The legalization of cannabis across dozens of individual state markets within our country has given entrepreneurs reason to believe in the phrase “the sky is the limit.” As 2021 showed, innovation in cannabis continues to force businesses to get creative and bring pristine products to the market. At the intersection of science, cannabis and technology, innovators have found a niche entry point to the industry, one vertical being infused beverages.

This segment is a great normalization tool for the industry. As a society, we’re constantly in environments where beverages are in hand—whether that be a ballgame, family dinner, or company outing. And now there are more beverage options for consumers wanting to feel the buzz without an alcohol component.

When it comes to creating a product and launching into a still-developing market, it is important to make sure the product aligns with current consumer trends. As the hard seltzer market rapidly grew in recent years, the seltzer trend was one cannabis beverage companies hopped on when generating their own business models. Forecasting into the very near future, the seltzer industry anticipates new products emerging from like-minded competitors. Current industry participants will have to continue to utilize consumer data from market intelligence companies such as Headset and BDSA as they have become and will continue to be valuable assets to make informed business decisions in the coming years.

As any entrepreneur can attest, however, with popularity comes competition.

Now that the cannabis beverage space is known as a viable avenue for cannabis product development, more entrants will arrive. Therefore, standing out among competitors is going to become a primal factor when developing a new cannabis beverage brand. Companies are naïve to think consumers are going to initially purchase a new product they hear about, just for the product. Those days are long gone; today, branding needs to be visually appealing and aesthetically pleasing in order to yield more customer attention. However, while branding can help secure a customer’s initial purchase, the goal is to attract repeat customers. Albeit difficult, attracting recurring consumers comes from the integrity of the product. Specifically in the cannabis beverage sector, consumers are looking for a product that yields a desired effect. Meaning, when it comes to securing frequent buyers, what’s in the can is more important than what’s on the can. The more positive experience a canna-curious consumer has, the more likely they’ll come back for more.

Looking Forward

The cannabis industry as a whole is going to continue to grow, especially the cannabis beverage sector. Infused beverages provide new consumers a more approachable option for dipping their toes in the cannabis market in comparison to smoking, vaping, or eating an edible, because beverage consumption whether it be soda, alcohol, or water, are more commonly accepted in social settings, thus increasing demand for more innovative product creations.

As infused beverages gained popularity in 2021, according to data from BDSA, the new year will most likely be no different. I believe traditional consumer packaged good (CPG) brands are going to follow suit and try to enter the cannabis market as they continue to follow the trend of cannabis beverage development and acceptance. Not only will traditional CPG brands dabble in cannabis, but with the CBD industry being more easily accessible, I foresee large, recognizable brand names entering that space as well.

While I anticipate an increase in new entrants in the infused-beverage space, innovation among existing brands will only become much more prevalent, meaning companies have to keep up with potential new competition or risk losing market share. 

I do not think massive deregulation in 2022 is feasible or realistic, but I remain hopeful that the industry’s regulatory framework will continue to ease, and I do think progress is in the forefront—specifically with the continued push for a change in banking regulations that allows the industry to operate more like traditional CPGs. These changes will allow the industry to continue to mature and provide more accessible banking options for social equity participants, giving them their chance at the American Dream.

Matt Melander is president and CFO of LEVIA, a producer of cannabis seltzers and tinctures.