Why Hemp-Derived THC Drinks Are Riding High
Since marijuana’s cannabis cousin was federally legalized in 2018, hemp has outpaced the legal weed market in America.
Now canned cocktails and other THC-infused beverages are going mainstream—especially in states where pot is still illegal.
In 1939, six years after Prohibition was repealed, Manuel Eskind received the third license to distribute alcohol in Tennessee. Today, the Eskind family’s Best Brands Incorporated sells an estimated $200 million worth of wine, liquor and beer across the Volunteer State. Now Jason Eskind, Manuel’s great-grandson, believes he has found a new growth area for Best Brands—THC-infused hemp drinks.
“The business is really good—it’s growing exponentially,” says Eskind, who recently set up a separate beverage distribution company with his cousin Ryan Moses that focuses on hemp-derived THC-infused beverages. Hemp drinks that pack a big enough punch to get people stoned have already become a $1-million-plus division for Best Brands. “It’s booming—we’re adding customers every day.”
Marijuana is currently illegal in Tennessee, but its cannabis cousin, hemp, is legal at the federal level and the state regulates and taxes psychoactive hemp-derived products. In 2018, Congress enacted the Agriculture Improvement Act, better known as the Farm Bill, which legalized hemp. Marijuana and hemp are different strains of the same plant—cannabis sativa L., but hemp, by legal definition, only contains 0.3% THC on a dry weight basis, while marijuana is defined as cannabis that contains more than that threshold.
In a letter written by the Drug Enforcement Administration in 2021, the agency declared that hemp-derived cannabinoids—including delta-9-THC, the compound also found in marijuana responsible for getting people high—were legal substances, while marijuana is still illegal and is classified as a Schedule 1 drug, in the same category as heroin. In an opinion from the 9th Circuit Court of Appeals in 2022, judges ruled that cannabinoids derived from hemp are legal under the 2018 Farm Bill, even if the substances have some psychoactive properties.
A total of 24 states have legalized recreational cannabis use so far, and the federal government is considering re-scheduling pot, but Eskind does not see the need any more reform. “The Farm Bill basically legalized weed in this country,” he says.
While Eskind’s legal analysis is particularly rosy, the legalization of hemp has created an industry that rivals many state-legal marijuana programs. Legal pot sales hit $26 billion last year, but hemp products reached $28 billion in sales, according to cannabis-focused data company Whitney Economics.
Rod Kight, a lawyer who specializes in advising hemp-derived product manufacturers, agrees with Eskind that pot prohibition, as long as the THC comes from hemp , is over. “It’s not fully grasped what is happening,” says Kight. “The federal government legalized cannabis in 2018, but it came through the backdoor. It’s a backdoor to legalization.”
While marijuana cannot legally cross state lines, hemp products can. While some states have banned hemp-derived THC products—and the Food and Drug Administration has issued cease-and-desist letters to companies for marketing CBD and other non-psychoactive cannabinoids as cures for diseases—many states have chosen to regulate them.
The result is the creation of a quasi-free market where products can be made in Indiana or Kentucky—states where marijuana is illegal—and shipped all over the country. And with dozens of startup beverage companies making hemp-derived cannabis concoctions, and alcohol distributors and liquor stores comfortable enough to sell it, Americans who live in states where weed is still illegal, or don’t live close enough to a legal dispensary, can walk into a liquor store and buy a hemp drink and get their buzz on.
In March 2023, Stephen DuBose, a former terminal manager for the oil and gas company Kinder Morgan, along with two friends, John Berdux and Liam Becker, launched Levity, a hemp-infused, non-alcoholic spirits company. Based in Charleston, South Carolina, Levity makes three different THC-infused beverages—Mellow Mash, their take on whiskey with notes of caramel, oak and smoke, Agave High Water, which has a similar taste profile to tequila, and London High, a gin-inspired drink. Packaged in 750 ml bottles, each cannabis drink contains 50 mg of THC and 50 mg of CBG, another cannabinoid, and sells for around $40.
Levity, which sells its products to alcohol distributors, bars, restaurants and liquor stores across eight states, is expanding to Rhode Island and Massachusetts this month. DuBose says the company will generate $1.5 million by the end of the year, but revenue will jump to more than $10 million in 2024 due to demand and Levity’s expanding footprint. “We are growing a little too fast,” DuBose humblebrags. “I feel like we captured lightning in a bottle.” Levity will also start selling canned cocktails in December—one of the fastest-growing spirits categories—which have cheeky cocktail-related names like the Canngarita, the Chronic Collins and the Kentokey Mule.
Louis Police, the founder of Hi Seltzer, based in Louisville, Kentucky, ships cans of delta-8-THC—what’s known as “THC lite” because of its less potent psychoactive properties—to 3,000 locations across 23 states. Since launching sales in 2021, Hi Seltzer now generates $1.5 million in revenue a month and expects to hit $20 million by the end of 2023. “The demand has been nearly insatiable,” says Police, explaining how his company started selling 10,000 cans a month shortly after launch and now sells more than half a million.
Not only startups and mom-and-pop distributors are getting in on the hemp action. In November, Total Wine and More, the liquor store chain with 260 locations across the U.S., began selling THC-infused drinks at a few shops in Minnesota.
Beverages only make up about 2% of total cannabis sales in legal dispensaries, according to cannabis data analytics firm Headset. After all, most consumers go to dispensaries to buy flower to roll a joint, or to buy a vaporizer or to purchase edibles. But as alcohol retailers and grocers start carrying hemp-derived THC products, dispensaries could become an afterthought for THC drinks.
Adam Terry, the cofounder of Massachusetts-based THC beverage company Cantrip, which is being sold in Total Wine’s Minnesota locations, says the mega-retailer carrying pot seltzer is the first domino to fall. But he disagrees with Kight that hemp-derived THC products are coming in through the backdoor.
“At this point, it’s the front door,” says Terry. “People are now coming across THC in their day-to-day lives. You go out to get a pack of White Claws, you might see it right there.”
