Understanding The Risks

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In the wake of Canada’s legalization of cannabis there’s a lot of buzz floating around about cannabis-infused beverages.

Beer giants like Constellation Brands, Molson Coors and Heineken are dipping their toes in cannabis waters to see what the potential marketplace could look like.

Who are the players?

There’s already cannabis drinks on the U.S. market where marijuana is legal (nine states and the District of Columbia have legalized the leaf for recreational use).

Heineken-owed Lagunitas recently released an IPA-inspired beer that is made out of hops and cannabis, called Hi-Fi Hops. The company said the beverage is alcohol-free and does not contain any carbs or calories. Oregon’s Coalition Brewing also released a CBD-infused beer called Two Flowers IPA.

Constellation Brands, which makes beers like Corona and Negro Modelo, along with whiskies, tequilas and vodkas has invested $4 billion in Ontario pot producer Canopy Growth.

And then there’s Coca-Cola. On Monday, BNN Bloomberg reported the company was in talks with B.C.- marijuana producer, Aurora Cannabis to make CBD-infused wellness drinks.

“Along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world,” Coca-Cola said in a statement.

Aurora Cannabis said it has not signed a deal with respect to any partnership with a drink company. But the company did acknowledge that it had been in conversation with several beverage makers over the last few months.

Drinks can be infused with cannabidiol (CBD), tetrahydrocannabinol (THC) or both.

CBD is one of the hundreds of compounds found in marijuana plants and contains less than 0.1 per cent THC, the primary ingredient that gets you high. Terry Lake, the vice-president of corporate responsibility for HEXO Corp., said because cannabis is the active ingredient, the company’s drinks will not have alcohol.

“It could be a dealcoholized beer that is infused with ingredients of cannabis. And it could be made up of many chemicals like THC, which gets you high, and CBD which does not get you high and will work more for anti-inflammatory and mood modulation qualities,” he said.

The taste of the cannabis drinks will depend on the flavour you buy, Lake said.

READ MORE: Cooking with cannabis? Pot-based pop-up dinner has Vancouver buzzing

“It could be a beer taste in a dealcoholized beer. It could be a fruit flavour, a coffee drink or even kombucha,” he said. “We see in the United States, for instance, you’ve got drinks like Happy Apple in Washington State that is an apple-flavoured cannabis-infused drink, which tastes like fresh apples in a bottle.”

Even though marijuana is not legal, edibles and drinkables will need to be regulated and consumers shouldn’t expect to see anything on shelves until Fall 2019.

READ MORE: Marijuana edibles won’t be sold until July 2019

The federal government said regulating edibles is a “complex undertaking” as there are potential unique health risks and harms that need to be understood before it becomes legal.

According to the government, the sale of cannabis edibles would be authorized no later than Oct. 17, 2019.

“So next summer hopefully we can see these products on the shelves,” Lake said, adding that he hopes to get his company’s cannabis drinks ready for sale next summer.

If you want to pick up a six-pack of cannabis-infused beer, the liquor store may not be the place to do it.

Lake said it’s likely that Health Canada will sell weed drinks in regulated stores that sell cannabis (depending on what province you live in,, this could be a government-run entity or private store).

As legal weed becomes more widespread, it is expected that more beverage companies will get into the business of marijuana. “Many beverage companies see the opportunity of cannabis, which could compete with or replace the alcohol business,” Marc Lustig, CEO of CannaRoyalty said.

He said many of these companies are seeing their sales either plateau or decline due to changing consumer behaviour. So extending their product and brand in the cannabis industry is a great way to boost sales.

According to a 2017 Health Canada survey, only three per cent of cannabis users said they consume pot in a liquid form. However, both Lustig and Lake believe Canadians are ready for the new product and this number will only soar come legalization.

“It’s going to be a great market for this,” Lake said. “If you go down to the U.S., in states like California and Washington, you can find these drinks already, they’re very popular. And we now can do this on a national scale and that’s why other companies are thinking about this.”

Source: Global News

Cannabis refers to the plant Cannabis sativa. The cannabis plant originally comes from Asia. It is now grown around the world, including in Canada.

