High Spirits: The Cannabis Business Podcast
Hosts Ben Larson and AnnaRae Grabstein serve up unfiltered insights, reveal their insiders' perspectives, and illuminate transformative ideas about the cannabis industry for people who want to make sense of it all.
High Spirits: The Cannabis Business Podcast
#114 - What Comes Next for Hemp THC Beverages w/ Martín Caballero, Managing Editor at BevNET.com
We unpack the 365-day clock facing hemp-derived THC beverages, why the category exploded, and how a policy rider vaulted prohibition-style limits into law. Martín Caballero of BevNet joins us to map realistic paths forward, where coalition power lives, and what compromises might actually work.
• why hemp-derived THC drinks resonated with mainstream shoppers
• how a funding bill rider created the new 0.4 mg per package limit
• why fragmented advocacy loses to unified, well-funded lobbies
• lessons from retailers and distributors who want the shelf to stay
• a pragmatic path: low-dose through three tiers, higher dose in cannabis channels
• why beverages won’t simply shift to illicit markets or dispensaries
• what data, packaging, and age-gating standards could secure legitimacy
• the role of investors, timelines, and state-level regulators
• scenarios for compromise without collapsing innovation
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I think something will get done. There's enough momentum behind this, and in a time where there's not really much political flexibility, this seems to be an issue where there's a little bit. There's some some political will on both sides to do something.
Ben Larson:Hey everybody, welcome to episode 114 of High Spirits. I'm Ben Larson, and with me as always is Anna Ray Grabstein. We're recording Tuesday, November 18th, 2025. And it's another week, another airport lounge. Sorry for any background noise. I'm sitting in DC, just got done with the Ignited conference. It was awesome. It was all policy focused. And based on the happenings of the last week, I would say it's pretty timely. So another shout out to our friends, the Lane brothers, Elliot and Patrick Lane. Another incredible event. The lineup was incredible. Anna Ray, I saw all of our friends. You were missed. You were missed.
AnnaRae Grabstein:Oh, thank you. I was feeling it on Saturday. I was looking at plane tickets, being like, should I just go to DC tomorrow? And I almost texted you and almost just booked a flight. And then I thought, okay, Ben's gonna be there. He'll represent, he'll give high fives to all my friends. It's it's been a week, you know, and sometimes being around people is is the best thing to do after a big complicated week. It helps me work kind of through my perspective on things often.
Ben Larson:Yeah, yesterday was a long day. I think it was about 7:30 a.m. till about midnight. That's a lot of socializing for me. And it was just a lot of hard conversations, I think. They're necessary conversations, but a lot of talk, you'd be proud, about you know, just the convergence of our regulatory systems and kind of sorting through what this all means and what what the trajectory is. And I I there was a lot of calls for for unity of the plant and cannabinoid regulations, but yeah, just a lot of uncertainty about how to do it, especially with the context of the next 360 days or so.
AnnaRae Grabstein:I mean, I would say that in the context of the work that I do as an external consultant with companies that are in both worlds of hemp and cannabis, it's it's just really hard to not be in denial about what's happening because when you work in the cannabinoid space, what sometimes feels like obscure politics is actually the type of action that can decide whether you can pay your mortgage or support your family. And it gets really personal. And and I see people celebrating the hemp ban, but it's not a win. There are so many people who are so stressed right now trying to figure out how to see the future. And this is about people, and even if it benefits your business, it's still a step back towards prohibition. Um, and we've lived through plenty of that. So uh I'm I'm staking my my flag in the ground here. Uh, I think that there that we can hold multiple things at once. There's urgency and seriousness in the moment, and there's room for evolution and innovation and and opportunity, but it is really important, I think, to accept the reality of what's in front of us, to make clear decisions and to be thoughtful about our actions as leaders, as humans, all of that within a really complex time uh market dynamic.
Ben Larson:I think it's true. It's just hard to rationalize like what's happening right now and how to create a unified voice that is actually heard. You know, there's so much chaotic energy. People are in survival mode as they should be, and they're calling the representatives, they're storming the hill, so to speak, not in a January 6th style, but like, you know, like pounding the pavement. And you know, all I keep hearing from some of the the regulatory side is, you know, when there's so many voices, like who do you listen to?
AnnaRae Grabstein:Yeah.
Ben Larson:And, you know, as Alcohol showed last week, it's probably the people with the money.
AnnaRae Grabstein:Oh MG. Yeah, yeah. Well, so we usually do a news update before we bring on our guest, but today our guest is someone that covers news. So we figured that we would skip our regular news update and include our guest, Martin Caballero, in the news update. So I think I'll just cue them up and bring them on. Martin is the managing editor at BevNet CPG Media, where he writes, edits, and leads content publishing for BevNet.com. And um, if you haven't heard of BevNet, you've probably been under a rock if you have been doing anything in the cannabinoid uh beverage space. They are the beverage industry's leading source for news, analysis, and education. And he's been reporting on food and beverage since 2016. Um, before that, he was a culture contributor to the Boston Globe and the Boston Herald, and he's worked um at other national media outlets like USA Today and Reuters. And um, we are just really excited to have him on to talk with us today about all things beverage. Welcome, Martin.
Martín Caballero:Thanks for having me, guys. Super excited to be here. Great timing.
