Welcome to the Community Call Podcast.
I am Melissa Travers, Director of Community here at BevNET & NOSH, here with my co-hosts Jackie Brugliera and Lukas Southard.
If you're enjoying the show, please follow and review us on Apple Podcasts or your listening platform of choice.
Jackie, great to see you again.
Lukas, first time on the Community Call Podcast.
Bantur, thank you so much for joining us.
Yeah, and I've never recorded with Jackie, so this is fun.
I know.
This isn't your first rodeo, though.
You are on another podcast.
It's a little bit more newsy.
We try to keep it more on the business side, whereas this just seems like we're just having a good time talking about CPG stuff, talking about drinks.
But the podcast you are on is called CPG Week, so check it out on nosh.com.
Really digestible format, 15 minutes or so.
I love it so much.
Yeah, we try to cover the latest stories of the week, and in a snackable format, I think was what my editor, managing editor of NOSH, Monica Watros, coined.
The snackable format, which I think is great.
That's what we do.
Love it.
Well, maybe you can let your hair down a little bit, Lucas, or maybe you could let your beard down.
Is that a thing?
I have it up right now a little bit.
It gets all over the place.
By the end of the episode, it'll be everywhere.
Well, so great to have you here.
I wanted to start off by welcoming Maxine Henderson, founder of Bolly Good.
Bolly Good is one of our favorite beverage brands.
It's an Indian-inspired beverage line with phenomenal packaging, really bright, beautiful.
They've got delicious flavors as well.
There's lemon pomegranate cardamom, lemon mango turmeric, lemon ginger mint, lime, basil, cumin.
I mean, tell me you wouldn't want to be sipping on one of those on a hot day, which it actually kind of is today in Boston, which is miraculous.
And it is here too.
But it always is.
Yeah, you're in San Diego.
Don't rub it in.
I mean, I was born and raised in a, well, I was born in New York, but I was raised in the Bay Area in California.
So I miss the always 60, 70 degree weather where a cold drink is year round.
Whereas here, it's like you get into cold drink weather and you get like sparkling lemonade weather.
And I'm like, yeah, give me a Bollywood.
Who wouldn't miss that?
I mean, moving from that coast to this coast seems like, I would say a big mistake, but I've lived here all my life, so I can say that.
Jackie, you guys were just talking about Bollywood on TasteRadio, weren't you?
Yeah, yeah, we were trying it out, testing it out, talking about the packaging.
The packaging is beautiful.
I think it really plays on like the Bollywood vibe with bright colors, big lettering.
The ingredients are really the hero on the packaging, too.
There's like these sunbursts, and then there's like the ingredients front and center, and then they have some elephants, because, you know, why not?
And elephants are important in Indian culture.
It's absolutely beautiful.
We were talking about their rebrand right after Expo East, I think it was, and they really knocked it out of the park.
Well, welcome, Maxine.
And may I also say that Maxine is just one of the loveliest people you could ever hope to meet.
So we just, we love it all.
Welcome, Maxine, and for anybody else who's not already part of our Slack community, slack.bevnet.com.
You should definitely join us there, and we'll give you a shout out on the Community Call podcast.
Well, if we're talking about beverages on hot days, I feel like we should definitely talk about some of our favorite THC beverages grabbed from the infamous Danger Fridge.
We've all got a beverage or two in front of us.
Lukas, what did you pull from the Danger Fridge today?
Well, we both grabbed a Magic Cactus, which is unsurprising.
So this is their New Flavor Spiced Peach, which I actually opened.
I haven't tried yet, but I love this brand.
I'm obviously a big fan of the THC beverages.
I just wrote about them for a feature, and I think it's a really interesting category that's growing alongside the non-alch space.
And what I like what Magic Cactus does is it's right in my wheelhouse of like a two milligram, which is great, because it feels like I drink one of these, and it's like I had one beer.
I don't feel too loopy, and the flavors are great.
So I'm excited to try Spiced Peach, and if I don't mind, help myself right now.
Don't mind if you do.
I love Magic.
I also grabbed a Magic Cactus.
I grabbed the Lavender Raspberry.
Magic Cactus, of course, participated in our new beverage showdown.
I noticed that they also have THCV Diet Weed, Weederal.
I don't know about either of those, but I hope it works.
I think that sounds fantastic.
I think that's with any Cannabinoid now.
Right now, I have Creekwater Botanicals, and on the front has CBDV and CBD, and then this one has CBG and CBD.
I mean, it's just gibberish to me, but...
The cannabinoid call-outs are becoming a really important thing.
