At Lua in Des Moines, patrons consume Climbing Kites hemp drinks. Iowa last year enacted a law limiting the amount of THC in drink servings and cans. Photo / KC McGinnis, The Washington Post
American states are rushing to ban or restrict sales of intoxicating cannabis drinks that have exploded in popularity in a market lacking many of the regulations imposed on marijuana.
The drinks get their psychoactive properties from hemp, marijuana’s less potent and less regulated cousin.
They can be sold outside dispensaries – in some states, to minors – and are increasingly drawing a variety of consumers including sober-curious drinkers and craft beer enthusiasts, industry experts say.
The boom has sparked a wave of lawsuits and legislation, as officials try to rein in a rapidly growing industry that is drawing interest from business groups such as brewers or alcohol distributors who want a piece of the nascent market.
More than 80 bills regulating hemp beverages were introduced in state legislatures this year, according to government relations firm MultiState.
Lawmakers in Alabama, Georgia, and Texas – one of the country’s largest hemp markets – have recently tried to ban intoxicating hemp drinks. Congress is considering a similar measure.
“We’ve got to get the genie back in the bottle,” said Texas state Senator Charles Perry, a Republican, at a hearing in March.
Cannabis can be classified as hemp if its concentration of THC – the psychoactive compound that helps produce feelings of relaxation and euphoria – remains at 0.3% or less by dry weight. Anything with a higher THC concentration is considered marijuana.
Hemp was legalised by the United States federal Government in 2018. Hemp drinks were left mostly unregulated by states until recently.
But the THC in hemp can be chemically altered or used in large quantities that make it as intoxicating as higher-potency marijuana, industry experts said.
“It’s really about the milligrams of THC that are allowed,” cannabis business lawyer Rob Kight said. “There are hemp-derived beverages with 50 and 100 milligrams of THC that will get you very high but are legally classified as hemp.”
The hemp beverage industry has grown rapidly since 2018, as retailers have become more comfortable with demand for the products and their legal liability.
The market is estimated to be worth more than US$1 billion (1.66b) this year, up from near US$239 million in 2023, according to Euromonitor International.
Retail sales could reach $30b over the next decade, said Ian Dominguez with Delta Emerald, a private equity fund that invests in the industry.
“We expect hemp-derived, low-dose THC drinks to outsell craft beer nationwide by 2035,” he said.
Insurance firm Frontier Risk this northern spring began offering insurance to live-event venues and arenas to cover serving hemp drinks, seeing it as a gap unfilled by traditional general liability and liquor liability policies, said co-founder Peter Berg. The company has received inquiries every day since the programme launched, Berg said.
For live-event spaces with proper safety measures, “we actually felt – as compared to alcohol – this is an inherently less risky category”, Berg said.
Some traditional cannabis and alcohol companies, as well as the Wine and Spirits Wholesalers of America, have come on board, lending lobbying heft and a level of legitimacy to the new industry. Many want hemp to abide by the same rules that constrain the highly regulated alcohol and cannabis markets.
The current patchwork of hemp laws “do not meet the same standards” that the beer industry follows, the chief executive of the Beer Institute, Brian Crawford, has said.
Industry boosters say hemp beverages have struck a sweet spot, appealing to consumers who wouldn’t normally venture into dispensaries – and appearing on store shelves and in bars as some look for alcohol alternatives.
Sales of alcoholic beverages have declined as consumers prioritise health, while cannabis use has expanded to new demographics: 7% of adults aged 65 or older used cannabis in the last month in 2023, compared with less than 1% in 2005, according to a recent study published in JAMA Internal Medicine.
North Carolina beverage distributor R.H. Barringer first looked into hemp drinks in 2023 and quickly saw potential in a beverage that combined the social lubricant of alcohol with the lighter caloric and lower sugar content of sparkling water, executive Rick Craig said.
“We have been fighting the calorie and carb wars in beer for a long time,” said Craig, whose company distributes 116 hemp drink brands to 880 retailers.
Drink makers and retailers say hemp beverage customers are often people aged between 30 and 50 who are trying to cut back on drinking.
“We use the terms Chardonnay Mom or Beer Dad” to describe the core customer base, said Mike Colich, who co-founded North Canna Co., which makes calorie-free carbonated hemp drinks.
But the drinks are selling in markets that include university towns and retirement enclaves, where older adults might be taking medication that interacts with alcohol, some said.
Des Moines resident Gary Goudelock, 46, said he likes that the hemp drinks have fewer “downside physical effects like dehydration”. But he primarily drinks on social occasions and wouldn’t buy a four-pack of the beverages at the grocery store, he said.
“What I’m going to have is much more dependent on where I’m at and what they have available,” he said.
The beverages have wider appeal than other cannabis products because they’re seen as less intimidating and can be easily substituted for alcohol in social settings, some experts said.
Hemp drinks outsell vapes and gummies at Adam Sinks’ two liquor stores in the Nashville area.
The drinks – which they started selling in 2023 – now rival craft beer sales at both locations and fill the shelves behind seven of the stores’ 36 cooler doors for soft drinks and beer, Sinks said.
“It’s a game-changer,” said Christopher Lackner, president of the Hemp Beverage Alliance, a trade group.
“Instead of having to step outside [to vape] or have a gummy or whatever – you can enjoy a low-dose hemp beverage with your friend who’s having a glass of chardonnay.”
Sceptics say the products can be dangerously intoxicating or contaminated.
Those critics argue that hemp drinks were inadvertently legalised in the 2018 law – which mostly dealt with farming and agricultural issues – and have since proliferated alongside vapes and gummies that appeal to children with colourful packaging and fruity flavours.
Austin area resident April Ramos said she was startled recently when she looked closely at the drink her 13-year-old son picked out at the grocery store.
He chose it for the pomegranate flavour, Ramos recalled, but it also contained CBD, a non-intoxicating compound in cannabis.
“I was expecting it to be with the beer and the wine in that section of the store, not with the regular sparkling water,” said Ramos, who opted not to buy the drink for him.
Poison centres have responded to more than 1520 THC cases in the last year, more than half concerning children and teenagers, according to data from association group America’s Poison Centres.
Marijuana is classified as a controlled substance by the Drug Enforcement Administration. It cannot be moved across state lines, and it is generally subject to excise taxes, licensing requirements and safety standards in the two dozen states that allow sales.
By contrast, the 2018 law allowed intoxicating hemp drinks to be manufactured in one place and shipped across the country, to be sold in service stations and hotel mini-marts or dropped off by food delivery apps.
“What we’re talking about is the same thing,” Kight said. “Same product. Same effect. Two different regulatory regimes.”
Some states have begun to crack down.
Populous states such as California and New York have banned or partially banned sales. Most states now have some restrictions, such as requiring that hemp drinks go through third-party testing, have THC limits or be sold only to consumers 21 and older.
Many hemp drink makers are calling for nationwide standards, hoping to curtail bad actors they say are giving the industry a bad name and to manage the barrage of new and sometimes conflicting state laws that have left them constantly pulling products from store shelves in recent months.
Iowa in 2024 limited how much THC can be in a serving to 4mg per 12-ounce can – a change that made some of Scott Selix’s Climbing Kites hemp beverages illegal overnight.
That forced the company to recall many of its products that were already on retail shelves, costing it an estimated US$1 million in lost sales and employee time, he said.
“We were looking at potential felonies for all of our owners,” Selix said.
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