AnnaRae Grabstein:Yeah, we we booked this like about a month ago, and we did not know how good the timing would be, but sometimes it just works out.
Ben Larson:I wish the timing wasn't so good. Like if it could just be another week, that would have been much more preferable. But yes, thank you for being here on this fortuitous moment. Yeah.
AnnaRae Grabstein:Help our listeners understand a little bit about BevNet and specifically um when BevNet started covering cannabinoids uh in general to set us up a little bit.
Martín Caballero:Yeah, for sure. I mean, so BevNet, as you mentioned, sort of were a trade publication focused on the beverage industry. So we're always looking at trends in nutrition and consumer preferences and ingredients, uh, when they interact with the beverage industry and when they sort of begin to appear there. So certainly we started uh talking about cannabinoids probably around 2018-2019, just after the farm bill, um, when we really started the uh started seeing the appearance of CBD drinks on the market. And that, I think between 2019-2021 was a pretty significant trend, as many of you guys probably know and seen. Um, and that sort of opened the door and developed into the kind of thing that we're probably going to discuss more today and the current subject, which is the sort of hemp-derived THC market and these beverages that sort of existed in that loophole created by the 2018 Farm Bill. Um, so that's really been a major theme over the course of, I'd say, the past 18 months in particular, um, really just reshaping the distribution landscape, the retail landscape, the way consumers are interpreting these products, the way they're interpreting maybe other functional products and opening the door to those things, the Maha movement. It's really been sort of a flashpoint for a lot of the things that we've been covering. So uh really been fascinated to see that development.
Ben Larson:So I've often reported on the podcast and elsewhere that this is the most exciting beverage category that's ever existed. And of course, I'm gonna say that I'm in it, but I have been hearing it from retailers and distributors, and I'm just curious what your perspective on it. And and the reason I'm asking is because there's different narratives that you hear in the space, and and one that kind of like irked me last week, although it was valid, was that like sorry your THC seltzers aren't important enough to hold up the government. And I'm like, true, but that's not the point, anyways. Mart Martin, from your perspective, is this the most exciting beverage category that you've seen?
Martín Caballero:I think so for multiple reasons. And I think because if you observe the beverage industry, I mean it's it's relatively the the trends can be uh are usually softer rather than steeper. So, you know, bottled water, you know, iced tea, you know, certain categories, they they don't really change much from year to year. And once they're established, there's sort of there's little things that you can tweak about them. For example, in you know, in soda, we over the past year we've seen uh, or over the past couple years, we've seen a lot of interest in these sort of better for you gut health sodas of the poppies and the olipops of the world for people who are familiar with that. And that's really just basically that's really just sort of changing a few things in the classic soda formula and and sort of what people expect from that soda, and it it becomes a new thing. It becomes a different way for people to read to imagine the category and interpret that they know that they shouldn't be drinking high fructose corn syrup. Okay, there's a better option, sort of tweaks and incremental changes uh in that sense. But with cannabis drinks and the Hemp Temp derived THC drinks, I think it's just been the biggest thing because it hits on so many levels, so much deeper than that. And we're talking about people who uh would never use CBD, have you know, turned off by smoking or are sort of stigmatized for various reasons, opening the door and becoming customers. We're seeing retailers who you know are in, you know, selling beer and wine having a brand new category, a new shelf, a new section that is driving a majority of the or driving a significant amount of their uh their revenue. It's the kind of thing that it's funny because it would take a Coca-Cola or Pepsi, it would take years and millions of dollars for them to prove out what has been proven out in by this loophole. I mean, they would spend so much money to show people, hey, look, there's a category here, there's people who want to buy it. Now let's do this, now let's get retailers on board. That's all happened sort of organically. So this, when you flip it back to the prohibition, as you mentioned, it's sort of the most it's one of the most stunning, uh, most important beverage sources, but it's also kind of one of the most amazing own goals ever scored because you did all this work and then you shut the door after doing it. So uh it's uh I think that part has just been fascinating. And and hopefully this opportunity hasn't been squandered. Um, because again, like I said, like this is the stuff that beverage companies would kill to develop one type of product that uh that has had this kind of resonance.
Ben Larson:Was it an own goal or was there like a 11th man that entered the field? I don't know how I'm not a soccer player, I don't know how many people are on the field, but like it just feels like someone came out of left field.
Martín Caballero:Sports metaphor of your choice, you're choosing. Yeah, yeah. You can mix it up. If you're you know a football fan, use a football metaphor. You know, I went for the easy one.
AnnaRae Grabstein:Well, so let's let's lay the groundwork for the news that that happened last week, and then we'll dive into the details and the implications. So, as part of the appropriations bill and the government shut down, Mitch McConnell and some of his buddies created some language that they inserted into the bill that would create an off-ramp into a hemp ban 365 days after implementation. But it's not exactly a ban. It is a limit of 0.4 milligrams per package. And it does a lot of other detail, it creates a lot of other details around kind of how that affects other cannabinoids and directives to the FDA, things like that. After that language was inserted, Rand Paul offered up some other language that created a pathway for the Senate to vote to take that language out and replace it with some other language that would not have been a ban and would have been an opportunity for research and a regulatory pathway. And uh that failed heroically. Um, three-quarters of the Senate voted to keep the language as is, and one quarter of the Senate voted um with Rand Paul, which is basically like an exact mirror opposite of the public support for marijuana legalization, which is at around 70%. So it really seems pretty upside down. And um, and then the language passed out of the Senate through the House, and President Trump signed it. So the industry is now on this 365-day clock moving towards the implementation of this new rule. And that's that's where we land today, um, about five days, five days in or so. Did I get that right?
