With all the promise and hype surrounding the emerging cannabis-infused beverage space, BD invited a pair of beverage executives to Future Smarts 2018 to discuss their work in the sector. Timothy Walters is COO of Lighthouse Strategies, an eclectic holding company that recently expanded into cannabis under the name Cannabiniers. Late last year, Michael Lorelli, a former PepsiCo operations executive, joined the board of Cannabiniers, which bills itself as a foodservice, technology and brand management firm. Cannabiniers has launched two cannabis-infused beverages. Two Roots is a non-alcoholic craft beer infused with THC and CBD, while Just Society is a cold brew coffee line that also incorporates THC and CBD. Both products are sold only in licensed cannabis dispensaries in California and Nevada, two states that regulate the legal production and distribution of cannabis. CBD is a non-psychoactive compound found in cannabis, especially hemp varieties. Proponents claim the substance can reduce inflammation and provide a host of other health benefits, although scientific research on the substance is nascent. “CBD is going to give you a relaxed feeling,” Walters said. “It’s going to lower your anxiety, muscle pain, those sorts of characteristics.” THC is a psychoactive compound found in marijuana. “With THC, you’re going to get that euphoric feeling,” Walters said.

Federal Law.  The men spoke just two weeks before President Donald Trump signed the 2018 Farm Bill, which included a provision to take hemp off a list of illegal drugs that includes marijuana. Walters said he expected the Farm Bill measure “to open up interstate commerce” for CBD-infused beverages and reduce risk for banks that want to service CBD food and beverage producers. “There will be a process,” Walters said. “I don’t think banking is going to open up right away, but there’s going to be a greater reception to CBD being distributed. You’ll see big box stores start to open up and carry those products. You’ll be able to order any of this off the internet and it will ship interstate. Walters went on to note that the ability to sell CBD products in a “regulated channel” would “drive up margins significantly.”

Scale.  Walters said Cannabiniers was signing letters of intent with brewers for production capacity, so it could scale its beers “pretty quickly” once the legal landscape became clearer. “The beverage market for beer has been very soft,” he said. “It’s really been impacted by the growth of craft beer. There are a lot of breweries out there that are suffering.” Cannabiniers is taking that excess capacity, removing the alcohol and adding CBD, Walters said. “We start with craft beer,” he added later. “We take the alcohol out. We’re not creating a water that we put some hop flavoring in. It’s real de-alcoholized beer.”

Supply.  Cannabiniers grows its own cannabis and extracts the CBD and THC. Lorelli, the former Pepsi executive, referred to company’s vertical integration as “seeds to sale.” Walters said there are “multiple” types of extraction processes. The company in December was extracting oils from 300 pounds of cannabis per day. Cannabiniers also is working to advance research around CRISPR gene editing technology, to increase quality and yields.

Health Claims.  Walters said there is a scientific gap when it comes to claims about the health effects of CBD. “Given the fact that the drugs have been [illegal], there hasn’t been access to research institutions to actually do meaningful, scientific research.” To help close the gap, Cannabiniers plans to open a research center near its headquarters in San Diego. “We’re going to give the biotech and pharmaceutical industry access to plant material and lab space, so they can actually come in and do real research on site and not be in violation of any laws.”