By: Brad Berkman*
Cannabis and cannabis derived products are a hot commodity and alcohol beverage producers, particularly brewers, see huge potential in the burgeoning sector. Dad and Dude’s Breweria in Colorado introduced a CBD infused brew called George Washington’s Secret Stash. Lagunitas Brewing Company, a subsidiary of Heineken, produced a limited release, terpene brewed beer called Supercritical.
Dad and Dude’s played it by the book. They submitted and were granted formula approval and received a Certificate of Label Approval from the Alcohol Tax and Trade Bureau (TTB) (the first approval ever of a non-THC infused cannabis beer). It didn’t take long, however, for TTB to kill the buzz.
Soon after granting formula and label approval to Dad and Dude’s TTB demanded that they surrender both approvals, a necessity for legal manufacture and sale. The brewery refused and is fighting back but the government clearly stated its position going forward. TTB issued an industry advisory stating that they “will not approve any formula or labels for alcoholic beverages that contain a controlled substance under federal law, including marijuana”. Citing the controlled Substance Act (CSA) 21 U.S.C. §802(16), marijuana is defined as all parts of the Cannabis sativa L. plant and its derivatives such as THC, CBD or terpenes. TTB went on to suggest that certain substances which are excluded from the CSA definition of marijuana referred to as hemp ingredients such as hemp seed oil, sterilized hemp seeds and mature hemp stalks may be approved ingredients and receive formula approval. There are trace amounts of cannabinoids in these exempted plant parts which makes extracting CBD impractical for use in but formula approval may be granted. In a nutshell regardless of state law, federal regulatory agencies will not permit the manufacture or sale of alcoholic beverages derived from marijuana with very limited exceptions.
Regardless of the federal government’s position, big business is taking a different tact. Recently, Constellation brands of Corona beer fame bought a 38% stake (a nearly $4 billion investment) in the Canadian medical marijuana company, Canopy Growth. Rumors abound that Coca Cola is seriously considering in investing in the CBD space and launching non-alcoholic marijuana infused drinks. Canada appears to be on the verge of legalizing the recreational use of marijuana making it an attractive market for drinks marketers and provides them with a launching pad if and when the U.S. market opens up. And our good friends at Lagunitas, they introduced a non-alcoholic sparkling water made with hops, THC and CBD. Who needs TTB (no formula or label approval needed for non-alcoholic drinks)?
As of this writing the statistics are staggering. In 2011 estimates show that legal sales of marijuana hit just over $1 billion. In 2017 sales were close to $9 billion. The numbers (along with consumers), will only get higher. It will be interesting to see who wins the fight in the alcoholic beverage sector – regulators or big business. Don’t forget, at one point in this nation’s history the manufacture, sale and service of alcohol was illegal. My how the tables have turned.
Greenspoon Marder is a national law firm that has both an alcohol beverage and cannabis law group. If you are considering introducing a cannabis infused beverage we can assist in navigating the regulations affecting these industries.
*Not an Attorney
* *The information in this article is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Greenspoon Marder LLP or the individual author(s), nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.