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'Deep Space' and 'Zorzal cacao': Canopy Growth reveals new pot drinks and edibles

Canopy Growth unveils cannabis 2.0 products (Canopy Growth)

Canopy Growth (WEED.TO)(CGC) has rolled out its first batch of cannabis drinks and chocolates, with products ranging from psychoactive ginger ale, to a CBD-infused cucumber and mint sparkling water, to “Bean & Bud” cacao medallions.

The company unveiled a list of 16 new products ahead of a tasting event at the once-abandoned Hershey’s chocolate factory in Smiths Falls, Ont. that was reborn as the pot producer’s headquarters.

More than 50 new products spanning the drink, edible and vape categories are set to be released in 2019-2020, the company said. Vape products are expected to be revealed in November.

Canada legalized the sale of so-called cannabis 2.0 products on Oct. 17, 2019. Licenced producers were required to give Health Canada 60 days’ notice for new products, meaning the earliest sales can begin is mid-December. Canopy Growth said availability will vary by province. Prices were not included in documents released ahead of Tuesday’s event.

The stakes are high for Canopy Growth and its peers when it comes to selling higher-margin products that could boost the appeal of cannabis to those who may not want to smoke dried flower. A study by Deloitte estimates the annual Canadian market for edibles and alternative cannabis products is worth $2.7 billion, with edibles accounting for $1.6 billion of that figure and drinks accounting for $529 million.

Cowen analyst Vivien Azer said she expects licenced producers to release a variety of products at first that mimic the look and feel of sports drinks, alcohol and pop.

“Until we see where consumer preferences settle out, I think there is room for all of the above,” she told Yahoo Finance Canada on Monday.

Canopy Growth unveiled concepts for six intoxicating drink products under its Tweed brand based on a proprietary blend of whole flower cannabis distilled into a clear liquid. Three of the products are 10 milligrams of THC per package, and intended to be combined with non-alcoholic mixers. There are also three “ready to drink” Tweed-branded formats; tonic water, soda water and ginger ale.

“We believe a standard serving of two to 2.5 milligrams of THC is ideal for consumers, allowing for more control for the user. Most of our beverages are available at this potency. This is unlike what we see in U.S. markets, where higher doses of 100 milligram are common,” the company wrote in its product descriptions.

Azer said lower-dose formats, as well as a predictable onset and offset of the high consumers feel, will help drive sales by allowing individuals to partake in more than one beverage, as one might in a bar setting.

Canopy Growth also introduced two intoxicating beverage products under its Houseplant brand backed by actor Seth Rogen, one lemon flavoured and one grapefruit flavoured, each with 2.5 milligrams of THC. Another another stronger 10 milligram drink in a sleek can has been dubbed “Deep Space.” The company is marketing a range of CBD only, and CBD plus THC drinks under the name Quatreau.

On the edibles side, Canopy Growth has partnered with Hummingbird Chocolate from nearby Almonte, Ont. The trio of 10 milligram of THC per bar products features chocolate from the former Hershey’s factory where Canopy Growth is based. One includes Zorzal cacao grown in a bird sanctuary in the central highlands of the Dominican Republic.

Azer said infused candy has actually proven more popular than chocolate in U.S. states where cannabis is legal, and pot beverages have only claimed a sliver of the cannabis market. She added that only time will tell if the same holds true in Canada.

Azer said Canopy Growth has a leg-up on its competition when it comes to launching drinks due to its significant head start with beverage partner Constellation Brands (STZ) to rivals like Tilray (TLRY) and Hexo (HEXO.TO)(HEXO), which have partnered with Anheuser-Busch InBev (BUD) and Molson Coors Canada, respectively.

“That’s probably their biggest competitive advantage,” she said. “It’s pretty meaningful.”

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