Budget-Friendly High-THC Beverages: The Untapped Niche Investors Can't Afford To Miss

While most cannabis beverages currently on the market offer lower THC content, typically in 5mg or 10mg doses, the demand for more potent options could carve out a lucrative segment. Brendan Mitchel-Chesebro, senior analyst at BDSA, noted that while beverages generally have a lower retail price compared to other edibles, there is room for growth in markets where consumers might seek stronger, yet affordable, drinkable cannabis options.

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Pricing And THC Levels: The Market Divide

Cannabis beverages have a notably lower average retail price compared to other edibles. According to Mitchel-Chesebro, in Q2 2024, the average retail price per package for beverages was approximately $7.70, significantly less than gummies, which averaged $13.05 per package.

This pricing difference could be partially explained by the THC content in these products. While most edibles are capped at 100mg THC per package, cannabis beverages often feature lower potency options, with 5mg and 10mg doses being particularly common. This lower THC content could contribute to the lower pricing seen in the beverage category.

On the other end of the spectrum, powdered drinks stand out as a premium option within the cannabis beverage market, with an average retail price of $17.30 per package. Mitchel-Chesebro identified this segment as particularly appealing to brands targeting high-margin consumers who are willing to pay more for specific use cases.

Consumer Preferences And Market Growth

Beverages, while an intriguing category, are consumed less frequently than other cannabis edibles like gummies. According to Mitchel-Chesebro, in North America, only 8% of ingestible cannabis consumers reported consuming carbonated drinks, the most popular beverage subcategory, in the past six months. Additionally, just 6% of consumers reported using cannabis coffee products within the same period.

This lower frequency of consumption is influenced by the nature of cannabis beverages, which are often associated with specific social occasions such as parties or gatherings. This social use pattern can lead to more seasonal consumption, with higher rates in spring and summer when social activities are more common.

Cannabis beverages also tend to appeal to a niche market segment. These consumers may not use cannabis as frequently but might choose beverages as an alternative to alcohol or for specific occasions where a drinkable form of cannabis is more convenient or socially acceptable.

Despite the lower overall consumption rates, the cannabis beverage category is gradually gaining traction, particularly in emerging markets where there is still significant room for growth.

Markets To Watch: Opportunities For Investors

Mitchel-Chesebro highlighted several markets where cannabis beverages are poised for growth. New Jersey, for example, presents a promising opportunity with its successful launch of adult-use sales and a relatively small number of beverage brands in the market. This limited competition could provide a foothold for new or expanding brands.

Similarly, Maryland shows potential despite its beverage sales having stagnated, largely due to limited brand availability. With edible sales doubling year-over-year, there’s a clear consumer base for ingestible cannabis products, suggesting that an increase in beverage variety could drive market growth.

In contrast, mature markets like California and Oregon exhibit high consolidation, with the top ten brands commanding up to 81% of beverage sales. However, Mitchel-Chesebro noted that in emerging markets, where the beverage space is less developed, there are more opportunities for smaller brands to establish themselves and capture market share.

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Photo: AI-generated image.