Experts see the legalization of cannabis as a “game-changer” for the wine industry, with value-added products such as teas, edibles and infusions that may appeal to some of the educated, affluent consumers that have been drawn to wine.
However, extensive government controls and complexities within the world of cannabis make it still unclear how the two will coexist in the marketplace, the experts acknowledge.
Not the least of these is the fact that marijuana is still illegal at the federal level – a status that industry leaders believe will be addressed by Congress within the next couple of years, notes Rebecca Stamey-White, a California attorney specializing in wine and cannabis regulatory issues.
Still, a new wave of entrepreneurs are targeting consumers with a variety of products, events and activities that are modeled on wine marketing, Stamey-White and other panelists told a ballroom audience on the opening day of the Unified Wine and Grape Symposium Jan. 29 in Sacramento.
“There are going to be instances when consumers substitute, and there will be instances when they are complementing wine with cannabis,” says Liz Stahura, president and co-founder of the Colorado-based market research firm BDS Analytics. “The companies that do best are the ones that find ways to coexist.”
Just five years after cannabis-legalization initiatives in Colorado and Washington state took effect, the long-clandestine crop’s production and marketing are now a “full-fledged, sophisticated and established industry,” Stahura says.
As with alcohol, cannabis products come in different strengths in terms of potential intoxication. But unlike alcohol, cannabis products have “so many different forms and functionalities with different intended benefits,” she says.
For instance, one ingredient in both hemp and marijuana oil is cannabidiol, or CBD, which is non-psychoactive and is believed to offer pain relief and other health benefits. Anheuser-Busch InBev and Coca-Cola recently announced investments in developing cannabis-infused non-alcoholic drinks, joining a host of entrepreneurs who have already entered the market.
One of those entrepreneurs is Cynthia Salarizadeh, whose Saka wine-like pink beverage infuses cannabis into unfermented Napa Valley wine grapes.
THE FUTURE IS DRINKS
“I believe this is the future of the industry – drinks,” she told wine industry professionals. “In 2019, this is when you’re going to see a confluence of your industry and our industry.”
Until recently, scientists hadn’t figured out how to make a virtually tasteless and odorless cannabis liquid, so the earliest drinks on the market had odd flavors, she says.
“It was terrible,” she says. “I preferred edibles because of the taste of the beverages.”
But now that the taste problem has apparently been resolved, the ability to strictly manage the dosing of cannabis’ various ingredients – including the psychoactive component tetrahydrocannabinol (THC) – will make it attractive to mainstream drink makers, Salarizadeh predicts. The drinks must be non-alcoholic, as it is illegal for manufacturers or sellers to mix alcohol and cannabis.
“Micro-dosing has allowed this to be a possibility with the wine industry,” she says. She believes components of hemp and marijuana will also begin showing up in such products as over-the-counter medications, beauty supplies and pet food.
But will the two beverage types – wine and cannabis-infused drinks – have much crossover appeal? Perhaps, asserts Stahura, the market researcher.
For one thing, market share is shifting, she says. When Colorado legalized pot beginning in 2014, the bulk flower made up 60 percent of purchases. But today only 40 percent of purchases are of the raw flower, with the majority of purchases consisting of edibles that are branded and packaged as any other product is, she says.
According to her firm’s research, 25 percent of respondents have used cannabis in some form in the last six months and another 38 percent have considered using it. Among cannabis users, 71 percent say they do it for recreation, 56 percent say they use it for health or medical reasons and about one-third say they use it for both.
Within this same group, 68 percent say they also drink alcohol, and about half of those believe it’s not appropriate to use the two at the same times of the day or week, Stahura says. Thirty percent say their alcohol consumption has decreased since they began consuming cannabis.
“That 30 percent – who are they?” she says. “They’re young adults who are cash-strapped. And the other group is the medically motivated group.”
People who are used to getting one-on-one attention in a winery may be more comfortable in a dispensary setting than other consumers, she adds. Like with wine, today’s average marijuana or hemp oil consumer is in his or her early 40s, works full-time and has disposable income, she says.
“We’ve gotten past that stereotypical stoner,” she says.
However, while the average wine drinker is focused on health and wellness, most wine consumers don’t connect these attributes to cannabis and are less likely to try cannabis than other consumer groups, she says.
Among the people who do use both, the pairing may result in a decrease in per-setting wine consumption, Stahura says.
“These people are more likely to think of cannabis mainly as a recreational benefit,” she says.
Aside from a potential mismatch of consumers, there’s no shortage of legal obstacles that await wineries that wish to get into the burgeoning cannabis industry. The most obvious one is that pot is still federally illegal, which makes financing and planning difficult.
“From a legal perspective, we’re starting at the beginning,” says Stamey-White, an attorney for Hinman and Carmichael LLP. She’s spent her career helping the wine industry follow its rules and started taking on cannabis clients a few years ago.
In California, would-be cannabis producers and retails must obtain both local and state permits, and some local governments have placed quotas on licenses, she says. Cannabis businesses also face high taxes as well as strict regulations on advertising, packaging and labeling, testing, tracking and on-sale consumption and events. For one thing, it’s illegal to sell or showcase wine and cannabis on the same premises, she says.
“Right now the regulators are focused on keeping everyone in their own lanes,” she says.
Regulations are changing or being clarified on nearly a daily basis, she says.
“California has just started down the legalization path,” Stamey-White says. “A lot of answers are not yet fully clear.”
IS IT WORTH IT?
Moreover, there’s still a question whether a cannabis boom will be big enough to force alcoholic beverage makers to adjust much. Even as the company has announced a $100 million joint venture with a Canadian cannabis producer, Anheuser-Busch InBev chief executive officer Carlos Brito recently told CNBC he has no evidence that marijuana is hurting beer sales, although the company’s North American beer volume was down by 3 percent in the first nine months of 2018.
Still, entrepreneur Salarizadeh believes the potential reward is worth taking the plunge.
“One of the reasons you don’t see a ton of infused beverages yet is the obstacles,” she acknowledges. “But just lawyer up and prepare.”