As alcohol consumption declines—especially among younger consumers—many craft breweries and cideries in New York are facing a sobering reality: traditional beverage sales are slowing and margins are tightening. But with this market shift comes a new and timely opportunity—hemp-derived THC beverages.
Riding the Consumer Trend Wave
According to IWSR (a beverage industry data provider), the no-alcohol beverage market is projected to grow by 7% annually through 2028. Meanwhile, Gallup data shows that only 62% of adults under 35 drink alcohol—down from 72% just twenty years ago. These trends suggest a generational shift away from alcohol and toward wellness-focused alternatives and functional beverages.
Breweries across the country are adapting by extending their product line to include THC-infused seltzers. The marketing differs from traditional marketing for alcohol manufacturers, promoting low-dose THC options with a wellness-oriented branding to appeal to health-conscious and sober-curious consumers. Branding can also be positioned to appeal to canna-curious consumers who are not likely to smoke or vape.
Why THC Beverages Make Business Sense
Hemp-derived THC beverages are not just a product innovation—they’re a strategic business decision. Here’s why:
- Speed to Market: Brewing beer takes 14 to 60 days. A THC-infused seltzer? Just six hours.
- Higher Margins: With lower-cost ingredients and shorter production cycles, THC drinks offer better profitability than traditional beer.
- New Demographics: These beverages attract consumers who don’t drink alcohol—expanding the customer base rather than cannibalizing it.
- New sales channels: In New York, a $300 hemp retailer license allows a business to sell hemp derived THC beverages. This can expand the wholesale consumer base beyond traditional alcohol retailers.
- Co-Packing Potential: Breweries can also serve as contract manufacturers for other brands, creating a new revenue stream without major investment.
- Regulatory friendly – While producing beverages with cannabis derived THC is laden with regulatory hurdles and excise taxes, there is little regulation for hemp derived THC beverages, reducing entry into the space costs and allowing for more profitable operations.
Regulatory Caution—but Also Opportunity
While hemp-derived THC beverages are federally legal (provided they contain less than 0.3% Delta-9 THC by dry weight), New York State’s regulatory environment is still developing. The New York Office of Cannabis Management (OCM) is expected to address cannabinoid-infused beverages as part of its evolving hemp cannabinoid regulations. However, as New Yorkers have experienced, the roll-out could be years away based on the agency’s work in the cannabis regulatory space. Manufacturers are capitalizing on current loopholes in regulation at the state level by concentrating the hemp derived THC to produce beverages with higher THC levels. This may eventually be regulated by some states, including New York, but the current lack of state regulations has created some immediate opportunities for producers, Notably, cannabis producers are also entering this space, producing both cannabis derived THC and hemp derived THC beverages to take advantage of the current regulatory environment.
Breweries and cideries should consult legal counsel to ensure:
- The THC source is compliant hemp, not marijuana;
- Labeling and testing follow state-specific guidelines;
- Retail and distribution models conform to both NYS and federal rules.
While regulation presents complexity, it also presents a barrier to entry—an opportunity for first-movers who take a compliant, strategic approach.
A Natural Evolution for Craft Beverage Makers
Craft breweries and cideries already have what it takes: expertise in flavor development, fermentation, canning/bottling, distribution, and branding. Transitioning into THC seltzers or sparkling hemp tonics is a natural extension.
For New York craft producers—many of whom are navigating rising costs, tight margins, and stagnant taproom traffic—THC beverages could be the diversification play that stabilizes and even grows revenues.
Final Pour: Strategic Considerations
Before launching a THC-infused product line, breweries and cideries should:
- Obtain the Necessary Licenses – Understand the current NYS rules for producing cannabinoid hemp products, changes that need to be made to your production facility and what’s permitted in the production process.
- Assess Licensing & Labeling Laws – Understand the current NYS rules for cannabinoid hemp products and what’s permitted.
- Consult Industry Advisors – Work with co-packers or formulation experts experienced in water-soluble THC emulsions.
- Test the Market – Start with small-batch production and in-house taproom sales (where allowed) to gauge consumer interest.
- Plan for Branding – Create a sub-brand to distinguish THC products from alcohol offerings while protecting your core brand identity.
- Engage Your Distributor Network – Distributors may be more receptive to carrying THC beverages than another beer SKU with limited demand.
Ready to Explore THC Beverages for Your Brewery or Cidery?
Contact Attorney Tracy Jong at Evans Fox LLP to explore legal, regulatory, and operational strategies for expanding your product line into the hemp-based beverage space. You can reach Tracy at Tjong@www.evansfox.com or follow @AttorneyTracyJong on LinkedIn and Instagram for updates.
Tracy Jong is a Senior attorney at Evans Fox LLP with 30 years of experience focusing her practice in business law, intellectual property and licensing for alcohol and cannabis. Tracy Jong is a member of the New York Bar and is a registered attorney at the United States Patent and Trademark Office. She can be reached at Tjong@EvansFox.com.
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The content has been prepared for informational purposes only; it should not be construed as legal advice, does not create or constitute an attorney-client relationship, and readers should not act upon it without seeking professional counsel.