Martín Caballero:Yeah, that's that is a very good summation of it. Um, I think the conditions that allowed this to happen are really a significant part of the story. As you mentioned, you know, Mitch McConnell um and uh as well as the uh representative from Maryland have introduced language and proposed language similar to this at different times that has been taken out of uh of other bills and reintroduced. So it has been something that's been simmering in the political sphere. But, you know, the the unique situation of a bill, a funding bill that you know was going to pass in some form or fashion. There was no way that the government was not going to reopen at some point, really, I think created this opportunity and for the bill to be included in there. And that's why I think you saw sort of a lot of attention within maybe our circles uh on this particular issue as it was happening. But you know, many other media outlets and and other places were sort of only reporting hey, did you did you notice that the hemp beverages are also are are banned or hemp at THC is gonna be banned, included in that bill that passed a few days ago? It was a it was retroactive, it was after the fact because again, this so many other things going on in Washington and the shutdown, that was gonna take precedence. So I think that's important to note this really was a unique set of circumstances that allowed it to be passed so quickly and overriding the momentum of of uh anyone uh opposing it, I think.
Ben Larson:My my father literally texted me yesterday being like, So does this hemp ban thing affect you? And I'm like, yeah, kinda. Oh let me tell you.
Martín Caballero:Um, I mean, I think Ben too. I mean, you you probably noticed in in conversations, it it's interesting because I think everyone can understood that the farm bill loophole wasn't sort of a forever solution, and we weren't going to continue sort of on the status quo forever. So there's a desire to create, you know, regulations and desire to to do on both sides, but you know, the the breakdown politically and the breakdown and sort of in that sense has been very interesting and and not maybe what people expected.
Ben Larson:Yeah, it's it's it's been really interesting because of the past week, how much buzz there's been about it. I think there's actually even more recognition of the space now. And we've been talking to some brands and retailers, and they're like, oh yeah, like sales have actually popped. And you could say it's one of two reasons. One, there's more recognition of it, people people are becoming aware, or two, people are stocking up because they don't want their beverages to go away. But either way, Martin, you you've been tracking beverages, and as you said, as you said, if Pepsi or Coke were to enter the space, they would spend millions of dollars to prove out you know what we've already done. With this level of excitement, like how do you imagine this goes in the next year? Like, how do you expect this buzz, this excitement to carry the category forward and and avoid this existential crisis?
Martín Caballero:I would say that it's a fragile situation. Um, I think, you know, as you mentioned, there's certainly as a journalist, I certainly can appreciate the power of a deadline to get you into action. Um, you know, there's definitely uh a reason to be engaged and there's a reason to be motivated, and there's a whole industry that you know needs to figure this out. But it's really unclear because you know, this situation essentially existed prior to you know last week. There was a desire to get regulations. There was, you know, some people were pushing Congress to do something, others were looking to the FDA. Again, this has been ongoing, and they're we're in the situation we're in now because nothing happened previously. You know, it's kind of the idea that you know you should start the divorce proceedings in order to, you know, spark the romance back and get the marriage back together. I don't know if that's the way I would go about things. Um, so I think it's a fragile moment. Um, you know, and and the desire from brands and certain you know, people in the industry is is one factor, but there's is it many things at play? It's supply chains. If those are disrupted, if if people decide to take other avenues or make changes, that can you know have whole effects on the market in that sense. Uh, investors who have put a lot of money into this in in bets in this category, are they going to double down and sort of look at the situation optimistically to be first in line for a better future? Or are they gonna look to cut their losses? And you know, uncertainty is not the friend of investors. So what their sort of tactics from here are gonna be very telling. So I think there's certainly reason to be optimistic, but there's also reason to be skeptical. And I think um, again, we're in the very early stages of this 365-day period. There's a lot of different issues that people need to get on the same page on. Yeah.
AnnaRae Grabstein:Outside of the actual brands that have been operating in the intoxicating DHC beverage space, the other beverage companies that have been looking in and watching this, whether they are a functional beverage or maybe they are an alcohol company that is watching their consumer demand decline. I'm curious what you're hearing from behind the curtain, kind of your inside perspective from the conversations you're having with beverage brands, CEOs, about how they see the category kind of leading up to this. Have they looked at it as competitive? Have they looked at it as complementary? Maybe they think of it as something that is coming no matter what, like inevitable. And how is that changing over the last week or is it?
