6. Beverages are currently a small segment…
Beverages are currently one of the smallest segments of the US cannabis category mix,
with flower and vape pens leading the way.
US category sales by year (2018) 1
$186 $287 $409$182
$422
$227
$616
$987
$1,289
$1,838
$213
$803
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
2014 2015 2016 2017 2018
Value($B)
Beverage Capsules Concentrates Edible Flower Pre-Roll Tincture & Sublingual Topical Vapor Pens
Source: Headset
7. …representing only 5.5% of the edibles market…
40.2%
19.9%
13.9%
10.3%
7.5%
5.5%
2.7%
Edibles Sub-Category Share in Medical
Candy
Chocolates
Tinctures
Pills
Infused Foods
Beverages
Other Edibles
50.3%
20.6%
9.3%
7.4%
5.7%
5.4%
1.2%
Edibles Sub-Category Share in Adult-Use
Candy
Chocolates
Tinctures
Pills
Infused Foods
Beverages
Other Edibles
Beverages only represent ~5.5% of both the medical and adult-use (recreational) markets today,
with candy, chocolates and tinctures representing ~75%-80% of the market.
Source: Headset
8. …beverages are one of the smallest penetration segments…
Category
Post-
Millennials
Millennials Generation X
Baby
Boomers
Silent
Generation
Beverages 7% 7% 5% 4% 4%
Capsules 2% 3% 5% 5% 7%
Concentrates 30% 22% 17% 14% 10%
Edible 34% 35% 38% 38% 42%
Flower 70% 69% 68% 67% 50%
Pre-Roll 47% 46% 38% 31% 24%
Tincture &
Sublingual
4% 6% 10% 14% 24%
Topical 3% 5% 7% 10% 18%
Vapor Pens 40% 41% 41% 36% 30%
Percentage of consumers that purchased at least one product in the category in 2018
Source: Headset. 2018. Legalized: Understanding the US Cannabis market (CA, CO, NV, WA).
9. …but then why are all these beverage giants stepping in?
Constellation Brands and
Canopy Growth
Corporation
Molson Coors Canada
and HEXO
Moosehead Breweries
Limited and Sproutly Inc.
Terms
Molson Coors will have a 57.5%
controlling interest in the JV, with
HEXO holding the remaining 42.5%
Goals
The JV will operate under Truss,
with plans to develop a wide range
of products from water, hot
beverages and a “beer-like
product”
Terms
Moosehead Breweries Limited
and Sproutly are engaged in a
50/50 joint venture
Goals
Develop, produce, and market
non‐alcoholic cannabis-infused
beverages in Canada using
Sproutly’s proprietary, naturally
produced water soluble
cannabinoids known as ‘Infuz2O’
Terms
Constellation Brands announced a
$4B investment in Canopy Growth
Corp for a 38% stake in the company
Goals
Constellation is expected to develop a
drinkable cannabis beverage utilizing
the existing Canopy Growth
infrastructure
Source: Bloomberg, Cision, Newswire
Lagunitas and
Cannacraft
Terms
Heineken owned Lagunitas and
Cannacraft are engaged in a joint
venture
Goals
Enter the THC infused beverage
space with a brand called Hi-Fi
Hops, to be distributed in
California dispensaries
11. We know cannabis is big business – 2.5x larger in 4 years (2020)
$3B $4B $5B
$7B
$5B
$7B
$8B
$10B $11B
$0.4B $1B
$2B
$3B
$8B
$11B
$15B
$18B
$21B
$-
$5B
$10B
$15B
$20B
$25B
$30B
$35B
2014 2015 2016 2017 2018 2019 2020 2021 2022
Worldwide Legal Cannabis Spending (In Billions)
Medical Adult-Use
Source: Arcview Research
$32B
$28B
$23B
$18B
$13B
$10B
$7B
$5B
$3.5B
12. Growth will come from new legalized markets
$9.5B
+$5.4B
+$15.1B
+$2.1B =$32B
Existing 2017 Programs Growth in Existing Approved for Launch '18-'22 Projected for Approval '18-'22 2022
Components of Legal Global Spending Growth
Biggest drivers =
California, NY,
Canada and
Europe
Source: Arcview Research
13. Evolution of the Cannabis Industry
Wave 1 Wave 2 Wave 3 Wave 4 Wave 5
Cultivation
(Present)
Ancillary
(Present – 2 yrs)
Consumer Packaged
Goods (CPG)
(Present – 10 yrs)
Big Pharma
(5-10 yrs)
Mass Market
(10-15 yrs)
Market
Growth
Time
Current StateCannabis will evolve in five distinct steps.