The problem is, on a can, it's hard to explain what the different letters at the end of CBD or THC are relating to.
I feel like they're messing with us on some level.
It's too many letters, just too many letters.
But if it really is diet weed or weeder all, then sign me up.
And talking about all these cannabinoids, it's kind of in the weeds and I think consumers, even myself, who I consider myself an avid consumer, I know what THC does, I know what CBD and CBG does.
But I think it's going to be even more important for, especially beverages, to talk about the function.
I know with gummies, you can have social gummies, you can have sleep gummies.
It's really clear.
And when you try them, it does give you that effect.
And I think with this product, they're trying to do that here, uplift and relax.
And I think that might be the next level in using these as ingredients rather than being so technical.
Do you guys notice a difference in how THC products are branded?
Do you notice a difference between the uplift and the energize and the calm, for example?
Personally, I don't.
I notice when the dosage is higher.
Yeah.
I think the only time I really notice is when I'm at extremes.
So I do like the excite gummies, and that makes me more social and uplifted.
And then when I do the sleep ones, I fall asleep.
So it's kind of like Indica versus Sativa.
Those are the main strains people know, and those have very different effects.
So I think at that level, I notice the difference.
But if you're going from social to excite to talkative, I don't know the difference between those ones.
Yeah, I appreciate the effort though.
I grabbed a Flyers cocktail from the Danger Fridge.
I grabbed the sparkling margarita.
They also have an old fashioned and a spritz.
So I really like that they take a traditional cocktail and turn it into a THC beverage.
Really delicious stuff.
You know, I was poking around on their blog and they posted a study published in the Journal of Agriculture and Food Chemistry that found feeding hemp plants to cows can result in a significant increase in the production of hemp-derived THC in their milk.
They fed them for three weeks.
And that just sort of elicits all kinds of ideas about like what the cow, like were the cows listening to the Grateful Dead?
Were they, I don't know, what were they like doing in the hippie games?
Just hanging out in the fields and you know.
I mean, don't like magic mushrooms grow in cow poop?
So they're tripping all over the place.
They were smoking weed and taking mushrooms.
Cows, the original stoners.
They're pretty chill beings.
It's hard to get a rise out of a cow.
I think that might be the quote of the episode.
It is hard to get a rise out of a cow.
Well, anyways, they sound like happy cows to me.
Today's Community Call focuses on the cannabis industry.
Lukas, there was some news just lately from the Justice Department about the DEA moving towards a marijuana reclassification.
And this came out right after we taped the Community Call episode.
So I wanted to hear a little bit from you what that news was.
Reports are that the Justice Department is going to reschedule marijuana from a Schedule 1 drug to a Schedule 3 drug.
And Schedule 1 drug, for a little background, basically says there's no medicinal use, there's no health benefits to this ingredient or this product.
It's in line with heroin or ecstasy or LSD.
Whereas a Schedule 3 drug is in the same category as anabolic steroids and ketamine or even Tylenol with codeine.
So most importantly for the marijuana industry or the cannabis industry, reclassifying from Schedule 1 to Schedule 3 opens up the possibility from a business perspective for writing off taxes, which has been a big sticking point for a lot of marijuana companies and cannabis industry stakeholders in that they can't write off things like their rent or labor expenses on payroll or other things that a normal business would be able to write off on their taxes.
And they already operate in a pretty capital-intensive industry where, you know, state by state, it's heavily taxed.
So if this does go through, and keep in mind it has not gone through yet, and it will probably take months if not years to go through the bureaucratic system, but if it does get rescheduled to Schedule 3, it will kind of release some of the handcuffs off of cannabis industry stakeholders and some of the marijuana brands.
Yeah, I think that will just remove some barriers to entry and we'll just see a new flood of entrants and startups and people doing some really cool things, which always just pushes the industry forward.
And in some of the information that you sent me, Lukas, I saw that that would also open up testing on human subjects, and there's such a lack of data on what cannabis does to you.
I think that would certainly be really interesting and helpful.
So thank you so much for that update.
In this episode of Community Call, we discuss the influence of hemp-derived delta-9 on the cannabis landscape within edibles and beverages.
We will chat with Kristi Palmer, co-founder and president of Kiva Brands, a leading producer of premium cannabis-infused edibles, and Lukas Southard, senior reporter at BevNET, as they explore the evolution of the cannabis industry due to hemp D9 and speculate on what might happen next.
This is a companion piece to Lukas' article on bevnet.com, so please head over there for more information.
Please enjoy.
