The New Economy of Craft Cannabis

2023 was was a historically bad year for “small, independent” craft brewers in the United States. According to the Brewers Association in their 2023 Year in Beer annual review, over 385 craft breweries in the United States closed while only 420 breweries opened throughout the country. The year was challenging for many small and independent brewers and all signs are showing that production is down due to slow market share growth that has been marked by declining draft sales and a highly competitive retail market environment.

Amid headwinds, there is good news: the continued overall popularity of the category. Independent brewers still sell more than one out of eight beers in the United States, and consumers spend roughly a quarter of their beer dollars on a beer from a small and independent brewer. What will this mean as breweries start adopting new products that involve cannabis extracts and emulsions and shift towards the trending non-alcoholic movement?

Brewers Association Year in Beer 2023

The 385+ breweries that poured their last draught brew and closed doors exceeded the number of breweries that closed in the first year of the COVID-19 pandemic in 2020. The economic reality of craft beer is growing into craft brews and taking a new direction. One has to wonder how much worse things can get for people making craft beer going forward and what can be a pivot point for the new economy of craft beer in America?

Shifting Beers

It is truly now a thrilling time to be in the ready to drink and carbonated beverage market. Every month it seems craft breweries like Martin House Brewing Company, LLC , Austin Beerworks , and 8th Wonder Brewery + Cannabis come up with new brews, events, marketing schemes, and create demand to meet the shifting consumer habits and growing demographics. This creativity is now showing up in the world of cannabis and innovation from the craft beer world is pushing the envelope.

Consumer preferences are shifting and B2B businesses like Canworks and American Canning are printing thousands of cans everyday for the “Green Ocean” market shift that is happening in the canned beverage and ready to drink cannabis market.

These forces now are working in tandem with market shifts and this creativity presented by the great teams that make up craft brews and the future of cannabis beverages. Drinkers and new generations are renewing focus on healthy lifestyles contributing slowing growth among the craft beer economics and they are pivoting towards non-alcoholic and lifestyle that is shifting gears away from alcohol and into high gear with cannabinoid-infused beverages.

This unique buzz only comes that only cannabinoids are now being emulsified, formulated, flavored, and promise a mellow, enjoyable experience, setting them apart from traditional beers and classic cannabis consumption methods.

The New Economy Craft Cannabis

Legal hurdles be damned, making a hydrophobic cannabinoid water soluble, and other technical obstacles to getting the main psychoactive component of cannabis into beverages in a stable, predictable way. This is no easy feat. The challenge, science, and gear is slowly growing into small craft breweries to stimulate local economies and will be coming to a independent brewery near you in the future.

Production targets are slowly shifting towards cannabinoids and non-alcoholic portfolios that have local flare and market share. Cannabis beverages currently represent less than 1% of total sales in the medical market throughout the United States and even smaller percentage in Texas while the hemp derived market exceeds 20-30% throughout the country with those numbers slowly gaining traction.

Regulation Navigation

States like Minnesota, Illinois, and Texas face regulatory hurdles. These challenges although immense they are not impossible. In Texas all consumable hemp products (CHP's) must be tested and from a licensed manufacturer. To sell CHPs in Texas, retailers must complete the DSHS Hemp Retail Registration. Retailers must ensure the product is safe for consumption by being free of heavy metals, pesticides, harmful microorganisms, and residual solvents.

Every 4 years, Texas agencies must conduct a review of their regulations. That time has come for the Department of State Health Services and its rules regulating the manufacturing, distribution and retail sale of consumable hemp products, such as CBD, delta-8 THC and delta-9 THC. Notice of the review was published in the Texas Register on March 13.

The 2018 Farm Bill legalized hemp, defining it as cannabis with 0.3% delta-9 THC or less. Delta-9 is the chief psychoactive component in weed that gets users high. Delta-8 is a less potent form of THC. Texas defined hemp similarly in its House Bill 1325, which also set rules for consumable hemp products in the state. These are the rules up for review.

During this review, the agency can readopt, readopt with amendments or repeal certain regulations. Shayda Torabi Howell chief executive of the hemp manufacturer and licensed retailer RESTART CBD + THC "We're not just challenging the State of Texas (or Dan Patrick), we're challenging the pathway that has been laid out before ALL independent state operations which is this idea of MMJ to Adult Use and simply suggesting that there might be a better way. Meanwhile, unintentionally, hemp has kicked the lid right off that idea and has created a new path that is direct to consumers. Which I argue deep down is what we all want. And it’s clear that with proper regulations can be a viable path forward."

Also the Department of State Health Services did not indicate in its Texas Register notice that it would be making any changes, but it still could. Shayda "aims to represent the voices of the consumers who value access to these products, the good operators trying to push through the uncertainty and work towards building a bridge with Texas policymakers to create a unified industry that benefits consumers and operators alike." To read the full story on The Texas Tribune Please see the link here

The Craft Beverage Future

While craft beer may be on the decline by no means is it the apocalypse now but rather a shifting trade wind that opens the opportunity for new creativity, flavors, and markets. The path forward for THC-infused beverages is buzzing with both opportunities and challenges. As the market matures and becomes more stable and regulated, these unique drink will evolve, create collaboration among brewers and growers leading to great products and standardization. With education for legislators, and voiced needs from consumers it will be possible to navigate the complexities of this budding industry. The potential for creativity and growth remains immense, heralding a new era of products that marry the art of brewing with the dynamic landscape of cannabis consumption. In the end we will have a new craft beverage category that will finally over take the IPA craze.

Thank you for reading let me know what you think in the comments.

-Herb