Source: Canopy Rivers Research
14. Heat Check – Private Company Raises, by wave
$505M $1,674M
$5,547M
$10,540M
2016A 2017A 2018A 2019E
Wave 1: Cultivation & Retail
$123M
$228M
$426M
$794M
2016A 2017A 2018A 2019E
Wave 2: Ancillary
$51M $142M
$394M
$1,096M
2016A 2017A 2018A 2019E
Wave 3: Brands & CPG
$51M $142M
$394M
$1,096M
2016A 2017A 2018A 2019E
Wave 4: Pharma
CAGR = 114%
CAGR = 115% CAGR = 42%
CAGR = 60%
Avg. Series A Raise = $20 - 40M
Avg. Series A Raise = $5-10M
Avg. Series A Raise = $5-15M
Avg. Series A Raise = $30 - 50M
Source: Arcview, Canopy Rivers Research
15. 300+ startups in North America tackling beverages
Juices Cola
Tea/Coffee
Water Sports
Alcohol
Source: Headset, Canopy Rivers Research
Combined Sales
US$5.5M
Market Share
85.9%
Combined Sales
US$10.2M
Market Share
70.1%
Combined Sales
US$3.6M
Market Share
85.8%
Combined Sales
US$13.1M
Market Share
88.3%
CALIFORNIA WASHINGTON
NEVADA COLORADO
Top 5 beverage brands represent…
16. Understanding the Cannabis Beverage Consumer
$17.9
$8.5
$7.9
$4.0
$1.5
$0.7
$0.6
Breakdown of Beverages ($M)
Carbonated
Iced Tea, Lemonde, and
Fruit
Drops, Mixes, Elixirs, and
Syrups
Tea, Coffee and Hot Cocoa
Water
Sports and Energy
Mocktails
Carbonated drinks are the leader in the beverage
category, with juices sitting closely behind, followed by
drops, mixes, elixirs and syrups
21%
18%
29%
15%
4%
22%
16%
11%
Estimated Beverage Use
Beverages are skewed towards
a younger demographic looking
for an alternative to smoking.
Source: Cowen, Headset
18. Beverages target the future consumer
One fifth of Canadians are cannabis consumers, largely driven by rec reasons. Another fifth are
Intenders, many of whom are lapsed consumers who have tried cannabis in the past
Cannabis is a new subject, with a
heavy stigma attached to it.
Currently, over 80% of the population
intends to try or rejects cannabis.
Marketing is focusing on talking
openly about the subject to increase
product penetration.
Source: Canopy Rivers Research
19. Dispensaries v. Brands
Currently, in the US, beverages are being priced based on the amount of THC or CBD in the
bottle. Without regs, the end consumer is being forced to buy a high dosed product.
Source: Canopy Rivers Research
100mg250mg
$25 $10
Cost of
Cannabis
= $0.30
Other COGS
= $4.40
Gross
Margin
= $20.30
Cost of
Cannabis
= $0.20
Other COGS
= $4.40
Gross
Margin
= $5.40
“My best selling product is the
100mg bottle, but I can’t make
money off of them. The retailer
wants to price it based on the
amount of cannabis in the bottle
– cannabis is only one of many
ingredients.”
– Unnamed Brand
“My consumers aren’t coming in
here for a Coke. They’re coming
in to receive a medicated drink.
How much THC or CBD is in the
product is directly correlated
with price.”
– Unnamed Retailer
20. Cannabis is only and ingredient
Source: Canopy Rivers Research
CANNABIS CULTIVATION HIGH MARGIN CONSUMER PRODUCTS
Disruptive consumer product backed by medical data to create functional brands
AAAA
AAA
AA
A
Low
quality
Hemp
(no THC)
Extraction,
Purification
Processing,
Manufacturing
Oil and
Chemical
Intermediate
21. Insights from VC Data
Cannabis beverages are still in its infancy – while there are a number of active users, the
data shows that to unlock the mass market of intenders and rejectors through the
following:
Regulators need to focus on micro-dosing – create and sell products that have low doses of THC; Microdosing
will increase volumes and bolster the product category.
Get that “Big Mac” effect by developing brands that people can trust – many rejectors and intenders had
pulled away from cannabis, due to the inherent lack of product stability and bioavailability (i.e. tried a
homemade infused brownie).
Education – large advertising dollars are being spent on educating the end-consumer on the merits of
cannabis use, for relaxation, stress-relief, pain relief and anxiety management.
Improve product quality – Beverage companies have been criticized for problems with product quality, due to
the stringent regulations around cultivation, and the lack of preservation of cannabis through the packaging.
Health and safety are important – like food products, consumers are increasingly interested in what they are
consuming; regulations help develop product safety measures that incentivize quality and safety. The industry
needs FDA support and ruling to create long-lasting quality brands.