Martín Caballero:Well, I it's a great question. And I think like we've like we've seen, there's so there's competing interests and there's different sort of perspectives on this within uh you know, within a single sort of umbrella. So if you have something like uh like alcohol companies, certainly um, you know, alcohol consumption is falling. Um, you know, uh younger consumers are looking for alternatives, whether they be sort of different intoxicating beverages or just turning away from alcohol in general. So alcohol companies are definitely conscious of this. Um I think there's the particular other aspect that that makes it a little bit more difficult for them is that um these products, not all of them, but they a big part of their story and resonance with consumers is as an alcohol replacement and as something that specifically sort of highlights alcohol's weaknesses, be it you know, uh health issues or hangover and things like that. So it's a fragile, it's a fragile thing to know to sort of pursue. And I think for those companies uh and the hemp industry, I think it's it's complicated to see like, you know, both want to play in these vice categories and and sort of exploring and and and and growing that category, but that's gonna have an effect on how people perceive alcohol and and and the other products that are coming from those same companies. So it's a it's a delicate thing to balance. And I think that there's, you know, maybe some other people feel the same way. I don't know if you guys feel the same way, but I think the reason why a lot of alcohol companies were in favor of this prohibition or at least, you know, stopping it now and then developing regulations is that that allows them to sort of be at the forefront of that conversation. That allows them to sort of set the table a little bit more with those regulators, with the you know, uh stronger lobbying uh muscle that they have.
AnnaRae Grabstein:So they're pissed that they're behind. Is that is that what you're saying?
Martín Caballero:I think, yeah. I think, well, they're they're conscious of falling behind and they're conscious of territory, you know. These guys, if there's if these guys are taking away their shelf space, if these guys are taking away their sales, they're certainly not gonna uh sort of sit by and let that happen. Um and so yeah, I mean, I think as we've seen from companies like you know, the Boston Beer Company operating in Canada. Um, we've seen you know Tilray also, you know, operating in Canada and sort of laying groundwork there. They they certainly want to make money from this. Uh and the their support behind this particular action that we saw last week, I think is kind of indicative of where they're at, as opposed to the distributors who you know are seeing uh this is something that's gonna lose them a lot of sense.
Ben Larson:I think it even goes beyond territory, though. It is also like the the power dynamic that shifted in the relationship of all these different players. With alcohol, you have the three-tier system, and the suppliers have a very important role in those three tiers. And exactly in the most you know, recent years with this this category, you know, everyone was being very innovative with how uh they wanted to explore the the the lack of the three-tier system. I think that's also uh a big big driver to it. On the capital front, I just want to point out that like one of my takeaways from from the show here is that everything is literally on pause and until there's there's certainty. And so, you know, it is a very fragile space. And how fragile it is, like I'm actually like pulling some other signals from the rest of cannabis, and like we always say it's like, oh, you like we have this idea that we can't go backwards, but you have states like Massachusetts and Maine that are trying to repeal their their legal cannabis, and so it's it's just a really interesting time. You have a you have a Gallup poll where you show like slipping uh support for cannabis, you have Republican consumers reporting at less than 50%. It's hard to tell where it's all gonna go. One of the biggest challenges that we have as far as making progress in the next year is unity of voice, and as we were talking about at the beginning, and the fact that cannabis beverage is only like a very small portion of the total conversation. Is there any precedent about this kind of like crossover of other form factors with existing beverage companies that you know might be reporting to to BevNet?
Martín Caballero:Yeah, I mean, I think it's interesting, it's an interesting point that you bring up because it's not just big alcohol has has a stake in this as well, but also just what about the regular regulated cannabis market themselves and the beverages that are going through that market? Um, we saw just in the past month um a lawsuit in Pennsylvania against Total Wine and DoorDash by uh uh cannabis MSO, you know, for saying that, you know, this is creating an unfair, unlawful marketplace. Um, so basically, you know, and and we've seen in California, you know, that um there's been those efforts to sort of steer this market into that regulated cannabis channel with its own taxes and and sort of different structure in that sense. So yeah, I mean, I I I'm trying to think back to your original uh question there. Um there's there's definitely been um yeah, I mean, there's definitely sort of competing interest there. I'm I'm I have to recall what you you your original question was.
Ben Larson:So let me clarify just a little bit. I I my question actually lies in like, do you think these beverage companies have an interest in beyond beverage? Like, do you think they will lobby for control of THC gummies, so to speak? Like, do they care about that or do they just want the beverage category? Gotcha. Especially when we're talking about power dynamic and and building unity.
Martín Caballero:Yeah, um, it's hard to say. I mean, I think definitely if you look at beverage companies in general, I think they tend to stick to their core uh competencies. So I I think it would be a bit of a stretch to be sort of doing both at once, like looking at gummies and certainly inhalables and other things. I mean, again, I think the beverage format has really been the key here. I think this is what this is what has the wide appeal. This is what sort of works in different channels. I think gummies and and other things are um, again, like, you know, that's uh maybe more associated with as a candy, is something for for kids. Um, you know, I just think there's a lot of like contextual differences outside of the beverage category that would I don't I don't think necessarily these beverage companies are looking at that just yet. But certainly, you know, it's money, it's CPG, it's sort of, you know, they're they're not looking to overlook opportunities. But I think uh, you know, if the case of something like Boston Beer Company doing the uh teapot drink in Canada, I think it's really like, okay, what what can we sort of how can we get our foot in the door? How can we establish, you know, a sort of a brand in this category before there's a lot of other moving parts that we need to sort of go to next? And I'm not sure if uh, you know, there's there's maybe some better data out there uh on this, but you know, the the crossover between these hemp beverages leading to purchase of other formats like gummies or edibles, or leading to uh, you know, someone who buys a hemp drink in a liquor store, does that lead to them making a purchase of flour or something, a high potency product in a legal dispensary? Um, you know, that I'm not sure how strong that crossover is. I think the beverage opportunity is pretty unique here. So I would imagine they would stick close to that for now.
