Will cannabis put the party back in Boston Tea Party?
Boston Beer Company, the Massachusetts-based maker of Samuel Adams, is releasing a line of THC-infused iced tea. TeaPot, which contains 5 milligrams of THC, the ingredient in marijuana responsible for the drug’s euphoric high, will launch in Canada, where cannabis is federally legal, in July.
Paul Weaver, the head of Boston Beer Company’s cannabis division, says THC-infused beverages could help bring new consumers who otherwise wouldn’t smoke a joint, pop a pot gummy or hit a vape pen. “Cannabis beverages offer the most socially acceptable form of consumption for the industry,” says Weaver, who worked at Canadian cannabis company Canopy Growth and Molson Coors before joining Boston Beer last year. “You don’t have to sneak away—you can consume it unabashedly with your friends and family.”
Boston Beer Company is headquartered and publicly traded in the U.S., where marijuana is still illegal federally. The brewer is not growing or processing marijuana itself and it created a Canadian subsidiary to oversee its cannabis beverage line, which acts as a “legal firewall,” says Weaver. The company partnered with licensed cannabis companies in Canada to grow marijuana, extract THC, and manufacture and distribute the product. (Entourage Health Corporation will grow the cannabis and distribute the finished product while Peak Processing will infuse the tea and manufacture the beverage.)
“Make no mistake: we’re an American company, our business is built on success in the American market, so when we do have the opportunity to enter the U.S. market, be sure that we will.”
Despite not directly touching the plant, Boston Beer’s TeaPot marks a big moment: it is one of the first big alcohol companies to enter the industry with its own THC brand and product. Weaver says TeaPot will eventually be sold in the U.S., which is where the real “opportunity” lies. Weaver did not give a timeline, but he says the company might not wait for federal legalization.
“Make no mistake: we’re an American company, our business is built on success in the American market, so when we do have the opportunity to enter the U.S. market, be sure that we will,” says Weaver. “I think it’s becoming clear that America is not going to have the singular moment of legalization like you saw in Canada, it’s going to be piecemeal progress towards decriminalizing, normalizing and ultimately legalizing cannabis. We’re going to continue to monitor each of those moments of progress to find what is in our best interest in terms of how we enter the U.S. market.”
The cannabis industry sells more flower—good, old-fashioned pot—than any other product. Flower made up 61% of the $25 billion in legal cannabis sales in the U.S. last year, according to analytics firm Flowhub. But new form factors like edibles and beverages are fast-growing segments. In January 2020, drinks made up 0.9% of the total market but increased to 1.1% in January 2022, with the top 10 brands bringing in nearly $150 million in sales, according to Headset, the Seattle-based cannabis data firm. Total THC beverage sales will grow to $615 million in five years, a report by consumer data firm Brightfield Group predicts.
Boston Beer is not the only Big Alcohol company experimenting with dank drinks. Molson Coors Beverage Company formed two joint ventures with Canadian cannabis firm HEXO Corp to produce a CBD beverage in Colorado and a THC beverage in Ontario. Pete Marino, president of the emerging growth division for Molson Coors, said Molson Coors has “redefined” itself as a company and laid out a strategy to expand into “new spaces beyond the beer aisle.” Lagunitas, which was founded in 1993 as a craft California beer maker but is now a subsidiary of Heineken International, partnered with AbsoluteXtracts a few years ago to launch Hi-Fi Sessions, a zero-calorie THC seltzer. It also has worked the other way around: Canadian cannabis company Tilray acquired SweetWater, a U.S. beer maker based in Georgia.
Boston Beer was founded by billionaire Jim Koch. Koch, who controls the company with a 20% ownership stake, created Samuel Adams beer in 1984 when he used his great-great grandfather’s 1870s recipe to brew in his kitchen. Koch has since been known as a founding father of the American craft brewery movement. He took the company public in 1995, ten years after selling the first crates of Sam Adams, and is currently worth $1.5 billion, according to Forbes. Boston Beer Company might be best-known for its flagship beer Samuel Adams, but it has a portfolio of brands including Truly Hard Seltzer, the company’s best-selling brand, along with Twisted Tea, Angry Orchard Hard Cider and Dogfish Head Brewery.
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Pot might also be the future for alcohol companies searching for the newest consumer craze as drinking habits change. Beer, which made up 25% of Boston beer Company’s sales in 2018, is expected to drop below 10% by 2025. Truly was responsible for about 40% of 2020 revenues, according to Goldman Sachs analysts but demand is softening. Boston Beer Company reported during its 2021 fourth-quarter earnings call that hard seltzer growth decelerated to 13% in 2021, down from 158% in 2020. But Weaver says cannabis is not a hedge—it’s another alternative to alcohol.
“I think this is just an extension of our beverage-making sensibilities and exploring new frontiers,” Weaver says.