With full adult-use legalization looming, the recreational marijuana industry is gathering its resources to provide several options for tomorrow’s consumers. While smoking the plant matter will be the primary market at first, once restrictions are lifted, the future of the sector points heavily towards non-inhaled products—namely in drinks.
Now that the Ontario government has awarded a $300,000 research grant to help develop the world’s first beer brewed from cannabis, it’s safe to say that food and beverage legalization will arrive shortly after the first round of prohibition is lifted. It’s not a matter of if, but when.
The pot-beer development is indicative of where the sector is going. Cannabis growers across the market are gearing up for putting their wares in a drinking glass or can, including Aphria Inc. (TSX: APH) (OTC: APHQF), Cannabis Wheaton Income Corp. (TSX.V: CBW) (OTC: CBWTF), Canopy Growth Inc. (TSX: WEED) (NYSE: CGC), WeedMD Inc. (TSX.V: WMD), and The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTC: TGODF).
The mad rush towards liquefying cannabis for consumers really began to gain steam when the largest player in the game, Canopy Growth, made a monumental deal with Constellation Brands earlier this year. Because Constellation is known for making Corona beer, the market assumed that a pot beer would be on the way—However, according to Canopy CEO Bruce Linton, that their drink will not be beer.
“We are not going to call it beer. Beer is beer. There will be a cannabis beverage selection, which will not be called something it’s not,” said Linton in an interview with the Ottawa Citizen. “Beer is beer, wine is wine, vodka is vodka. I’m not making those things. I’m displacing those things.”
Now there are several options on the market in the works, with cannabinoid-infused products being developed in time for legalization. As the culture begins to embrace cannabis as a mainstream recreational option, by adding new methods and forms the cannabis market stands only to grow further.
COMPANIES DRINKING UP THE POT-ENTIAL
Aphria Inc. (TSX: APH) (OTC: APHQF)
In an attempt to continue a march towards global coverage, Aphria recently added the continent of Africa to its world map. Aphria entered a series of agreements to acquire an interest in a licensed producer of medical cannabis extracts in Lesotho. The strategy is to gain a supply of high-grade low-cost cannabis isolates in Africa, for world distribution. This followed a recent deal in Canada with Great North Distributors to distribute adult-use cannabis products throughout Canada, leaving the door open for a possible introduction of cannabis-infused drinks to be sold in the alcohol distribution chain.
Cannabis Wheaton Income Corp. (TSX.V: CBW) (OTC: CBWTF)
Through an exclusive license with Dixie Brands, Inc., Cannabis Wheaton is set to begin marketing cannabinoid-infused products in Canada and Mexico. Founded in 2009, the Denver-based Dixie specializes in developing intellectual property relating to cannabinoid-infused products—ranging from beverages to pet treat supplements. By signing with Dixie, Cannabis Wheaton gains access to over 100 cannabinoid-infused products for 10 years, with the option to add two more 5-year periods.
Canopy Growth Inc. (TSX: WEED) (NYSE: CGC)
When Canopy and beverage manufacturer Constellation Brands made a deal months ago, the market went wild over the concept of pot meeting beer. However, it’s not just through the partnership with the makers of Corona Beer that has Canopy’s management excited. Through a project that the company has been developing for the last three years, Canopy plans on launching a cannabis-derived drink in the second half of 2019, when it becomes legally permissible in Canada. The drink will have psychoactive properties, but won’t taste like cannabis—Canopy CEO Bruce Linton claims it’ll taste more like Red Bull.
WeedMD Inc. (TSX.V: WMD)
Through a recent merger with cannabis marketing experts Hiku Brands Company, WeedMD is targeting its own entry into the cannabis beverage market. The company has stated its awareness of the cultural acceptance of consumers ingesting intoxicants in a beverage format. The deal with Hiku began as a joint venture aimed at eventually supplying cannabis-based drinks in Canada. The newly merged organization’s goal is to produce a beverage which has similar effects as wine or beer, but with cannabinoids as the primary active ingredient.