Today on Community Call, we are discussing the impact of hemp-derived delta-9 THC and how it's changing the landscape of cannabis in edibles and beverages.
Our guests today are Kristi Palmer, co-founder and president of Kiva Brands, producer of premium cannabis-infused edibles, and Lukas Southard, senior reporter at BevNET.
This podcast is a companion piece to an article Lukas wrote for NOSH and BevNET, so please make sure to head over to bevnet.com for more content on this topic.
Kristi and Lukas, thank you both so much for joining us today on the Community Call podcast.
I would like to set the stage with some information on this topic as a whole.
It's such a confusing topic, and, you know, we've sort of been coming up against the intricacies of the regulatory aspect and legality and the, you know, the product itself.
So let's start off by just kind of diving into what is hemp-derived delta-9?
We see it burgeoning in popularity, but what is it?
Lukas, could you take this first?
Yeah, of course.
It is incredibly confusing.
And although I went into reporting on this category feeling like I knew what was going on, I learned that there was a lot to still learn.
So we're seeing a lot of hemp-derived delta-9, whether it's in beverage or in edibles, in the last year and a half or so.
What really delta-9 is is THC.
So the full name would be delta-9-THC, and it's the intoxicating cannabinoid that you get from the cannabis plant, either from the hemp cannabis plant or the marijuana cannabis plant.
Both of them have delta-9-THC.
In marijuana, there's a lot more of it, and that's why that plant is traditionally where you would get most THC, whether it's in a flower or used for edibles and beverage.
In the hemp plant, there is a lot less of it, but it is still there.
And as innovation in technology has gotten better at extracting it, especially since hemp became legal as part of the 2018 Farm Bill, there's been more preponderance of brands in food and beverage that are starting to use delta-9 derived from hemp.
So it's almost kind of like a nomenclature kind of situation where the hemp industry has appropriated delta-9 as like a reference point for both consumers as well as those of us in the industry, that when it says delta-9 or D9 on packages and in the marketing material, it's a reference to that this is a THC product that is intoxicating.
Yeah, great, great point, Lukas, well said.
It's kind of a tough point to explain.
And one thing I'd love to kind of build off of that you mentioned is typically in marijuana or cannabis, the THC content, the delta-9 THC content is higher, and in hemp, it's lower.
A cannabis plant that is in the hemp industry has been bred to have a certain threshold of THC, which is very, very, very little.
Cannabis plant in the quote-unquote marijuana industry, which I think is generally called the cannabis industry now, is bred to have higher concentrations of THC, and that is the, you know, again, THC, psychoactive effects, that's what gets you high, right?
I put that in quotes.
That's what gets you high is the THC content.
And so, yeah, you've seen that the plant is essentially the same, just the way that it has been bred and the characteristics that it has been bred for are different depending on which side of the industry it's on.
Lukas, you mentioned the foreign bill, and as we just discussed, really, it is the same thing.
What is the loophole that makes hemp-derived D9 legal?
Well, it's interesting, because it's almost like it's legal, but it's not legal.
So federally speaking, marijuana is still characterized as a Schedule I substance under the Controlled Substance Act.
So federally, marijuana and I guess by default, THC, is illegal on a national scale.
But what the Farm Bill of 2018 did was it legalized the industrial hemp industry, so industrial grown hemp.
So that hemp plant that Kristi was just talking about that has less THC per volume in the plant that has been bred over generations to be used in any number of ways.
The fibers are used to make clothes and rope and food products, hemp seeds, all these things that we use hemp for, but it has a very low amount of THC.
The 2018 Farm Bill basically said that this is now legal to grow industrial hemp, and as long as the concentration is no more than 0.3% of THC, you can use it to make food and beverage, which is the kind of backdoor loophole that was created for the cannabis industry to start making hemp D9 or hemp-derived THC products.
So as long as that their hemp plants that they're using to make the Delta 9 starts with 0.3% of THC per volume, it can be synthesized into psychoactive Delta 9 THC that is then used in these food and beverage that we're seeing.
There has been more regulation that I'm sure we'll talk about later that's come out state by state as states have had to kind of adjust to this new normal that started in 2018.
But in the last, I would say probably two years, we've seen big growth in the Delta 9 category in terms of a lot of brands either pivoting into this, expanding their portfolios into the Delta 9 category or just new brands starting out because there's so much opportunity there to reach consumers that might not live in states that have medicinal marijuana or adult use recreational cannabis legislation.
Yeah, and I think it's important to highlight that 0.3%.
Initially, when the Farm Bill came out, 0.3% THC.
