Firms race to quench thirst for pot beverages
Toronto’s Trait Biosciences claims to have edge in potentially lucrative cannabis-drink market
When the next phase of pot legalization arrives one year from now, Canadian cannabis users might celebrate by raising a toast rather than getting baked.
Edibles won’t be available on Canada’s recreational market until a year after the Oct. 17 legalization of dried and oils and until then, a race will be underway to corner the market for edibles, which Deloitte estimates will be consumed by 60 per cent of cannabis users.
But Toronto’s Trait Biosciences claims it has created technology that could give it an edge in the world of cannabis beverages, which a third of cannabis consumers say they are interested in using.
Cannabinoids such as CBD and THC, which are the medicinal and psychoactive compounds in cannabis, are fat-soluble and hydrophobic, meaning they can’t be dissolved in water and are absorbed much more slowly in the body than alcohol. When added to a drink, they eventually separate from the aqueous layer, like oil and vinegar dressing, so that dosing can be unpredictable.
Other companies claim they’ve found a way around this with water-soluble cannabinoids in powdered form. But according to Trait, its scientists — lead by crop researcher Dr. Richard Sayre — have developed a next-level proprietary process that “converts cannabinoids into water-soluble products grown in whole plants or sterile cell suspension cultures.”
Trait announced last month it had secured $12.3 million in private-placement seed financing.
At the same time, Sproutly’s Infusion Biosciences claims to have developed a technology it calls Infuz2O, which it markets as the “first truly water-soluble cannabis solution to be formulated into beverages/drinks.”
Which of these bioscience firms will succeed first is unclear, but last week Trait’s board of directors snagged one of the biggest names in international alcoholic beverage branding and marketing.
Peter McDonough helped build major brands for Procter & Gamble, Duracell and Braun before joining alcoholic-beverage firm Diageo, whose portfolio includes Smirnoff, Johnnie Walker and Guinness.
McDonough said he sees similarities between the evolution of recreational cannabis in Canada and the end of alcohol prohibition in the United States.
“It’s going to move from a product-focused conversation to one that is brand-led,” he said in a recent interview. “What people are going to be looking for is a safe and more predictable experience.”
With Trait, McDonough saw “amazing IP (intellectual property)” that boosts crop yields and concentration of cannabinoids within plants, while at the same time making them less reliant on pesticides. But what piqued his interest was Trait’s tech for water-soluble cannabinoids.
A big concern with cannabis drinks is that their delayed absorption into the body will cause people to overdose. Someone might take a sip and not immediately feel the effects, like they would with alcohol, and take another sip right away. Half an hour later, they are too high.
“If there’s one thing that I learned in the beverage-alcohol business, it’s you have to be responsible in how you put forward your brand proposition and you’ve got to establish a sense of trust, and you’ve got to have a predictable experience with your brand,” McDonough said. “Trait set the stage for that.”
McDonough said he also sees strong potential in hemp-derived CBD for sport drinks as well as medical applications, both of which Trait’s tech can provide, he said. Trait is evaluating whether to produce its own drinks, or partner or license its intellectual property to another firm. Meantime, McDonough said he doubts anyone in the alcoholic-beverage industry wants to “stand on the sidelines” as the market booms.
“Millennials, more and more, are looking at cannabis as on par with their choice in making a decision for an alcoholic beverage,” he said.
“We’re a generation away from there being no stigma with it. I think it’s really legacy-related.”