The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTC: TGODF)
Among the players jockeying for position in the upcoming legal cannabis beverage market, TGOD recently added an exclusive agreement with Stillwater Brands to license a proprietary technology to add cannabinoids to food and beverage products. Along with the license for the RIPPLE SC (Soluble Cannabinoids) ingredient technology, TGOD gained exclusive access to cannabinoid-infused consumer packaged goods including micro-dose and full-dose tea sticks within Canada and certain other international jurisdictions—all outside the USA. This major agreement came shortly after TGOD signed another exclusive agreement with CBx Enterprises for other proprietary technologies for extraction and commercializing new products.
THE ORGANIC ADVANTAGE
Among the largest cannabis growers in the sector, The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTC: TGODF) is the primary option for organic cannabis offerings. Not only is the company seeking an advantage through its rare organic designation for its plants, but it also is housing a supercritical CO2 extraction system capable of processing up to 6,600 kg per annum into ultra-pure, environmentally friendly, organic cannabis oils.
“The extraction process allows TGOD to transform our premium quality organic raw material into a variety of premium higher-margin cannabis products,” said Robert Anderson, TGOD’s Co-Chairman and CEO in a press release earlier in May. “Our oils will be as close to the original plant as possible, including terpene profiles to realize entourage effects. Our process is easily customizable to create full-spectrum strain-specific oils, as well as oils of varying cannabinoid and terpene concentrations.”
TGOD’s extraction process is free of toxic solvents, and is capable of producing the highest-quality cannabis oils in the world. In order to produce premium cannabinoid-infused products, containing the two main ingredients tetrahydrocannabinol (THC) and cannabidiol (CBD), extraction is key—Thus it’s important that TGOD keeps its organic designation through careful extraction. The company’s laboratory was built to Good Manufacturing Practices (GMP) specifications, and work is currently underway for EU GMP certification.
During the month of May, TGOD reached multiple milestones on the path towards production of premium organic cannabinoid-infused products. The first major cue to the market that TGOD was moving forward in the food and beverage wing of the cannabis industry was when it assembled a world class senior leadership team made up of Consumer Packaged Goods (CPG) experts. The team consists of former executives of Cott Corp., one of the largest distributors in the bottle and food service industry, as well as from Andrew Peller Limited, an ultra-premium wine brand in Canada. The team’s assembly kicked off an aggressive CPG-based month of activity.
The subsequent announcements in the month included receiving a Health Canada License to produce cannabis oils, followed by the exclusive license for CBx Enterprises’ cannabinoid technologies, and finally culminating with the deal with Stillwater Brands.
The deal with Stillwater especially positions TGOD with a beverage and food producer, with market experience. Stillwater’s RIPPLE SC is a proprietary, patent-pending suite of low-calorie, fast-acting, water-soluble ingredient products that allows consumers and commercial manufacturers to simply and easily infuse cannabinoids into beverage and food products.
What’s key to the RIPPLE SC platform is that it’s formulated to absorb into the bloodstream within fifteen minutes and last for up to four hours, allowing RIPPLE SC-based edibles to offer a uniquely consistent and controlled experience that consumers can trust.
For many consumers today, especially with infused beverages and foods, the fact that TGOD is indeed producing an organic product should help their prospects. Combining TGOD’s organic materials with RIPPLE SC’s method, consumers will have healthier, better-tastings edibles with no additional sugar, fat, or artificial flavorings.
RIPPLE SC products are already available in Colorado, where it’s among the fastest-growing products in the edibles category. RIPPLE SC also is behind other high-end consumer brands such as Stillwater Tea and Whitewater Tea.
TGOD’s intention is to offer Ripple Dissolvables and other Stillwater Brands products and formulations in international markets (outside of the USA). TGOD has made it clear that it intends to aggressively work on the other novel formulations in the beverage, functional foods and dietary supplements areas which will contemplate using RIPPLE SC as the base water-soluble input.
“We believe that soluble cannabinoids and the consumer benefits they enable represent the future of functional foods,” said Justin Singer, CEO of Stillwater Brands in the announcement press release. “TGOD’s emphasis on organic, high-quality consumer products makes the Company an ideal partner to carry our vision into the Canadian and international markets.”
The fact that TGOD is one of the world’s only certified mass producers of organic cannabis, gives the company a significant advantage in the months to come. Once legalized, the cannabis sector’s biggest players will certainly move forward on beverages and edibles—but at the moment, only The Green Organic Dutchman Holdings will be offering an organic product for the most discerning customers.
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