Like if you go to a shop in California, you're not buying any flower that's under probably like 15% THC all the way up to like 30% THC.
So when you're talking about 0.3, it's like, well, that doesn't sound like anything worth smoking.
And so what you're seeing is you're not seeing flower brands come out in the hemp world.
You're seeing edibles because and particularly beverages or items that are heavy because the heavier they are, the more THC content they can have for that 0.3%.
And 0.3%, we're talking about an edible, is a decent amount of THC that you can have in there.
So yeah, that's why you're seeing edibles rather than flower emerge.
How long have we seen D9 in the marketplace?
Lukas, you said that it's been about two years.
Is this, is that because being able to extract the D9 was sort of a recent discovery in the last two years?
How did this, how did it start?
I wouldn't say that it's a recent discovery.
There's definitely been some innovation in extraction methods.
So a lot of what I've heard recently from a variety of sources is, especially when it comes to beverage, is the use of nanoemulsion technology, which is, I am no scientist, but from my understanding, nanoemulsion is a way that is pulling the THC out, but it's also working really well in beverages because it allows for more fast acting effects for users.
So instead of the old days, at least when I was growing up, and having an edible was usually like baking a brownie with butter you made at home, and you would sometimes have to wait an hour or an hour and a half to even feel anything, and then those effects would last for hours on end.
This new nano-emulsion technology allows for that THC, or the Delta 9 in this case, to enter the system quicker, and so you feel the effects quicker, and those effects only lasting for about an hour to an hour and a half.
And Lukas, you mentioned extraction methods and innovation around extraction.
Also, I would mention supply.
If you're going to extract THC, if you're in the cannabis market, then you can easily do that.
There's a lot of THC if you've got a 20% flower, right?
THC 20% on the flower.
You're going to get a great yield, and a lot of THC pulled off of that flower.
If you have 0.3%, then you have to use a whole lot more flower to get the same amount of THC extracted from the plant.
And so I think with the industrial hemp movement, people are growing on a massive, massive scale.
And a lot of people are doing it.
And so it has driven the cost down of hemp material.
And so you're able to put a ton of hemp material into the extraction process and just pull out that 0.3%, and have it still make economic sense when you turn that into a product.
So that kind of feels like the unlock and sort of the difference between what was going on in, say, 2018 or 19 when the industry, the hemp side was just getting off the ground versus four years later.
Now you've kind of got some natural market dynamics going on where there's a lot of supply, therefore allowing you to do extraction on a larger scale like that.
And so, yeah, so that's what, and the technology around extraction, if you're using, if you have a hemp farm with a large quantity, you're able to scale up the equipment in a way that makes more sense than you could if you were a California business or a New York business that's only serving the California or New York cannabis market, right?
Those products can't cross state lines.
That material can't cross state lines.
And so your market size shrinks.
Your market size that you can address with that particular type of equipment.
So you really start to recognize scale in the hemp world, which is super important and, yeah, makes all this really cool technology, like what Lukas was saying with Fast Onset, and the world opens up, right?
It's like, we'll get so excited because instead of these tiny little micro markets that you have to serve individually with a business and an operation in each market, now the world opens up and so much more opportunity.
Kristi, when you say micro markets, are you talking about those states that have adult use in place and in dispensaries?
Correct.
Yep.
So adult use dispensaries, and then now also in contrast with the hemp industry and how that can conserve multiple markets from one manufacturing location.
And Kiva Brands has been in effect since 2010.
You must have seen so much evolution in the cannabis space.
How has the onset of hemp-derived D9 changed the way that you do business at Kiva Brands?
Like I said, it has opened up another world.
And I do say that with...
I mean, I'm so excited and optimistic about it, but if the cannabis industry has taught me anything, it's to temper that excitement and try to be realistic about how things move and how things develop.
Kiva started in California.
My husband Scott and I started the business in our home kitchen here in the Bay Area.
And that was at a time when California didn't even have...
There wasn't even medical regulations for commerce, right?
There was no business licensing.
There were no taxes, other than your standard kind of California sales tax.
There were zero kind of, or maybe very, very gray, I should say, regulation in Prop 215 around how a cannabis business should operate.
So that's the environment that we got started and felt very underground.
Edibles, for example, didn't need to be tested, didn't need to be made in a licensed facility, no packaging regulations, no child resistance, none of that.
And so after a few years, we started with chocolate products and we wanted to make them look like what you would see in a BevMo, in a Whole Foods, in a Trader Joe's, these traditional channels that consumers were used to purchasing in and certain product quality that they were used to experiencing just did not exist in the cannabis world.
