It’s been more than a year since cannabis became legal in Canada, but the first concentrates and edibles have yet to hit the market. As the launch of non-flower products ticks ever closer, companies like BevCanna are rushing to develop brands, prepare their facilities and establish critical industry partnerships.
In September, BevCanna announced two agreements that will be cornerstones of the company’s cannabis-infused beverage portfolio. The first is a supply agreement for cannabis extract from Nextleaf Solutions; the second, a partnership with Clearwater CannaGrow to produce sun-grown cannabis at the company’s farm in the Okanagan Valley.
Emma Andrews, the chief commercial officer of BevCanna, spoke with Marijuana Venture about why the British Columbia-based public company is well-positioned to excel in the cannabis-infused beverages category.
Marijuana Venture: What makes BevCanna an exciting company in Canada’s emerging and developing cannabis industry?
Emma Andrews: The main strength that sets apart the venture are the team’s existing expertise in bottling and creating beverage brands. We’ve worked on everything from alcohol brands to pharmaceuticals and natural health products, so there’s a really strong acumen behind the team and really helps to build a nascent category — we’re creating this from the ground up — so it gives you a lot of confidence in what we’re up to.
And then the other piece of our position is making use of existing world-class infrastructure and assets. We have a fantastic bottling facility near Osoyoos, British Columbia. It’s a 40,000-square-foot facility with a spring water aquifer, and we’ve recently announced plans for outdoor cultivation on the site, so it’s an absolutely stunning property with a lot of infrastructure to take advantage of for this cannabis-infused beverage category.
MV: How important is that facility in terms of being able to quickly ramp up production?
EA: It’s huge. Health Canada recently announced that for anyone to apply for their standard processing license, let alone be approved, their facilities have to be fully built out. That’s a huge barrier to entry for new companies wanting to get into the beverage and bottling vertical. Our bottling plant has been in use for more than 16 years.
But even if you had the capital and were building it from the ground up, there are a lot of components and intricacies in terms of actually producing these beverages, so it takes skills and experienced operators to do this efficiently. The equipment also has to get retrofitted for cannabis, because of the different dosing technology, child-proof lids and other compliance requirements.
MV: In terms of branding, do you approach the cannabis brand differently than how you would approach another consumer product?
EA: There’s a lot of regulations, obviously, and compliance to work through. Having the experience of working in natural health products helps us to understand the nuances in compliance, in terms of documentation control, in terms of product positioning, in terms of transparency that’s required for the consumer.
And similar to working on alcohol portfolios, cannabis beverages are an intoxicant, so that helps you understand how the consumer experiences those types of products and working with similar distribution channels. There’s a lot of familiar pieces that help us inform our approach to cannabis, but there’s a whole extra filter of this being a substance that is going to reach a new consumer segment. I really believe the cannabis-infused beverage targets a new consumer who isn’t necessarily a high-tolerance consumer. This is a new consumer who’s going to enter these derivative categories because it’s far more approachable.
MV: A lot of people have mixed opinions about the potential for the cannabis beverage market. In Washington, Colorado and other legal states in the U.S., beverages make up a small fraction of the market, but there are a lot of companies that expect big things from beverages. What do you see with the potential of the beverage market?
EA: There are a lot of differences between Canada and what we see currently in the U.S., which are the more mature markets that we can look to for either inspiration or a bit of context. In the U.S., it’s a state-by-state manufacturing infrastructure that has to be established to produce those products. It really affects the growth of brands in the U.S., where in Canada, when you can take advantage of nationwide distribution, we’ll see more refined brands and more refined product portfolios.
I spoke with some different brands at the Cannabis Beverage Expo this summer in San Francisco, and the brands were saying that retailers are commonly asking for 100-milligram (THC) beverages because the legacy consumer has a higher tolerance. In Canada, we have a 10-milligram potency limit, so you just won’t be targeting that same consumer. It will be built for new consumers, so the impetus is on the brands to make sure they’re building market awareness to drive that new consumer in store.
