GTI is expected to report earnings on March 17th after the market close.
Yesterday, GTBIF announced an exclusive partnership with cannabis-infused beverage brand Cann to manufacture and distribute its line of cannabis-infused sparkling beverages beginning in Illinois this spring. Green Thumb and Cann will expand distribution to additional markets, including New Jersey, which recently legalized adult-use cannabis sales.
If you don't follow GTI CEO Ben Kovler on Twitter, @Bkov9, you should. He announced the partnership on Twitter "Let's not overconsume – Suppose you have two cans, one holds 3 liters and the other 4 liters, but neither has any measuring marks. How can you measure exactly 2 liters of water using only the two cans and a functioning faucet? @drinkcann #nonalcoholic #nohangover $CGC $GTBIF. Noting the support for the Canopy and its non-thc beverage push a few days earlier or the need for cannabis beverages?
He went on to say in the official press release, "The cannabis beverage category is poised for growth. Consumers are increasingly entering the market, seeking alternatives to alcohol with familiar consumption experiences. Cann sits squarely in this opportunity, delivers on the consumer need, and complements our brand portfolio with entry into the beverage segment. What's even better is cannabis drinks can offer a superior experience, fewer calories, and no hangover compared to alcohol. We are investing in the space and the Cann team, and we couldn't be more excited to bring California's #1 cannabis beverage brand to Illinois and beyond."
More on Cann
Cann's social tonics are low in sugar and calories and contain no preservatives or artificial sweeteners. Each drink is made of all-natural juice (not from concentrate), herbs, organic agave nectar, and micro-doses of cannabis CBD and THC extract designed to be similar in strength to a glass of wine or a light beer. Cann is available in three creative flavors: Lemon Lavender, Grapefruit Rosemary, and Blood Orange Cardamom and is sold in 6-packs of 8-ounce cans. The brand got its start in Venice, California, in 2019 and became a quick local favorite for those in Hollywood due to its appeal to the growing number of entertainers and media personalities looking for healthier alcohol substitutes that still come with a fun social buzz.
Not knowing int the brand other than online, there are many good reviews online, all praising the great taste and subtle high. Beverages can be an appealing product for new users to get the effects without smoking flower. The consumer who prefers flower is not likely going to substitute for a beverage. Longer-term having a beverage offering will likely be necessary. The current structure looks to be a capital-efficient way of taking the first step into the beverage category.
Cannabis Beverage
Trends show that cannabis beverages are gaining in popularity faster than other cannabis categories but represent a tiny part of the Cannabis industry. In California, cannabis beverage category sales grew nearly four times faster than total cannabis market sales between January and December 2020. Over the same period, Cann rose from fifth in market share to first with over 600% growth in sales (BDS Analytics).
BDS estimates that by 2024, that the U.S. Cannabis market will be $31.1 billion, with worldwide sales of $42.7 billion. This growth will be driven by the increasing prevalence of cannabis beverages, which BDS expects to reach $1 billion in the U.S. by 2022. Between the beginning of 2017 and 2019, the percentage of adults in California who reported cannabis use rose from 24% to 42%, according to BDS. In Colorado, use rates grew from 23% to 37% during the same period.
The cannabis beverage category is highly complex and is very different from alcohol. Its bio-absorption is very different, and thus its use-states and their effects. Substitutions can take place, but they will not happen overnight or at all. Our conversation with the largest alcohol distributor of alcohol in California said he had seen no impact since the state went recreational.
