From micro-dose to macro-vision: the evolution of a THC drinks brand
On the evolution of Cantrip and the THC drinks industry
On the evolution of Cantrip and the THC drinks industry
Cantrip started in early 2020 as a simple concept that my co-founder and I discussed late one night after work. As I approach the end of my fifth year since I began the initial concepts of what would become Cantrip, I can’t help but reflect on how much has changed. When I initially pitched the concept to investors in 2020, the idea was simpler and in many ways, more naïve: the most effective way to bring new consumers into cannabis would be through micro-dosed beverages, low enough in dose to be approachable for anyone, and in a format that people recognized easily.
The pitch was effective, and both investors and dispensaries bought in. When Cantrip launched in June 2021 – less than 90 days after we closed our first round - it took less than 60 days for Cantrip to become the ninth best retailing beverage in dispensaries nationwide per BDSA data at the time. The number one was our Massachusetts compatriots Levia, a company that within less than a year of operating would be acquired by major Canadian MSO Ayr Wellness, followed by Cann which had successfully been operating in California for nearly two years at that point. The pool was small, and the dreams were big. But as we would find out a year later, no one was dreaming big enough.
I initially pitched the concept of running Cantrip through a variety of licensing and co-packing deals in what since has become known as an “asset-light” model. Our model was slightly different than normally done, as we owned some assets to maintain the most possible margin for our products and I wanted to rely on my own water-soluble tech, but the idea was to launch a line of 3mg seltzers in the Massachusetts market, own as much market share as possible, and then replicate that in multiple dispensary marketplaces to drive revenue as high as possible. Rinse, repeat, sell in 3 -5 years. The goal was to get to a $100M exit. Even the name Cantrip was a reference to its micro-dose nature, as a Cantrip is a simple spell or trick by Celtic definition, or in the popular game Dungeons & Dragons a level zero spell that anyone can cast.
The challenges were myriad, and many of the underlying assumptions were flawed. Take the assertion that the canna-curious would try beverages in dispensaries. This was only half true. The canna-curious are interested in beverages as an introductory format, but not enough so to go out of their way to a specialty retailer that required showing their ID multiple times and wasn’t anywhere close to their weekend visit to the grocery store. Dispensary sales languished at 1-2% of total store revenues, a figure still roughly accurate in most dispensary channel marketplaces. Massachusetts to this day struggles to break $15M in total hemp THC beverage sales through dispensaries and peaked in 2022. In addition, prices were difficult to drive down. Co-packing fees in marijuana facilities are by necessity 2-3X higher than in normal facilities due to the increased regulation, vault storage limitations, and very expensive transportation. The average 4 pack of 5mg beverages in 2022 was $33 after taxes, a whopping 3 times higher than what you typically find at the average liquor store for the same offering today. And the quality, being limited to very small canning lines with limited capabilities, was lacking and permitted few products outside simple seltzers.
Many of you know the next phase of this story – Minnesota codified hemp beverages into their state law in July 2022, the market grew at a reasonable pace, and by October 2023 Total Wine & More launched THC beverages, setting the stage for an explosive growth year in 2024 for those able to unlock the massive expansion of alch-bev distribution of hemp THC beverages. This completely upended our business model. By the end of 2022, we were finally seeing a path to profitability. We cut all dispensary manufacturing operations by the end of 2023, which had become a distraction and a drag on our books. We achieved profitability and massive growth in 2023, a feat we managed to repeat again in 2024.
The world was suddenly so much bigger, and our vision expanded. We saw early in the data that 3mg THC beverages in dispensaries did not work as well as 5mg THC beverages. We expanded to a set including sodas and seltzers of a variety of doses. We were able to sustain the expansion in SKUs through careful planning, small batches, and close cash management. We could see the future – this was no longer a fragmented market where we would carry individual inventories in each state, set up complicated and difficult manufacturing relationships, and be relegated to the novelty part of the dispensary menu. We could now own shelf space, command attention, participate in real merchandising and in-store demos. The future was limitless, and the new goal was clear: we will become one of the very first THC drinks macro brands.
A macro brand is Anheuser Busch InBev and Coors. It’s Coca Cola and Pepsi. It is Guinness and it is Jim Beam. The goal is not simply success and brand recognition – it is ubiquity, a product so commonplace that it becomes nearly a requirement for any store to carry as a baseline offering.
This is a lofty goal, and one that will take tremendous work and continual building and refining of our offerings and brand. This is one of the first times in the last half of a century to create something timeless and classic, as it is the first time in recent history that there has been not only a new category of CPG product but an entirely new mode of intoxicant available to the marketplace – one rooted in a well known and popular plant, but given new life as a beverage. A new type of drink that doesn’t come with multi-billion dollar competitors but instead a cohort of friendly competition and like-minded individuals working together to create a more welcoming world for products that we truly believe are an optimal and truly fun alternative to its alcoholic cousin.
My vision for Cantrip is to create a line of products that everyone can find a home within. To bring a whole new audience into the world of cannabis and the transformation it provides for so many. To make the name Cantrip synonymous with trusted, quality products that deliver the cannabinoids on the label and are clean and safe. To shepherd the world into a new era of mindful consumption that offers you a new choice on how to live your life, unconstrained by the past. I believe THC beverages are a part of a path to a better world, and that this marketplace can not only take a large percentage of the $260B alcohol marketplace but become a coequal participant in our culture.
Cantrip is no longer a simple vision of putting fun little micro-dose weed drinks. It is now an ever-evolving avatar for what I believe will be a billion dollar brand. It is a drink on a mission to change the way we think about what a beverage can do, to transform how we approach beverage and to help tell the stories that are always best told with a beverage in hand.
We have a long way to go before we rest, but at least the drinks feel good and taste great.