Canopy Growth to sell CBD-infused sparkling water online in US

Dive Brief:

• Canopy Growth launched its CBD-infused Quatreau sparkling water brand in the United States, the company said in a statement. The beverage is available in four flavors and would be sold online in states that permit consumption of cannabidiol (CBD).
• The cannabis producer said Quatreau, which was launched in Canada in 2020, is now that country’s top-selling ready-to-drink CBD beverage. The company told CNBC it plans to bring Quatreau to store shelves in 2021, though it did not say when the debut would take place.
• CBD-infused foods and beverages have been slow to make inroads in the U.S., but those in the industry are optimistic Democrats in Congress and the Biden administration will pass reforms to decriminalize it and make other changes to speed up its adoption. 

Dive Insight:

Canopy’s rollout of Quatreau, while limited across the U.S., will give the cannabis maker a head start in anticipation of potential regulatory changes on the horizon. Some companies have been infusing coffee, cocktails and other products with CBD — one of the more than 100 chemicals found in cannabis — for years despite murky federal restrictions in place. 

So far, 36 states and Washington, D.C., have approved marijuana for medical use or cannabis programs, with 11 passing laws allowing the use of CBD with little to no THC, according to the National Conference of State Legislatures. The passage of the 2018 Farm Bill, which allowed hemp and its derivatives to no longer be classified as controlled substances, was a significant move for CBD, which can be sourced from this relative of the cannabis plant. However, it is still federally illegal to add cannabis and its derivatives to food and drink.

In an interview with CNBC, Canopy CEO David Klein told the business network his company would benefit from its relationship with Constellation Brands, which owns nearly 40% of his company, to manage the distribution to retailers.

“You’ll see us try to really tap into that more and more over time with our Quatreau CBD drinks, and ultimately our THC-branded drinks when we can get them into the U.S,” Klein said.

The U.S. market for CBD is very fragmented, so having a partner in Constellation, the marketer of Corona, Modelo and other alcohols, would give Canopy an experienced partner it can tap into immediately to roll out Quatreau and other legalized drinks nationwide. The partnership would give it a first-mover advantage over its competitors who would all be scrambling to woo and keep curious consumers. 

Canopy already has collected valuable consumer insight in Canada about how to distribute the product and what consumers are looking for could be useful during its introduction in the U.S. 

Quatreau is not the only CBD-infused sparking beverage with ties to a major beer company. Truss CBD USA, a joint venture majority owned by Molson Coors Beverage Company and operated with Canadian cannabis producer Hexo, announced the U.S. launch in January of Veryvell, a line of sparkling, nonalcoholic CBD drinks. The beverage line is available exclusively in Colorado.

Mike Gruber, vice president of regulatory and government affairs at the Consumer Brands Association, said he is optimistic progress could be made on CBD in the U.S. this year. 

“I think there’s a pivot point here for 2021 for all stakeholders to get behind legislation that provides FDA additional authority and additional funding to create a durable, national standard for CBD and other hemp derivatives that may be used in food, beverages, topicals and other products,” Gruber said. 

Large food and beverage companies have been eagerly awaiting changes in the regulatory environment, and soon Canopy and Constellation could find themselves competing with a number of other CBD-infused products on the market. 

Bolthouse Farms, a maker of smoothies and juices, planned to introduced CBD-infused products in 2020, but as of January was navigating legal requirements. In 2019, Unilever’s Ben & Jerry’s brand said it would create CBD-infused frozen treats once there are regulations in place from the FDA. And Mondelez International, the maker of Oreo cookies and Triscuit crackers, has said it could consider adding CBD as an ingredient in its snack lineup.