Cannabis contains hundreds of chemical substances. Over 100 of these are known as cannabinoids. Cannabinoids are made and stored in the plant's trichomes. Trichomes are tiny, clear hairs that stick out from the flowers and leaves of the plant. Cannabinoids have effects on cell receptors in the brain and body. They can change how those cells behave and communicate with each other.

The most researched cannabinoid is delta-9-tetrahydrocannabinol (THC). THC is responsible for the way your brain and body respond to cannabis, including the high and intoxication. THC has some therapeutic effects but it also has harmful effects. Harmful effects may be greater when the strength of THC is higher.

The potency (concentration or strength) of THC in cannabis is often shown as a percentage of THC by weight (or by volume of an oil). THC potency in dried cannabis has increased from an average of 3% in the 1980s to around 15% today. Some strains can have an average as high as 30% THC.

Cannabis that contains very low amounts of THC in its flowers and leaves (less than 0.3%) is classified as hemp.

Cannabidiol (CBD) is another cannabinoid. Unlike THC, CBD does not produce a high or intoxication. There is some evidence that CBD may block or lower some of the effects of THC on the mind. This may occur when the amount of CBD in the cannabis is the same or higher than the amount of THC. CBD is also being studied for its possible therapeutic uses.

Terpenes are chemicals made and stored in the trichomes of the cannabis plant, with the cannabinoids. Terpenes give cannabis its distinctive smell.

The cannabis plant is used for its effects on the mind. It is also used for medical, social or religious purposes. Marijuana is a slang term for the dried flowers, leaves, stems and seeds of the cannabis plant.

Cannabis can be taken in different ways, by:

• smoking:
  • joints or spliffs (cannabis rolled in cigarette paper)
    • which may be mixed with tobacco
  • pipes and bongs (a type of pipe)
  • blunts (partially or entirely hollowed out cigar wrappers filled with cannabis)
• drinking or eating:
  • teas
  • sodas
  • cannabis oil
  • baked goods
• vaporizing and vaping (breathing in dried cannabis or liquid cannabis vapours through a vaporizer or vaping device)
• dabbing (breathing in very hot vapours from heating cannabis concentrates)

Results of the 2017 Canadian Cannabis Survey provide a snapshot of how much cannabis Canadians use, how often they use it, and in what form.

Most cannabis products come from or can be made using the flowers and leaves of the cannabis plant. Depending on how they are made, these products can have a range of potencies of THC (and CBD). Table 1 lists the main forms of cannabis and typical potencies of THC.

Source:

https://www.canada.ca/en/health-canada/services/drugs-medication/cannabis/about.html

Whenever you sell a product to the public, you could become liable for how people behave after consuming that product. Bars and restaurants carry liability insurance in the event that a patron gets drunk and then ends up hurting someone with their car. Pot shops will want similar protection. It’s generally accepted that the number and cost of car accidents will go up due to legal pot, and the manufacturers and sellers of the product will be on the hook for much of the added cost.

You may think that you are not in the cannabis business, but if you rent out commercial space to someone or business that is, you are considered to be in the same business. Insurance, rent, utilities will all follow the costs associated with the cannabis business.

If you rent to a business that grows, stores or sells cannabis products, the risks to your property related to fire, theft, liability and other factors may be affected. 

One of the issues that businesses all over Canada have been looking at is what happens if employees come to work high. Depending on the kind of work the employee does, it could affect their performance in a number of ways, but if they are working with heavy machinery or driving, it could lead to serious injuries and/or major damage. Employers could be liable for at least some of these costs, and may have to put policies in place to protect against them. 

Businesses can already have employer liability coverage, and some businesses may want to review their coverage with their insurance professional to make sure they have enough to cover the new cannabis risk.

 You should review your policy with your broker to see if your coverage is sufficient given the added risk created if people are now smoking weed at your party instead of just having a drink.

Right now, insurance companies don’t have any claims experience upon which to base their pricing of cannabis-related risks, but quite a few are willing to offer coverage anyway. 

Once claims start to roll in in the next few years, insurers will have a better idea of how much all of this will cost. Until then, pricing will not be consistent.