Risk & Business Magazine Benson Kearley IFG Fall 2019 | Page 31

CANNABIS-INFUSED BEVERAGES "IN ORDER TO BECOME A LEGAL MANUFACTURING COMPANY, YOU WILL NEED A COMPLETELY SEPARATE FACILITY FOR THE PROCESS OF INFUSION THAT WILL BE INSPECTED AND THEN APPROVED BY THE GOVERNMENT." Constellation Brands, producer of Corona beer, invested $5 billion for a 38 percent stake in Canadian cannabis giant Canopy, with plans to introduce a line of infused drinks and other products. Meanwhile, Molson Coors paired up with Quebec- licensed producer Hexo Corporation to launch Truss, a line of cannabis drinks. BC-based licensed producer Tilray partnered with Budweiser producer Anheuser-Busch InBev to research THC and CBD drinks in Canada, with each company investing $50 million in the venture. WHAT DOES THIS MEAN FOR THE SMALL- TO MEDIUM-SIZED BUSINESS IN CANADA? HOW CAN YOU MAKE AN EDUCATED DECISION ON THIS NEW MARKETPLACE? It is important to consider a few key questions before entering into this market: • • What is the legislation? • Should you let the “bigs” fight it out until you truly understand the market? Will the costs be too great for you to turn a profit? • What are the legal requirements to become a licensed cannabis beverage manufacturer? • Does your company’s values and mission statement align with what cannabis beverage manufacturing will offer? • What are the other risks that your company could face? WHAT ARE THE LEGISLATIONS? WHAT ARE THE COSTS? Some of the first drafts of key cannabis- infused beverage legislations require that these beverages contain “zero” alcohol. Manufacturers will not be able to call their products beer or wine and will be restricted to limited quantities of either CDB or THC dosages in edibles or beverages. They will also have to be bottled with a childproof lock, increasing packaging costs right out of the gate. Another very important note: in order to become a legal manufacturing company, you will need a completely separate facility for the process of infusion that will be inspected and then approved by the government. This could be a major cost for a small- to medium- sized business. CAN I OUTSOURCE PRODUCTION? This is a viable option for the small- to medium-sized business: have a larger company produce your products for you under contract. However, this market is already almost 100 percent at capacity for most large producers. To look into this now may be too late in the game. little different. Alcohol has over 100+ years of data, information, and history of what it does to people and how it impacts driving. Cannabis is a new and recently created product, and we do not have the same data. While there are limited insurance companies that will insure risks like these, some specialize in it. The number one concern is that most people will try these types of cannabis products and have no idea how it will affect their bodies. How long after they drink a cannabis-infused beverage can they drive and not be considered under the influence? How will someone who has never tried THC be impacted by one beverage? How will consumers be tested for this? There are a lot of unknowns in this new world. This article is meant to encourage readers to do their own research and understand the risks and costs to their business before entering into this new frontier of cannabis-infused beverages. + CORE VALUES AND MISSION STATEMENT Companies that have a strong customer base will have mixed feelings on the new cannabis-infused marketplace. As a business, you need to understand your customers and their willingness and support for this cannabis market. There is some potential to gain a larger piece of the pie; however, the same risk applies to losing the current market you have. You need to consider your company’s core values before making this decision. KNOWING THE RISKS The risks are similar to the risks facing alcohol-producing companies but a BY: JOSHUA KEARLEY PROGRAM SPECIALIST, BEVERAGE PROTECT POWERED BY BENSON KEARLEY IFG Joshua Kearley is a Program Specialist at Benson Kearley IFG. Contact him today at [email protected] 31