AnnaRae Grabstein:I think you're honing in though on the complexity of this issue, because even if the alcohol brands are not interested in competing in non-beverage formats, I think that they do believe that intoxicants, legal intoxicants that are widely available are competitive to their product category. Similar to the way that the regulated cannabis space has in many instances lobbied against hemp as potentially competitive to their business. And yet there's also an argument to be made how hemp beverages in a low-dose form factor could be an on-ramp into either category, into more potent beverages that could be alcohol, could be cannabis, or could be introducing new consumers to the market. And it just speaks to kind of this how do we find unity? Where is the place that that all of these different groups can agree in a way that then we can have a unified voice for our policy ask? Within that context, though, even if some group of people are able to coalesce one message or one agenda, there will be businesses in the space that that lose, whether it's higher potency or different form factors. And then those people are loud in the corners, making it complicated. And this plays into the I've been thinking about it as like the policy or the lobbying industrial complex. You know, people have talked about the um, you know, the prison industrial complex for years. And and and sometimes sometimes as I've been thinking about how how regulations might happen over the next year, it it just keeps coming back to dollars. It's like, well, are we going to be able to put dollars behind behind lobbyists and be able to donate to PACs and all the things that that need to happen, which were the things that happened that made Mitch McConnell introduce this language? And Ben just said that there, that capital is drying up. And Martini, you said the same thing. And and it's a complicated time for for people to be making these investments. But I I do think that that groups that are already invested in the space are going to try. Uh I'm I'm wondering if you guys agree. Do you think that people are going to be putting dollars behind this? And and am I missing something? Is there some other way to get it done without putting money behind it? Is is just the will of the people good enough?
Martín Caballero:I I mean, I think that's that's so fast. It's so interesting with like the uh, you know, the will of the people, uh, I because I think that has been a really interesting part of the story, because you know, there's there's popular support, uh, like you mentioned. Um, there's a business uh, you know, case study now that that can be presented that okay, these products are growing, you know, things are going in the right direction. Um so why has that translated into this situation that we've seen now? Or why is that translated into this decline that you mentioned in sort of GOP support for cannabis legalization? If we're making if if that's the case, are we have we overestimated the amount of um destigmatization, you know, the the destigmatizing that has been done? And there's maybe there's still just a lot of people who are drugs are bad, THC is bad, get it all out. Um, so I think like the the messaging around that is is gonna be, you know, uh is gonna be a critical piece of that. And and to the point about money, yes, uh I you know I'm I'm of that belief as well. And I think you know, when you consider that, that really opens the door for the people with the most money. So that's what I Would expect you know the the alcohol lobby and the spirits lobby and some of these you know deeper pocketed stakeholders to supersede some of the grassroots uh activism that we've seen so far. Um, you know, and that's it's unfortunate. Um, and I hope I'm wrong in that sense, but um, but you know, money might talk.
Ben Larson:I I think you're spot on. I'd I the the the challenges, and and I know this from trying to advocate for a single category over the last couple years, is that there's just no unified voice from our side. And in order for grassroots to work, you need to have a unified voice. And while we might be able to achieve that somehow in the long run, which I hope we do, that was kind of like the message uh uh ignite it, it's not gonna happen in the next year. And really, if we don't want to start seeing companies go away, it has to happen in the next like three to six months, and we need to start getting traction. And so when we start thinking about money and how it's being deployed, everyone's gonna be trying. I I heard that there's like three new hemp coalitions that just spun up in the last week. And so, yes, there's money, maybe there'll be some unity of voice, but for what and what's palatable? And and then we think about the alcohol side, like you said, they're already in there, clearly. How do we speak to their needs? How do we at least make ourselves a part of that conversation so that we're not just completely shut out and they make stupid rules and regulations that bury the industry?
Martín Caballero:Yeah, and I think timing is key here as well, because the same way that this kind of appeared out of a special circumstance and situation, I think the timing, as you mentioned, uh the the next three to six months, um, you know, you could say that right now, now that this topic is at the forefront uh of people's minds, that's why maybe you're seeing now is a great time to sell beverages. Maybe now is a great time to really be aggressive and try to get the sort of regulatory momentum going right now and and um and just keep that keep that up. Um, because you know, the way that political winds blow, I mean, we're not talking about the same things uh that we were last month, and there's sure there's gonna be more craziness to come. Finding that sort of the the mind space for collective action on a federal level is gonna be just as tricky.
