With the ever-changing environment of adult drinks and consumer products, Canada’s biggest cannabis maker, Tilray Brands, is forging a new and ambitious path. Confronted with regulatory challenges and marketplace changes in its historic sectors, the company is embarking on a major strategic thrust into the growing U.S. market for hemp-based beverages.
This shift isn’t occurring in a vacuum. With traditional alcohol sales beginning to slow and the road to United States national legalization of cannabis still uncertain, Tilray is positioning hemp-derived drinks as a convenient solution to evolving consumer tastes. The beverages are being positioned as a wellness product, intended to provide consumers with a relaxation experience without the impairing effects normally linked with more-THC cannabis or alcohol.
Market Opportunity and Legislative Basis
The market opportunity Tilray is targeting is huge and expanding quickly. Based on Brightfield Group figures, hemp-derived THC beverage sales in the U.S. hit $382 million in 2024. In the future, the research firm projects tremendous growth, projecting U.S. sales to rise to almost $750 million by 2029.
This market is possible largely due to a particular provision in the 2018 Farm Bill. This federal law enables the sale of hemp-derived products that have 0.3% THC or lower by dry weight, providing a legal channel through which these drinks can be sold across state borders in some states where these types of products are legal.
Tilray’s Strategic Execution and Expansion
Tilray has already taken big steps towards building its presence in this lucrative space. Tilray has increased its facilities in pivotal states such as Georgia and Florida, which are accepting markets for hemp-based products. They have rolled out hemp-based THC beverages in several markets in the nation, and based on the company’s most recent earnings call, these products are on the shelves at 1,000 locations nationwide.
Tilray’s primary strength in this new realm is the wide distribution network and knowledge it has cultivated by its aggressive expansion into the craft beverage space. By a series of strategic purchases from beer titans such as Molson Coors and Anheuser-Busch, Tilray has emerged as the fourth-largest craft brewer in the US.
This includes acquiring high-profile regional brands like Montauk Brewing, SweetWater, Breckenridge Brewery, Shock Top, and Blue Point under the Tilray umbrella. This is a deep bench in the beer and liquor industry that gives Tilray incredible infrastructure and relationships that not many traditional cannabis companies possess to reach consumers through traditional retail channels.
Retail Synergies and Product Innovation
- PLANT BASED: Smooth out the look of wrinkles and fine lines with our Lavender & Chamomile moisturising lotion. It rejuvenates younger-looking skin with bakuchiol, a plant-based alternative to retinol.
- SCENT: Get your Zen moment with Hempz Lavender & Chamomile, with fragrances of lavender flowers, chamomile & patchouli you’ll feel like you’re in a peaceful meadow.
- NATURAL INGREDIENTS: Revitalize skin with vitamin-and antioxidant-enriched citrus and goji extracts, skin can look brighter and fresher with a vitamin C boost.
- KEY AMINO ACIDS: Healthy skin conditioning is matched with essential fatty acids, which is why this daily body lotion includes natural proteins, vitamins, antioxidants and minerals that stimulate the skin-nourishing process.
- GLUTEN-FREE: So many skin products contain body-harmful chemicals in the long term, but this hemp extract lotion is not just gluten-free, it is also paraben-free and totally vegan which is good for the skin.
Jared Simon, president of Tilray Wellness, said the huge synergy this represents. He added that a lot of the hundreds of retailers Tilray currently has partnerships with in the liquor world, such as beer and liquor stores, are exhibiting an excellent receptiveness to expanding the presence of hemp beverages, viewing it as a “big synergy that we have as Tilray.”
Simon also highlighted how the company is leveraging its extensive experience in the Canadian cannabis market. He explained, “We’ve innovated time and time again with cannabis-driven THC in the Canadian market, and we’ve been able to take those learnings and apply them to hemp-derived THC here in the U.S.” This transfer of knowledge in product development and market strategy is a crucial element of Tilray’s approach.
Sam Garfinkel, senior vice president of commercial operations and strategy for Tilray Wellness, further elaborated on the advantages of their beverage infrastructure. He stated, “We’re fortunate to have a vast network of distributors, wholesalers, legal/regulatory experts, and food scientists.” This comprehensive internal capability, he noted, “helps us get to market with breakthrough brands like Happy Flower and Fizzy Jane.”
Product Strategy and Brand Positioning
Tilray’s hemp-derived drink product strategy is intended to appeal to diverse consumer tastes. Responsibly creating beverages with both 5mg and 10mg of hemp-derived THC, they currently offer mocktail, seltzer, and soda formats under the Happy Flower, Fizzy Jane, Herb & Bloom, and 420 Fizz brands, as well as intoxicating drinks retailed under Liquid Love and Happy Flower in several U.S. states.
The firm realizes that formulation and taste pose special challenges and possibilities. In contrast to alcoholic beverages, low-dose THC does not add naturally much to the flavor. Garfinkel views this as a creative opportunity and comments that “Herbal ingredients actually complement the subtle hemp flavor nicely.” He was enthusiastic about investigating this further, citing such plans as the Happy Flower Mojito for the summer.
Scaling consistency and safety is of utmost importance to any beverage business, particularly in a fast-changing market such as hemp-derived THC beverages. Tilray feels that its established infrastructure provides it with a strong advantage in this regard. Garfinkel pointed to their “robust quality, testing and regulatory infrastructure.” He continued, “While we’re agile enough to get products to market quickly, we still have all of the protocols and standards of a much larger company,” which ensures that consumers receive consistent products.
Financial Landscape and Forward Strategy
Tilray is also innovatively involved in shaping the future of the category. The company is collaborating with associations such as the Coalition for Adult Beverage Alternatives (CABA) to assist in developing necessary safety and quality protocols for the entire hemp-derived beverage industry, ensuring responsible development and consumer trust.
The company is embracing segmentation strategies that have been in use for a long time in the alcohol industry for its hemp-derived beverage pipeline. Garfinkel said they know various brands of consumers want different things. “Some consumers want a full-flavor cocktail-style drink, which we fulfill in our Happy Flower brand,” he said, while “others are calorie-conscious, which we fulfill through Fizzy Jane.” This focus aims at buying category incrementality as they fulfill different parts of the market.
Importantly, Tilray sees hemp-derived THC beverages not as a mere alcohol substitute, but as a brand-new entity. Sam Garfinkel described the vision as saying, “Our research suggests that THC Beverage is strongly incremental to beer, wine and spirits drinking.” He views it as an “exciting opportunity for Tilray to build an emerging category while continuing to innovate for our craft beer and spirits drinkers,” concluding, “We believe that THC Beverage will be a new pillar of adult beverage drinking over time.”
