Hemp innovators take on public perception, regulatory hurdles in rising THC-infused beverage sector

The market for hemp-infused beverages is blooming like a field of weed in springtime — or rather, like a field of hemp, which, if you live in the U.S., can now offer the same experience as recreational cannabis through a variety of intoxicating ready-to-drink (RTD) products.

If you hadn’t heard, the Agriculture Improvement Act of 2018, aka the 2018 Farm Bill, legalized hemp for use in foods and beverages. Specifically, the law defines federally legal hemp levels as no more than 0.3% dry-weight delta-9 tetrahydrocannabinol (THC). Yes, that THC — the same chemical that’s in marijuana, the stuff that gets consumers “high.”

While 0.3% doesn’t sound like a lot, it’s more than enough. Hemp contains far less THC than marijuana, but it is also grown and processed on a large scale, and modern techniques and technologies allow formulators to extract and purify THC-containing hemp byproducts until they’re as potent as anything you’d find at a dispensary.

As a result, the category for hemp-derived cannabinoid products is now worth nearly $30 billion and is already disrupting alcoholic beverages like craft beer, despite a confusing patchwork of state laws and federal regulations that often seems to contradict itself.

Disrupting alcohol

Ben Kennedy, co-founder and CEO of Fable Libations, believes all this equals an untapped market for a new kind of functional RTD beverage. With a brand vision informed by his personal life — he discovered that his wife, a wine drinker who disliked cannabis, was willing to try THC in beverage form — Kennedy saw the potential for canned drinks that could offer a social lubricant without the health risks of alcohol.

“There’s an audience out there that would be open to consuming cannabis if you remove the stigma of the smoke and the bongs and the smell,” he said. “If we could turn that into an accessible, approachable, familiar consumption vehicle, we thought that was disruptive … And our goal is to disrupt the alcohol industry.”

An intoxicating beverage without alcohol could disrupt the burgeoning non-alcoholic (NA) beverage category as well, but Kennedy called that “a bit of red herring.”

“In 2024, we have these cell phones that give us worries 24 hours a day — we’re all more anxious than ever, and we’re also more informed as to the harms of alcohol,” he explained. “So, you’ve got this perfect storm that [NA] is stepping into, but the human truth is we need something to take the edge off our day. Whether you’re a parent with kids, or running a business, or living on your own and being exposed to the ills of the world every day, when it comes to 7 o’clock, people need something to take the edge off, and that’s where Fable plays a role.”

Weeding out the haters

But there’s still that stigma to overcome. Even though cannabis consumption is thought to carry fewer health risks than drinking alcohol, a lack of long-term research on the topic hinders most claims about potential benefits. And weed’s public relations problem is no doubt exacerbated by public confusion about which products are legal and why.

“It’s all legal everywhere,” Lance Asher, founder of Green Elevator Cannabis, said. “The thing that makes it not legal is the requirement for registration, the requirement for some form of licensure that the state or the city has determined, and then labeling requirements … there’s plenty of folks who say they’re fine ending prohibition of the plant, but there’s also plenty of policy restricting how we sell and manufacture it.”

Asher even believes the loophole in the 2018 Farm Bill may not have been an accident — perhaps the U.S. government was testing the waters for wider distribution of THC-infused products. And a letter from the U.S. Drug Enforcement Administration (DEA) seems to support this interpretation.

DEA or DUH?

In a letter sent on May 14, Terrence Boos, Ph.D., chief of the Drug & Chemical Evaluation Section at DEA, reiterated that “naturally occurring tetrahydrocannabinols extracted from the cannabis plant that have a delta-9-tetrahydrocannabinol (delta-9-THC) concentration of not more than 0.3 percent on a dry weight basis meet the definition of ‘hemp’ and thus are not controlled under the CSA [Controlled Substances Act].”

While that sounds as if DEA is not particularly concerned about the 2018 Farm Bill’s $30-billion loophole, Rep. Mary Miller, R-Ill., proposed an amendment earlier this year that could close it regardless. Before becoming law, the amendment must be adopted by the full House of Representatives and the Senate, but if that happens, it could destroy this new category — and other hemp-based industries as well.

“A significant amount of capital has been invested in varieties, testing equipment, standards and implementation of policies and procedures in hemp operations,” Tucker Herndon, a partner at law firm Burr & Forman, said. “Additionally, the hemp and CBD industry is now a meaningful driver of state and local tax revenue. Any product ban, including ingestible products, could have a real economic impact … [it] could be a death blow to many hemp farming operations across the country.”

What does FDA say?

Herndon practices law in the spaces of alcoholic beverage and regulatory compliance in Tennessee and parts of the southeastern U.S., and he has a different perspective regarding the Food and Drug Administration’s (FDA’s) role in regulating these products.

“FDA was very, very quick to say that you cannot combine CBD or any type of cannabis-derived products into food and beverage,” Herndon said. “But it’s happening every day, all day. And the question is, who is enforcing that? And we have seen through recent announcements to the general public that some states are taking a hard line approach.”

If you’re looking to get into this new market, tread with caution, because a fraught and shifting regulatory landscape could make the category go up in smoke. But the innovative efforts of those brave enough to risk it may just redefine the way we unwind.