MV: How does that change the process of creating those brands?
EA: It changes our approach to marketing the product. One thing we’ve really been thinking about with our house brands is occasion-based consumption, so the fact that you may want to drink multiple in a day or an occasion, that really speaks to social consumption, to relaxing and unwinding, or simply not getting over-intoxicated. We commonly hear that consumers are worried about the outcome of their experience, because they might have had a bad experience with edibles in the past, so it affects your marketing and how you bring that brand to life.
MV: Where is Canada at in terms of allowing infused beverages or edibles to be sold?
EA: October 17 was not only the anniversary of legalization, but also what the industry is calling Legalization 2.0, so all the infused products and extracts became legal in Canada. That’s the date that all the regulations went into effect, but as of that date and only that date, can licensed entities submit their products to Health Canada for approval, and that’s about a two-month approval process.
Health Canada has said it will be at least December 17 before you start to see the first products on the market.
MV: When do you expect to have BevCanna beverages on the market?
EA: Early 2020, for sure.
MV: Can you talk a little more about BevCanna’s Anarchist Mountain and Grüv brands? What went into those two products?
EA: We did a multinational consumer research study in January of this year, and that surveyed New York, California and Canada, with over 2,000 respondents taking an online survey. We asked them tons of questions about the beverage category. All of this informed the two brands, as well as a few others we’re going to be announcing.
Anarchist Mountain is a celebration of B.C. cannabis, as well as the specific bottling operation we have, which is actually on Anarchist Mountain, so it’s a very authentic name. It’s all flavor profiles inspired by the Pacific Northwest that speak more to the craft beer or craft cocktail connoisseur. Anarchist Mountain will be infused with bud grown in B.C. with water from a spring water aquifer on site. So it’s a very authentic, THC brand based on its regional identity.
Grüv is an iced tea brand. Four different types of tea: green tea, herbal, black tea and Rooibos. This brand is easy drinking, a lower potency of five milligrams THC and five milligrams CBD. Very approachable, very easy drinking.
MV: What do the agreements with Nextleaf and Clearwater CannGrow do for BevCanna?
EA: We’re big believers in owning your niche, focusing on what you do best. For us, that’s beverages, bottling and branding. So we want to make sure we have strong partnerships to deliver the rest of the equation, everything from producing the biomass to processing that biomass into a water-soluble format to infuse our drinks.
Our first partnership was the exclusive supply agreement with Nextleaf. They have a patent on their process for refinement and purification, so they’ll process biomass into an odorless, tasteless distillate, a really premium base ingredient for us to use in our infusions, which lets the flavors shine without using a lot of additives or flavor-masking to cover up a crude extract or an inferior extraction process.
On September 17, we announced the definitive agreement with Clearwater. Joey Bedard-Brunet is the master grower who will be on BevCanna’s outdoor cultivation license, so the intention is to be growing cannabis onsite next summer. Joey has an extremely strong reputation not only in organic cultivation — he’s done multiple hemp operations in the past — but he’s also been a legacy farmer in the Okanagan Valley, which is where our 130-acre site is located. The Okanagan Valley has tons of wineries, so whether it’s fruit, vineyards or cannabis the soil, terroir and climate are optimal for growing. We’re really excited about the ability to produce low-cost biomass, really high-quality, sun-grown organic cannabis.
MV: Does BevCanna have thoughts of creating a product for the U.S. market?
EA: We are actively exploring the U.S. opportunity. We definitely can’t export now, but maybe that will change in the future, potentially when the U.S. Food and Drug Administration regulates the hemp-based CBD category. For now we’re looking at a parallel strategy that complements what we’re doing in Canada, but those products would be manufactured out of dedicated facilities in the U.S.
We’ve been looking avidly at California, and specifically we have completed the research and development phase of a water-soluble powder with a partner in California in order to help broaden our beverage portfolio. This would allow us to commercialize drink mixes in the U.S. without needing a bottling plant. So we’re definitely keeping a keen eye on it.
This interview has been edited for length and clarity.