So fast forward to today, to 2024, and now we have about 13 states in which we have our products in the regulated licensed THC cannabis market.
There's a way easier way to say that, and if someone has that, I would love to hear it.
You have to be very careful about how you phrase these things.
I hear adult use, I hear recreational, I hear regulated, and it really depends on who you're talking to.
It really does.
Yeah, it really does.
So the licensed cannabis side, we're now in about 13 markets.
With our hemp products now, we have reached an additional 16 markets just solely with those products, and that just recently started at the beginning of this year.
So it's been about two months that we've been doing hemp versus cannabis.
We've got both of our horses in the race now, and since the THC cannabis market has so much more mature, that's where I would say most of our focus is, but you just can't ignore sort of the opportunity that lies in hemp.
So we're in both markets now.
Are there any major differences in the way that your business operates with the hemp D9 products but in the states that have legal adult use versus the states that don't but are selling hemp-derived D9 products because of the loophole?
We have our THC products, our cannabis THC products, in those like 12 markets, and we have not launched our hemp products in those same markets.
So when we launched hemp, we launched them in two different markets.
And so now we have, let's see, who are some of like, Texas is the best example of a hemp market where we don't have THC because it's such a big market.
So that's a really kind of exciting way for us to reach a totally new consumer, who I say, you know, totally new.
These people travel, right?
And their friends send them products.
And so they are new in the fact that we are reaching them on a one-on-one basis or in a direct-to-consumer, so we can communicate with them and we can help them connect with our products and we can ship right to their front door.
And that, you know, prior to that, they have to come to California or another state where our products are available, Illinois, you know, Massachusetts, and experience Kiva products there.
And now for the first time, we can communicate with them directly.
This is something that's echoed in the beverage side as well.
So a lot of the opportunity that the hemp D9 beverage companies have been telling me is that there is an addressable market in these states that do not have a legal or medicinal cannabis framework.
And a place like Texas, again, like Kristi was saying, is a perfect example, because Texas is not recreationally legal, but it's a huge population.
There's some huge metro areas, and that's one state that has done really well with beverages.
So Total Wine and Spex are two BevAlk distributors that have started carrying hemp D9 beverages, and they're doing very well there.
Tennessee is another state that's come up that has no framework for legalized marijuana or THC, but you can ship direct to consumer there.
And so it's interesting on the beverage side, because beverages aren't traditionally something that is very easy to work in a D2C framework, but a lot of these brands are really happy to be shipping heavy liquid across the country in some ways to these places because there is such a high demand for these products.
As the demand is growing, you're seeing a lot of these alcohol distribution networks and retailers saying, there's too much opportunity to ignore this anymore.
I know that traditionally marketing and branding opportunities for cannabis have been very limited.
How does hemp-derived D9 open up opportunities in that regard?
Advertising on social media, that's a beautiful thing.
With Google and meta ads is what is like kind of the only area that we've been pursuing.
And so just being able to do that, we've never been able to do that with our THC business, is huge.
It's simple, it's effective.
We're getting great ROI.
We're testing out our different ads.
I think we're acting like a regular company, like a non-cannabis company, which I don't have any experience really in, but that's what my team tells us.
These are the things that you would do if you had a normal beverage business, for example.
So yeah, the opportunities for advertising and using traditional channels, meeting consumers where they already are, is huge and has been widely successful for us in the past two, three months here.
My understanding, Kristi, is you still have to be careful, though, about the wording you use with some of the meta and Google ads, right?
You can't say THC, but that's, I think, probably part of the reason why Delta 9 has kind of been adopted as a wink-wink kind of situation where it's like, we're a Delta 9 gummy.
Everyone knows what that is, right?
Exactly.
Yes, exactly.
So yeah, you can't come out and say THC on your ad.
Like, it still has to be kind of hush-hush, nod-nod, wink-wink.
We are very mindful about how we present our imagery and the copy on those ads.
And even when folks click on to the ad, then it has to go on to a site that is all kind of vague.
And then it's once the consumer clicks into, takes their second click, so they click first on the ad.
Now, they're going to click into your website onto another page, so that kind of third step, then you can actually really start to talk about what you do.
But we've been able to, even in that environment, convey the messaging that we want to convey, enough so to pull traffic all the way through to those three steps.
From a philosophical perspective, it's so frustrating and it's pretty ridiculous.
Yeah, that you have to pretend that your product doesn't have D9 in it until somebody clicks twice.
We'd love to communicate in the same ways that wine and beer communicate, right?
Just be honest about what your product is, and you don't need to be shameful and hide it and throw it back in the corner, back in the shadows.