AnnaRae Grabstein:Uh well, let's be clear too, because this is not a a game of of hemp beverages versus alcohol. Uh, there are a lot of pieces of the alcohol space or the alcohol stakeholder groups that are very much supportive of the category. We've got the retailers who have seen tremendous excitement from consumers and and just really great velocity of and and and just brand success. And they still want these products. And then the distributors that are delivering these products to the retailers similarly um have seen lots of empty space in their trucks as beer companies are losing shelf space because it's just not selling. And so the distributors are all for it as well. And over the past year, there has been lots of public policy uh statements from those stakeholders of support for the category, where we're seeing kind of prohibition behavior is really coming from the brands that are directly competitive with the brands that are taking their shelf space at retail. And so that's, I think, where the reckoning really has to come from. And and I'll be interested to see how much of those retailers and distributors are ready to flex back at those brands that they carry on their shelves and try to get them on board. I think that would be a really useful and helpful path to be like, all right, you know, wine brand ABC that is doing lots of lobbying and get against this category. Like we we need you to back off and let's like figure out a path through this because those are the people that are buying those brands. The retailers and the distributors are paying the bills for the brands. So I'd I'd like to see them flex a little bit to help everyone figure out a path towards mutual alignment if it's possible.
Martín Caballero:Yeah, I mean, I think again, the timing of this, it's so unfortunate, really, because in September, I think late September, we were, you know, everyone was excited because Target and Circle K were all of a sudden stocking these products on their shelves. And I think when you have a retailer like Target or a Circle K involved in this and validating the category, that can certainly be very influential and that makes a difference in these sort of bigger conversations, showing that you know these can exist outside of a liquor and wine retailer and that kind of thing as well. So that would have been nice to see. It would have been nice to have a couple months under the belt uh with with that um before this happened.
AnnaRae Grabstein:Do you have insights after years of like working with these brands or even the trade associations like the wine institute or discus, the ones that were supportive of the ban uh compared to the WSWA and the wholesalers? Like, what is what would you say is the way that the THC beverage category should be building coalition or getting these groups on board? What's the convincing argument?
Martín Caballero:Well, I mean, I think that there's just gonna have to be there's gonna be have to some some compromise on the side of getting warming up to the alcohol retailers in the alcohol lobby. I mean, I think the model that I think a lot of people are would be interested in or have talked about is to sort of, you know, have low-dose beverages moving through the three-tier system, all the other stuff going through um regulated dispensaries. That certainly fits in with alcohol, the existing system, sort of allows them to sort of be driving that situation. So I mean, I I think that's sort of been in the backdrop of of our conversation for for the last um bit here is is really, you know, the alcohol companies and these, you know, the corporations are really going to be driving this conversation. So it'll be, you know, there'll have to be some some compromises on the side of the brands and um self-regulating um in terms of trying to get the the quote unquote bad actors, you know, sort of to carve them out of the situation and to just have a a relationship for beverages directly with uh you know with alcohol in that three-tier system. They're gonna be driving those conversations. Um the question is again, like will these brands and this sort of set as we now see it comprised, will that be on the other side? Or or will be that be, you know, the time where these alcohol brands are releasing their own products and are sort of putting more of their own personal stamp on the category?
Ben Larson:Yeah. There was a very clear statement in the letter that the American distributors of distilled spirits alliance, sorry, uh the Beer Institute, the Wine Institute, and Wine America. They said at the end of the letter, we stand ready to work with Congress and the administration to enact meaningful regulations that protect consumers and ensure a safe, orderly marketplace for these intoxicating products once this loophole is addressed. And so they're at the ready. I think that's an invitation to hear their needs and their wants and kind of find a way to meet in the middle. So I'm gonna I'm gonna do what Anna Ray did and direct a question at both of you. And we'll start with Anna Ray actually, because we've talked a lot about trying to build alignment and trying to not pit the industry against each other, but the theme that keeps rising up is like we have to get this across for beverage, and the beverage companies are gonna want beverage. How do we do that without completely like fractioning the industry?
AnnaRae Grabstein:Oh, um, I mean, I think that you do have to fractionate the industry to some degree. I think it is really important for beverages to figure out how to align with regulated cannabis and to figure out how to align with alcohol. And that potentially means separating and moving away from inhalable form factors completely. And that's that's what I would suggest is is like a path towards short-term political legitimacy and and regulation. And while I don't it's it's really hard. I'm trying, I'm like mincing my words here. I feel bad for the folks that have built businesses that that might not make it through this. But my hope is that some people do. And I think that there is a path through for beverage if it separates itself from the broader form factors, in particular, um, vapes, flour, and pre-rolls that are proliferating in the hemp space. I think that that's just there is not a path forward for that in the next 365 days. So I think that the beverage format does require a non-dispensary retail channel, and that I believe that regulated cannabis could be convinced of that with some consumer data that shows that introducing new consumers to the category is a net positive for driving people into the regulated market. And I think that there is enough stakeholders on the alcohol side in the retail and distributor kind of category that we just need a few strong partners on the brand side that that want to be able to take advantage of this and that are ready and willing to pivot. And working with companies like Vertosa and others that are helping brands develop products to be able to come into the space, to make them feel like it's not too late. Um, and and that there's still like plenty of green space, white space, whatever you want to call it, to enter the beverage category uh with these existing brands that they already have is a is an opportunity. The question is how fast can we pull this all off? I think that that's the path forward.
