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In December 2021, Tilray made headlines when it bought Breckenridge Distillery, a Colorado-based distillery, in a major deal valued at $102.9 million with intentions to infuse whiskey with cannabis.
“Tilray’s strength lies in our ability to identify and significantly expand leading CPG lifestyle brands that resonate strongly with consumers. Breckenridge Distillery is an iconic addition to our platform in this regard, based on its portfolio of award-winning spirits, passionate customer engagement, and strong sales and distribution network,” said Irwin D. Simon, CEO and chairman of Tilray.
“We see tremendous potential for Breckenridge and our existing Sweetwater brand to complement each other, expand their respective reach and drive further profitable growth in our beverage alcohol segment,” he added in a press release.
“Generally, the Breckenridge Distillery transaction is consistent with Tilray’s strategy to leverage our growing portfolio of US CPG brands to launch THC-based product neighborhoods following federal legalization in the US. These significant, diversified revenue streams are key to achieving our ultimate goal of achieving industry leadership with $4 billion in revenue by the end of fiscal 2024.”
Breckenridge was founded in 2008 by Bryan Nolt; They currently have an impressive portfolio consisting not only of bourbon whiskeys but also spiced rum and vodka among others. Tilray explains that with the acquisition, they hoped to develop cannabis-infused but non-alcoholic spirits like bourbon. Additionally, they see great potential to expand Breckenridge’s lineage across the country, as 85% of their sales still come from Colorado. “We are excited to join Tilray and drive revenue growth as part of its global and leading CPG (consumable goods) and cannabis lifestyle platform,” said Nolt.
“The award-winning spirits that have fueled our success will undoubtedly benefit from access to Tilray’s global distribution network and opportunities to expand into cannabis and edibles in the United States.”
Big Alcohol sees green in cannabis
It’s no secret that the alcohol industry has had its eyes on cannabis for a long time. After all, if you live in a legal state, you’ve probably seen numerous types of infused beverages. Cannabis drinks are going to be the next big thing, and there’s no doubt about that.
It all started in 2017 when Constellation Brands pioneered a 10% investment in Canopy Growth, a Canadian cannabis company. Despite Constellation wanting to keep a larger stake in a company, they lost millions of dollars in the deal. That hasn’t stopped other alcohol companies from dipping their toes into the cannabis world: In 2018, Great North Distributors, a subsidiary of Southern Glazer’s, began distributing Aphria. Then, in early 2021, Truss, a CBD sparkling water brand, was launched by Molson Coors.
In the cannabis beverage market, beverages are divided into 2 categories: CBD and THC. They are attractive to both drinkers and cannabis users for many reasons, most notably the fact that they are excellent alternatives to alcohol, are low in calories and have more health benefits compared to pure alcohol.
Pairing cannabis with whiskey is just another brilliant addition; As any connoisseur can tell you, these two mix very well. However, government regulations mean that for any beverage, whether infused with THC or CBD, there are different ways to market it to different destinations. But since Colorado has social use licenses, meaning companies can sell marijuana to adults for local recreational use, they’ve become a great case study to check out. Social usage aside, there will be huge lucrative opportunities for the hospitality industry to offer them.
Another reason cannabis drinks are skyrocketing is that we now have better technology that makes it possible. Infusing your favorite alcohol with weed no longer means you have to experiment at home, but the development of nanotechnology and other technologies allows cannabinoids and terpenes in the plant to have better bioavailability for the consumer and make them more predictable. After all, edibles are known for having the slowest onset of all types of marijuana use, but now the alcohol and beverage industry is changing that.
However, the cannabis beverage industry still has a few obstacles to overcome, although many have paved the way. The hurdles are still legal, but so are the rest of the industry. Because products can be consumed for recreational purposes in some states, companies selling THC-infused beverages can eventually obtain the licenses needed to sell to dispensaries. However, the same cannot be said for hemp-derived CBD, as the FDA has been vague on this area. Currently, it is still illegal to use CBD in beverages as it is still considered unsafe by the FDA. And since it’s used in drugs like Epidiolex, it’s technically illegal to put drug ingredients in food and drink.
That hasn’t stopped brands from entering the market with CBD-infused beverages, and what’s more, the FDA has limited resources to prosecute all of these brands.
Nevertheless, it is clear that there is money to be made there. A report by MarketGlass states that the US cannabis beverage market is expected to reach $649.1 million by the end of 2021 and a whopping $2 billion by 2026. So we’re waiting to see how things play out with Tilray and hope the FDA makes it easier for CBD beverages to be more widely available.
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