So yeah, there certainly still are those challenges with advertising.
In getting ready for this podcast, I suddenly realized that Hempderive D9 basically equals THC, and I asked you both to clarify this before we went live, and this light bulb went off in my head.
Oh, that's what I've been seeing.
Like, suddenly it all makes sense.
There really is kind of a Wild West aspect of the Hempderive D9 market.
What are some of the issues that you face as a brand while you're trying to navigate this?
Definitely public safety issues are like my biggest fear because we've seen, like, that is the top concern around.
Cannabis THC is like, you know, where is it made?
How is it tested?
Is the label consistent with what the gummy products actually are inside?
And making sure that that consumer experience is buttoned up and positive, the consumer is getting what they want and the product is safe.
So when we go over to the hemp industry, not all states, not all markets have those regulations or have any kind of guidance.
Some do, some don't, some are being developed.
And so that's, I think, the biggest threat and the biggest challenge to hemp is just not having those safety regulations and there being a consumer safety problem that comes up where someone gets sick or it gets into the wrong hands or whatever the PR nightmare that you can kind of imagine in your mind.
So yeah, that is something that when we were thinking about, okay, do we get into this industry, this hemp side of the industry, is it the right move for us?
I kind of went, well, we sort of almost have our responsibility.
That's sort of how I feel and how a lot of kind of the perspective of our leadership team was like, well, we need to do it because consumers are shopping and they're picking up hemp products that maybe are not tested, are not labeled.
And as Kiva, that's like our jam, right?
That is like in our DNA.
And we exist to have consistent tested, trusted products.
And so we need to be there where consumers are and where they're buying Delta 9 THC products with our safe, consistent products.
So yeah, that's, you know, we feel very strongly that it's important for us to kind of get there, raise the bar, set the standard and be a consistent choice for people.
Lukas, did you come across any horror stories from the consumer side based on what Kristi just said around the issues in testing with HempD9, the products getting into the wrong hands, that kind of thing?
There are obviously horror stories, whether it's, you know, a product being in the hands of a small child or somebody taking something that they didn't know had THC in it or taking something that said it had a certain amount of THC in it and ended up having more or it reacted with their body in ways that they were not ready for or used to.
I think a lot of where this conversation gets even more complicated than it might already be is that there is another Delta out there.
Delta 8 is another cannabinoid that is very similar to Delta 9.
It also can be derived from the hemp plant.
In the early days, and I say early days, and post 2018 Farm Bill, Delta 8 was being synthesized out of the hemp plant and being put into similar products, whether it's an edible, like a gummy or a chocolate or a beverage, and labeled as Delta 8.
But the issue arises in that how Delta 8 is actually extracted from the hemp plant is a chemical process that can lead to a lot of problems in terms of what's in the finished product, whether it's chemicals that aren't good for your health or things that a lot of some of these producers don't even know is in there until it's tested.
There was a number of products that came onto the market and were reported by various media sources that were kind of like, a lot of times called like gas station weed, that were found in places, in smoke shops and bodegas and stuff, that didn't have any lab testing with them.
And were, in a lot of ways, kind of dangerous for the public.
And especially for people who didn't really know what they were taking, but just assumed that it was a THC product that they could somehow get at a gas station.
And then they ended up having to call poison control or go to the emergency room because they were having an adverse effect.
There isn't a regulatory framework in a lot of ways, and the national level and even state by state.
It's happening in a very patchwork sort of way.
And so a lot of these brands are doing their own lab testing.
They're having QR codes on the beverages or on the edibles that you can scan, and it shows you the lab results of that batch.
So you know exactly what's in there.
There's no heavy metals that the dosage of THC is the same that is on the packaging.
But it's almost like Delta-8 has somewhat sullied the waters of the legal hemp-derived THC category and made it really, really difficult for your everyday consumer, or even someone like me who's been following this and reading a lot and talking to a lot of different brands, I sometimes get confused about what's the difference or what's right and what's wrong.
Great point.
It is very difficult to navigate the kind of alphabet soup of cannabinoids out there and to know that what you're getting is legitimate.
Some of the other issues around Delta-8.
So the Delta-8 naturally occurs in a very, very low concentration in the cannabis or hemp plant, mainly cannabis.
And so when you extract it and ingest such a large amount of it, that just hasn't really been done in the way that we've seen that being done with THC.
We have so much more experience and history consuming THC in large quantities, but really not Delta-8 in large quantities.
And then when you have a lack of regulation and you have these kind of brands that pop up overnight, you're seeing a lot of health claims being made.