Martín Caballero:And I think, well, another factor too is also just this another thing that's been in the background and and you know, uh maybe foolish to believe, but uh, you know, legalization or descheduling on a federal level, um, you know, that's been something that's been teased by uh the president at various points. It's really hard to see, you know, what if it's serious or not. Um, but in terms of that sort of what Anna Ray mentioned, is sort of, you know, the carve-out for these beverages and how they're sort of dealt with. I mean, I think that maybe it's more of a pipe dream than uh than even uh these next year that we're talking about, but something that could legitimately unify the plant and legitimately say, okay, you can make these low-dose products without, you know, having hemp be sort of redefined as this, that, and and and sort of like, you know, working through these little loopholes. I mean, that would I, you know, treating cannabis, the cannabis plant as one plant and and in terms of the sourcing would be uh another great advantage, I think, for people in this industry. But you know, again, that's that's another uh very difficult one to see uh coming down the line.
AnnaRae Grabstein:But well, and and you bring up one plant, people are talking a lot about one plant and what that means. And I think there's even a group in the last week that started called the One Plant Alliance. I've seen other groups called One Plant, this or that. I think in some ways, too, the other thing that we need to do is stop creating um new groups and stop trying to capitalize on this opportunity as membership drives, not throwing shade at anyone. And um, and it's not, and I also am not making any moral judgment about people that are choosing these other form factors that I say that I don't see a path for in the next 360 days. I think that there are people in lots of markets that don't have access to regulated cannabis that are finding a lot of relief from a diversity of products that are coming from the hemp plant. It's just we're in this, like, okay, what next? And and I think what next is that we need to choose to rally around some leaders and groups that probably are in existence today, and to have very clear and specific and a small list of asks. Um, and I think that focusing on beverage um is probably the the most choice path within that. And potentially some like I've seen some people in the comments talking about topicals. Like, I think some things like that sure, like that are much more specifically medical, um, are are an option too. But even that could muddy the waters uh and confuse things. And so I think we have to be careful what we ask for, which is something that my mom used to tell me as a child. Um and she's she's in my head right now, like careful what you ask for. So let's let's be choice about what we what we say we want.
Martín Caballero:Or if you don't know what to ask for, ask for more time, right? An extension, um, I think would certainly be uh something that, you know, certainly in the cards, I would imagine uh certainly used to these things would always be. Yeah, exactly. A little hurry up and wait game. Uh so yeah, that that could also be uh effective.
AnnaRae Grabstein:I thought about the extension idea this morning. It was my thought of well, the simplest thing is that if we could go from 365 days to 730 days, would would give us a little bit more time. So maybe not simpler.
Ben Larson:More time, just more uncertainty. But yes. That's true. So I like to do scenario planning as all good business operators. And now I don't want this to happen, but in a downside event, has this industry or category become popular enough to actually drive people into dispensaries? The the thing that we've lamented over the years is that low-dose beverages didn't really have a place in dispensaries, dispensaries didn't want them, the customers weren't going there. But a lot of consumers have tried these now. Like, do you think it's big enough and popular enough now to like drive some volume back into the dispensaries if it if it did get shut down?
Martín Caballero:I'm a bit skeptical of that scenario, to be honest. Um, I mean, I think there's just there's the practical financial mechanisms of you know selling uh that beverage in a in a dispensary. I mean, again, there's different taxes, they have different overhead. Um, there's vaulting has been a big issue. I know in Massachusetts, um, in terms of just you know how much real estate do they have in the store to stock these. Yeah, I've and a lot of vaulting conversations about you know, you got to keep those locked up, um, it creates a big headache. Um, and I think I agree with you that I think that there will be a large contingent of of customers who will want to continue their relationship with these beverages and would be open to going to a dispensary. But I think there's again the question of they're gonna walk in and see a different price, they're gonna walk in and have a different just sort of store experience where you know they'll check an ID before you go through a security door. Um, you know, they're not displayed in the same way. There's gonna be less variety, it it and also just proximity. You know, most people have you know liquor stores or uh grocery stores or someplace near them where they can access this stuff. If you have to drive a couple miles, five, ten miles to to go get it, is are you gonna be as motivated to make that purchase and and add gas onto your expenses as well? Um, it's a tough economic environment, as we all know. So unfortunately, I think I I see more reasons to be skeptical than to be optimistic that there would be a really easy transition. And that's not even counting all those, you know, a big reason why this uh category is taken off is the what people being able to order online and access those products that aren't being sold anywhere in their state at all.
AnnaRae Grabstein:So yeah, a a big difference of why beverage is so different is that as there has been sort of on and off prohibition um policy, whether whether it's on the state level or at the federal level, what happens generally with cannabis products is that when they become prohibited, people go back to the illicit, unregulated market to buy their products because people can go grow cannabis flour in their backyard. It is not as simple to have an illicit cannabis beverage. There is a lot of complication that goes into making a beverage. And one of the reasons that the products have have found success in hemp is not only because of the legality, but because of the access to a scaled supply chain and interstate commerce. And that's even part of why the dispensary model at the state level hasn't worked as well, is not only because of real estate, but because of the amount of infrastructure that it takes to really scale beverage manufacturing and distribution. And there's an existing kind of rail system. So whether this moves forward or becomes prohibited, I just don't see that that beverages are going to become an illicit market product that that people are getting from their plug or their guy, right?
Martín Caballero:Yeah. And I mean, you know, that's a great point. And also just these the the hard work that these beverage brands have done to create their their brands and products are with that, you know, the Whole Foods or the Total Wine or those other places in mind. So we can you can bring those into a dispensary and they're not necessarily gonna work in the same way. Um, certainly the Lodos uh, you know, has a very different context when you can get as much as you want in a dispensary. Um, so there's a lot of practical challenges that uh that are not, you know, it's not a simple switch.
