Canopy Growth (NYSE:CGC) released some excellent news on Oct. 29. If Canopy has anything to do with it, Christmas in Canada is going to be a whole lot more cheerful this year as cannabis-infused beverages and edibles make their way onto the menus of holiday house parties across the country.
I was having coffee recently with a friend of mine who works in the financial services industry. He’s a fun guy, but still quite conservative by Canadian standards. He was telling me about how he was at a house party held by a wealthy acquaintance, and there on the dining room table were the options of beer, wine and pre-rolled joints.
My friend couldn’t believe it. Well, I sure could.
And so could the big boys at Constellation Brands (NYSE:STZ) whose plan all along was to turn pot into a fourth revenue stream of so-called vice.
However, while it’s nice to offer pre-rolled joints at a party, the Canadian winters tend to get pretty cold. I’m not sure how many people are going to step outside to smoke a joint, especially when they can imbibe a cannabis-infused drink or eat chocolate edibles while staying warm and toasty inside.
That’s why Canopy is rolling out the perfect Yuletide treats Dec. 16.
A Holiday Surprise
At the Oct. 29 media event, reporters sampled the drinks that will go on sale shortly. As the Ottawa Citizen reported, “the samples were THC- and CBD-free but contained placebo substitutes meant to simulate the taste of the cannabis components.”
Canopy is being careful to keep the dosage relatively low so that consumers who’ve never tried cannabis can sample the products without having a bad experience.
“This is meant to be a social product,” CGC President Rade Kovacevic said. “To us, the mass market disruptive opportunity is to mimic beverage alcohol. That’s the home run.”
I couldn’t agree more.
Come the holidays, I’m confident responsible hosts will provide them in limited quantities along with glasses of wine and beer.
As I’ve said in the past, people my age (55 years old) are going to be far more interested in trying cannabis-infused drinks and edibles than they are smoking the dried flower. Many of my peers haven’t smoked anything since they were in college.
Interestingly, it only takes 14 employees at Canopy’s 150,000 square-foot facilities to operate the beverage machines. That’s less than 1% of the company’s total workforce.
Can you say “margins?” I knew you could.
The Bottom Line on CGC
At the same time Canopy introduced its cannabis-infused drinks to the media, it also took the wraps off its new line of chocolate edibles. Those chocolates come through a partnership with Hummingbird Chocolate, an Ottawa-area chocolate maker.
I’m partial to gummy bears and other candy. But I’d be more interested in trying a chocolate bar with 10 milligrams of THC. It takes an hour to feel the effects of this THC-infused chocolate, and as long as 10 hours for the effects to dissipate. On the other hand, the effects of smoking a joint are said to last as long as three hours.
Research suggests that 80% of cannabis novices, defined as those who’ve never been high, are interested in trying cannabis beverages.
Canopy Growth is wise to keep the dosage low until it has more empirical data that supports moving the THC levels above 10 milligrams. It’s the responsible thing to do.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