And that is kind of like one of those really big dangers to the industry overall, our brands acting in a way, you know, it just kind of throws caution to the wind and throws best practices out the door.
And yeah, health claims are one of those big no-nos that we're seeing those brands use.
Kiva Brands has been in the cannabis industry since 2010, so it makes perfect sense to me that you would jump into the hemp D9 market.
But are we seeing that brands who are releasing hemp D9 products have already been in the cannabis space and are well positioned to produce this alternate product?
Yes, there's been some amazing success stories with like, you know, colleagues that we have in California and throughout the cannabis industry that they have made the jump fully from THC cannabis into hemp only in either a DTC or on-premise type of environment.
And it's working because the hemp industry, since you can reach so many more consumers, like I'll give a kind of a pointed example of a company, Rose Delights, they make gummy products and they are super craft.
They're like, you know, chef inspired, chef created, and they've got a bunch of amazing ingredients and they command a higher like luxury price point and luxury consumer.
When you have those in the California THC marketplace, that type of consumer just is not entering the stores.
But on the hemp side, you can target your marketing.
You can directly go after that one set of consumers and show your product specifically to them.
And it just works so much better.
So yeah, we're seeing companies that were in THC kind of abandoned ship and hop over to the hemp world fully.
Lukas, what are you seeing on the beverage side?
Is it mostly beverage brands who are already in the cannabis space?
Or are there some new to market brands that are getting involved with cannabis for the first time with Hemp D9?
Well, it's a little of both.
So what you're seeing on the beverage side is that there's definitely a lot of brands that started in the CBD world.
So we're making a CBD beverage.
And then as technology changed in the last couple of years and supply, as Kristi was talking about, became more available and the consumer market grew, you saw a lot of brands not necessarily pivot away from CBD, but do line extensions into a low dose Hemp Drive THC product.
And many of those brands have done very well.
Flyers is the first one I think of that launched as a CBD brand.
They had kind of non-alcohol alternative canned cocktails that were just CBD.
And then they launched a Hemp THC 5mg per can.
I believe it was last year.
And when I talked to them recently, they were saying, you know, our THC beverage business has almost doubled our CBD.
Where these low dose Hemp Drive THC beverages are doing really well is as an alternative to alcohol.
So it's people who are looking to still enjoy something that will relax them socially in a lot of ways, either when they're out with friends or at a party or at a live music event, or even at home as opposed to, you know, cracking a beer at the end of the day.
They open a can of, you know, five milligram THC beverage, and it gives them a similar effect, but it doesn't have some of the negative effects that people associate with alcohol.
Couldn't agree more.
And two things on that.
So where the consumer is purchasing is at their standard.
They're already going to these stores to pick up whatever it is that's on their list.
And today on the NCAP is a whole section of D9 hemp derived beverages.
So, oh, I've heard it in the news, or, oh, a friend of mine mentioned it, so might as well throw a four pack in here.
And then you flip the can around, and you see, oh, and it's only 40 calories, or it's 15 calories.
And like that, I think, is so at low sugar.
Like it's just, it's a, that is such a big, big selling point in like the world we live in today, where everybody is trying to, we're trying to increase wellness, we're trying to get more sleep, we're trying to live better, healthier lives.
That nutrition label on the back of those beverages is, it's pretty powerful.
You can have three or four of these, and you're only up to 100 calories perhaps for the evening, versus if you've had three or four glasses of wine, bottles of beer, like you're much, much higher in your calorie content than you would be with a cannabis beverage or a Deltanine beverage.
Are hemp D9 products limited to being sold in shops that sell alcohol?
Are consumers carted when they're purchasing them?
What are some of the rules that are in place to protect consumers?
Well, at least on the beverage side, it's still really early days.
So most of the major retailers that we're hearing about are alcohol retailers.
So Total Wine is a great example, Spex.
There's many in Minnesota, who was one of the states that really pushed this industry forward.
A lot of breweries are doing it as well.
So these are places that are age-gated, whether it's on-premise or off-premise sales.
They do require carding.
That's not to say that there isn't some products that are making their way into independent convenience stores or bodegas or gas stations.
But a lot of the kind of bigger brands that are trying to do this right, I guess, are sticking to these major retailers, are making sure that it's being self-regulated, shall we say, in these age-gated sort of ways.
And also, there's obviously the direct-to-consumer aspect, which is a little bit harder to regulate, but a lot of brands I know are requiring a signature on delivery to make sure that it's someone of age.