Ben Larson:Martin, as we get closer to the top of the hour, what's your prediction? What do you think is going to happen?
Martín Caballero:I think something will get done. There's enough momentum behind this, and the fact that you have Ted Cruz coming out in support of this, and you know, the fact that this whole experience of Texas earlier this year, I think, has really shown that in a in a time where there's not really much political flexibility, this seems to be an issue where there's a little bit. There's some some um some political will on both sides to do something. But again, I think the regulations that will come out of this and sort of the table that will be set will be tilted towards the larger players, as we mentioned, you know, the people who are gonna be spending a lot of money on lobbying and are gonna really be able to shape that conversation. So I don't think it's the end of this market. And I would have to say, you know, the one thing that I'm just not totally sure on is how that's gonna affect everything else. Uh like we're saying, like the regulated cannabis market and and um and stuff like that. So I do think they're gonna figure it out. I don't think it's gonna look the way it is.
Ben Larson:You brought up uh an interesting stakeholder, right? We have a number of states, a lot of them red ones, that have opened up these markets and uh and and have built regulatory structures. And so we saw Tennessee regulators post a notice after this, after this law was passed saying business as usual until we are forced to do it otherwise, right? And I think similar messaging is going to come out of other hemp regulated states. And so that's another interesting nuance and just layered on top of the fact that 2026 is the midterms. So, like, how does that play into all of this?
Martín Caballero:Yeah, and and and look at Minnesota. I mean, like Minnesota was like this constant example of you know, they're trying to get ahead of this, they're trying to develop uh uh, you know, uh infrastructure around it, and their attorney general came out and signed the letter and to back the prohibition. So, you know, it's yeah, uh the home state of Target, just like we were talking about. So it's just there's a lot of uh there's a lot of crossover and and and um you know competing interests, let's just say look, Martin, I think that we want to keep talking to you for the next couple hours.
AnnaRae Grabstein:We've got great engagement with our online listeners. People really care about this issue and are trying, I think, to just absorb all the information that they can. So let's keep having this conversation. We'll keep talking about it as the news unfolds. But I think for now we have to move to our last call, um, which is our time to give you the mic one last time for a final message, advice, call to action, closing. Uh, what's your last call?
Martín Caballero:Well, I just like to say first of all, just thanks so much for having me. And yes, like this is something we could definitely talk about for much longer, and we will definitely be covering it uh ongoing on bevnet.com. I'd just like to also thank um all the entrepreneurs and brand leaders and companies that have talked to me over the past, you know, 18 months and longer as as this really has developed. Hopefully we've been able to sort of bring your voices into the mix. And I just very much appreciate you guys getting on the phone with me and talking with me about this uh on on both good days and bad days, uh, which I know is uh is tough. Um so just want to shout them out. Um and then also, of course, quick plug for our BevNet Live, our actually our BevNet CPG Media events, which are gonna be taking place um in early December in Los Angeles and Marina Del Rey. We have our Nosh Live event, which is gonna be focused on the food business. Of course, BevNet Live, which is December 7, 8th, and 9th, which is focused on the beverage business. I will have another panel there where I'll be talking with some of the uh brand leaders in this segment um about sort of what they're doing next and a lot of the questions we we talked about today, sort of curing their perspective. So um there'll be some announcement on that very soon. And then, of course, we have Brewbound Live after that, which is focused on the beer industry, which definitely has a lot of crossover as we've talked about, and uh that will be a major part of that uh event as well. So you can register and get your tickets uh at bevnet.com. Hope to see you there and always happy to hear from from people in this industry, and and again, always uh happy to join you guys.
Ben Larson:Amazing. Really looking forward to to BevNet Live. It's one of my favorite events of the year. So we'll be there, the Virtosa team will be there in force. And uh yeah, Mart Martin, really appreciate everything that you do for the category for spending the last hour with us and yeah, just reporting on everything. Hemp beverage, THC beverage, whatever you want to call it, beverage. All right, until next time. Uh we'll we'll we'll talk to you soon.
Martín Caballero:Thanks, guys.
Ben Larson:All right, and Ray, that was a very timely conversation.
AnnaRae Grabstein:Yeah, I mean, we we don't have any answers. So if you're listening listening today thinking that we were going to un speak for yourself.
Ben Larson:I have all the answers.
AnnaRae Grabstein:Oh, yeah, talk to Ben. But uh, I have lots of ideas, so I'm I'm ready to get to work.
Ben Larson:Well, work is what we need. How about you folks? Are you ready to get to work? You're probably already working. Let's be honest, we don't stop. Thank you for stopping and tuning in and engaging and listening to us. Please let us know what you want to hear next. Who should we have on the show? Thank you, thank you to our teams at Virtosa and Wolfmeyer, and of course, our amazing producer, Eric Rossetti. If you've enjoyed this episode, please stop, like, subscribe, share, do all the things. We love you. Thank you. Until next time, folks, stay curious, stay informed, and keep your spirits high. That's the show. I guess we're live, huh? All right.
AnnaRae Grabstein:No intro.
