC or CBD — or both . For a deeper dive into this category , and what may help it break through , we recently spoke with Jason Vegotsky , CEO of Petalfast , a routethrough-market platform for the cannabis industry .
Beverage Dynamics : Why have we heard so much about cannabis beverages recently ? Jason Vegotsky : So much human behavior revolves around consuming beverages . Imagine not having a beverage in your hand while you ’ re gathering with other people . Typically , that beverage is alcohol , and it ’ s in a can . That behavior translates into canned cannabis beverages .
BD : What ’ s holding back cannabis beverages from broader acceptance ? JV : The biggest challenge is channel . If canned cannabis beverages were allowed in grocery stores , I think it would become a top-five beverage category . Instead , right now the main channel for cannabis beverages is dispensaries . And if you were picking channels for these beverages , dispensaries would be at the bottom of the list .
Dispensaries present a number of problems . Their layout is not dictated for beverages , because so much of the product is kept behind the counter . There are rarely any cold boxes , and if there are , they ’ re very small . In grocery you have the motto , ‘ Stack ’ em high and let ’ em fly ’. But you can ’ t stack cannabis beverages , or even have them out in certain states .
The dispensary channel is the largest factor holding back cannabis beverages . Once that changes , and you have cannabis beverages at other , more-normal channels , that ’ s when you ’ ll see monster growth .
BD : The flavors of these products also seem to be an issue . JV : It ’ s a top concern , figuring out a flavor profile that can mask the taste of cannabis , or bring out the taste in a flavorful way . Is it mixing with malt ? Is it seltzers ? What is the category within beverage that allows that kind of flavor profile ?
Right now , a lot of the flavor profiles are overly cannabis in taste . We ’ re still trying to figure that out . It ’ s improving a lot , though .
BD : When will we see THC beverages in beverage alcohol retail stores ? JV : Regulation is not going to allow that quite yet . But canned non-THC beverages , like CBD , I ’ d love to see those guys get more into liquor stores and promote into the THC side .
I ’ ll say this : A lot of alcohol beverage brands have taken equity in cannabis and are looking more and more into THC . We ’ ll see how all of this evolves . I don ’ t think we ’ ll see major movement there until after federal legalization .
BD : When do you expect federal legalization ? JV : ‘ To what degree ’ is the question . There are two sides to what President Biden said in the fall . On one hand , he issued a very small number of pardons for the lowest level of cannabis crimes . On the other , those are criminal charges on the state level , not the federal . But it ’ s a step in the right direction . It ’ s helped put everything else on the radar .
I think everything will change as more states understand the money involved . Cannabis can help drive profits and tax revenue for states . While this might not be the right reason for change , ultimately , money is often the real reason that change happens .
4 Beverage Dynamics • January 2023 www . beveragedynamics . com