But again, this is where the lack of regulation is somewhat hurting the industry and where a lot of stakeholders are asking for more regulation because they want it to be, you know, they want this to be, at least on the beverage side, controlled by the TTB, which regulates alcohol, tobacco and firearms, because they're used to regulating an industry that is age-gated.
From the cannabis company coming into hemp, it's incredible to be on the shelves of a store that checks the, checks IDs.
Like, that's built into the business model that is, you know, it's done at the register typically versus at the very front door, which is what we're used to in many dispensaries.
Like, you know, there's oftentimes an armed guard, like standing in front of the door with their arms crossed, like ready to check your ID.
I love the kind of ability to improve the shopping experience and improving the warmth and the welcoming component of having your products right there in the regular shopping channels.
It just, it really makes cannabis or Delta 9 just this, like, so much more approachable and so much more within reach for the consumer.
But yeah, the age gate, like, you know, those stores have age gate processes, and it's working for alcohol.
It can easily work for cannabis, Delta 9.
We've just spent 45 minutes discussing the nuances and intricacies of hemp-derived D9, but I keep coming back to the thought, wouldn't it be more efficient to just pull the, whether you call it THC or D9, from a cannabis plant?
I know that sounds like, you know, an obvious question, but it's just so crazy to me that an industry is being turned completely around because of a loophole.
Yes, Melissa, if you were running for president, I would vote for you.
Yeah, I think the easy answer is, there's not a lot that's made sense in terms of how cannabis has been regulated in the last, like, 15 years.
Because, logically speaking, you're right.
It would just make sense to have this be pulled from the cannabis plant.
But because there's a demand and because there isn't an easier path, you have the hemp industry really growing out of that.
And where that will be in the next five years is where I'll be sitting to, you know, report on.
All right, fantastic.
Why don't we, I would love to end with a quick note on regulatory issues.
Is there any, Kristi, you mentioned that the farm bill is coming up again this year.
Are there any, you know, thoughts surrounding what might happen there?
Any idea how things may change?
So there's definitely speculation around how cannabinoids will be extracted.
So synthetics is an area that seems to be under a lot of scrutiny at the moment, as it should.
And as Lukas had mentioned earlier, you know, there's residual solvents, there's chemical processes that can lead to contaminants inside the extraction, inside the oil that's used in the products.
And so that's kind of a great place for scrutiny to take place.
So that's probably the biggest area of focus that I have heard under review for this year.
But, you know, we could also see the whole industry go away.
I don't think that's going to happen.
Or we could see it totally regulated.
I'm not sure if that's going to happen either.
But yeah, it's sort of anyone's guess at this point.
Yeah, I mean, I've heard similar things, Kristi.
From what I've heard, the synthetics you're talking about, so something like a Delta VIII is being regulated, not nationally yet, but a lot of states are instituting restrictions on Delta VIII products, so Florida being one of them.
In the process, though, they are also putting some restrictions on Delta IX, which is where the industry is somewhat pushing back and saying, well, they're not quite the same thing, and this is where the nuance comes in.
In terms of the farm bill renewal, a lot of the sources that I've talked to say basically they think it's going to continue to be kicked down, the can being kicked down the line, whatever that term is, in that the industry has also gotten just too big, that at this point for Congress to try and close that loophole would create an even bigger problem than there is in terms of how to regulate it because there's too many industry players, there's too much money in there, and by the time the farm bill comes up for renewal, we might have some major distribution players from beer and wine and spirits that are going to be distributing these products, especially on the beverage side at least, and let's just say they have a lot more lobbying muscle than others, and so it's hard to really see that loophole being closed So.
We get a lot of like, oh, we're gonna change the packaging regulations and that's effective tomorrow.
And you're like, whoa, that's too fast.
Like, we don't get a ton of respect.
We get overtaxed.
Like, you know, the stigma around the word cannabis is like, you know, still very much alive and well.
And it's my kind of hope or perception that once you get ingrained with some of these larger businesses and these larger revenue streams, it's a lot harder to tell Southern Wine and Spirits, you know, oh, we're gonna remove this line of revenue for you than it is to a cannabis business.
So we're really excited to see that alliance with kind of, you know, big business.
It feels slightly more secure and more unshakable than it ever has in the past.
Well, it certainly seems like there's so much opportunity to be had with Hemp D9.
I thank you both so much for joining us today on Community Call, Kristi Palmer and Lukas Southard.
Again, thank you so much for joining and explaining and unraveling this very complicated issue.
It's been such a pleasure to have you.
Thanks for having me.
Pleasure to be here.
That concludes another episode of the Community Call podcast.
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