The slow-walking of federal cannabis legalization has some of the biggest multistate operators looking for new ways to give their sales and profits a boost. Lately, a lot of that attention has turned toward hemp beverages. But the paths they’re taking are anything but uniform.
Just this week, Florida-based Trulieve Cannabis Corp. (OTC: TCNNF) (CSE: TRUL) launched Onward – its nonalcoholic, THC-infused cocktail line – with a “crawl, walk, run approach,” which is the same strategy CEO Kim Rivers credits for the company’s early success in Florida’s medical cannabis market.
“This is not a fly by night. We’re not approaching it that way,” Rivers insisted. “We are approaching it with an eye towards growing an actual product line in a business within Trulieve.”
While currently available online to ship to 36 states, she said, initial distribution through Total Wine & More locations in Florida was specifically chosen to generate consumer feedback and data in markets where the company (CSE: TRUL) (OTCQX: TCNNF) already has operations.
Trulieve wants to keep the whole vertical – developing, producing and distributing hemp beverages – in house. The drinks feature cocktail-inspired flavors in three dosage levels (3 mg, 5 mg and 10 mg), with batch-testing results accessible to consumers.
Rivers spoke of a year-long development process focused on market gaps in existing hemp-derived drinks.
“We saw white space in the current offerings and our ability to lead with education and lead with our competency and candidly within the THC space is a differentiator,” Rivers explained. However, she stopped short of providing specific market size projections for the product.
Green Thumb Industries (OTCQX: GTBIF) in taking a different tack. The Chicago-based MSO is making external investments, such as its stake in Agrify’s Señorita brand. This allows the company to maintain a firewall between its state-licensed cannabis operations and federally complex hemp ventures.
Still, Kovler made it clear that GTI isn’t sitting on its hands when it comes to hemp opportunities: “We’re trying to optimize every dollar for shareholders, and we’re keeping maximum flexibility.”
What’s behind the strategy?
“In a fully legal business, it makes no sense not to do it on a Nasdaq-listed company that can show how great the growth is going to be in this country with THC. Why do it in a Canadian company where really no institutional investors have the ability to buy the stock?” Kovler said.
Still, both CEOs are salivating over the same prize: alcohol’s customer base. As booze sales continue their slow decline, particularly with younger drinkers, cannabis executives over the past year see an opportunity to convert the cocktail crowd.
Green Thumb noted that Señorita is now the “exclusive THC beverage available for purchase” at Chicago’s music venue The Salt Shed, which draws in more than 600,000 people annually. Rivers mentioned Trulieve’s targeting of “the alcohol consumer and working on that transition conversation away from alcohol and into a hemp-derived THC beverage.”
“We put a lot of work into formulation and to really ensuring that the brand, the ingredients, the experience, both on a product level and the customer experience is really top tier.” Rivers said.
While the real prize for both operators would be federal legalization, intoxicating hemp beverages offers a growth opportunity amid uncertainty in Washington, D.C. – another topic the two CEOs are divided over. Rivers kept her usual cautious optimism about the Trump administration addressing “inequities for state legal operators,” while Kovler appears to have abandoned all hope for federal salvation.
“We are not optimistic on changes from D.C.,” Kovler said bluntly. “Look at the appointees and look at Kennedy’s total 180. Instead, we’re going to play offense exactly where we can control in the massive growth markets where nobody else is.”
“We think the DEA is corrupt and misguided and out to lunch. It’s not a popular opinion – it’s controversial – but it guides how we allocate dollars … Being on an island away from our peers is welcomed over here, no problem.”
Trulieve is betting the farm on its new hemp drinks, while GTI keeps regulatorily risky hemp operations at arm’s length. Read More
