November 21, 2025 • 53 mins
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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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Martín Caballero (00:00):
I think something will get done.
There's enough momentum behindthis, and in a time where
there's not really muchpolitical flexibility, this
seems to be an issue wherethere's a little bit.
There's some some politicalwill on both sides to do
something.
Ben Larson (00:18):
Hey everybody, welcome to episode 114 of High
Spirits.
I'm Ben Larson, and with me asalways is Anna Ray Grabstein.
We're recording Tuesday,November 18th, 2025.
And it's another week, anotherairport lounge.
Sorry for any background noise.
I'm sitting in DC, just gotdone with the Ignited
(00:39):
conference.
It was awesome.
It was all policy focused.
And based on the happenings ofthe last week, I would say it's
pretty timely.
So another shout out to ourfriends, the Lane brothers,
Elliot and Patrick Lane.
Another incredible event.
The lineup was incredible.
Anna Ray, I saw all of ourfriends.
You were missed.
(01:02):
You were missed.
AnnaRae Grabstein (01:03):
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 andalmost just booked a flight.
And then I thought, okay, Ben'sgonna be there.
He'll represent, he'll givehigh fives to all my friends.
It's it's been a week, youknow, and sometimes being around
people is is the best thing todo after a big complicated week.
(01:27):
It helps me work kind ofthrough my perspective on things
often.
Ben Larson (01:30):
Yeah, yesterday was a long day.
I think it was about 7:30 a.m.
till about midnight.
That's a lot of socializing forme.
And it was just a lot of hardconversations, I think.
They're necessaryconversations, but a lot of
talk, you'd be proud, about youknow, just the convergence of
our regulatory systems and kindof sorting through what this all
(01:51):
means and what what thetrajectory is.
And I I there was a lot ofcalls 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 (02:07):
I mean, I would say that in the context of
the work that I do as anexternal consultant with
companies that are in bothworlds of hemp and cannabis,
it's it's just really hard tonot be in denial about what's
happening because when you workin the cannabinoid space, what
sometimes feels like obscurepolitics is actually the type of
(02:29):
action that can decide whetheryou can pay your mortgage or
support your family.
And it gets really personal.
And and I see peoplecelebrating the hemp ban, but
it's not a win.
There are so many people whoare so stressed right now trying
to figure out how to see thefuture.
And this is about people, andeven if it benefits your
business, it's still a step backtowards prohibition.
(02:50):
Um, and we've lived throughplenty of that.
So uh I'm I'm staking my myflag in the ground here.
Uh, I think that there that wecan hold multiple things at
once.
There's urgency and seriousnessin the moment, and there's room
for evolution and innovationand and opportunity, but it is
(03:11):
really important, I think, toaccept the reality of what's in
front of us, to make cleardecisions and to be thoughtful
about our actions as leaders, ashumans, all of that within a
really complex time uh marketdynamic.
Ben Larson (03:28):
I think it's true.
It's just hard to rationalizelike what's happening right now
and how to create a unifiedvoice that is actually heard.
You know, there's so muchchaotic energy.
People are in survival mode asthey should be, and they're
calling the representatives,they're storming the hill, so to
speak, not in a January 6thstyle, but like, you know, like
pounding the pavement.
(03:48):
And you know, all I keephearing from some of the the
regulatory side is, you know,when there's so many voices,
like who do you listen to?
AnnaRae Grabstein (03:55):
Yeah.
Ben Larson (03:56):
And, you know, as Alcohol showed last week, it's
probably the people with themoney.
AnnaRae Grabstein (04:00):
Oh MG.
Yeah, yeah.
Well, so we usually do a newsupdate before we bring on our
guest, but today our guest issomeone that covers news.
So we figured that we wouldskip our regular news update and
include our guest, MartinCaballero, in the news update.
So I think I'll just cue themup and bring them on.
(04:22):
Martin is the managing editorat BevNet CPG Media, where he
writes, edits, and leads contentpublishing for BevNet.com.
And um, if you haven't heard ofBevNet, you've probably been
under a rock if you have beendoing anything in the
cannabinoid uh beverage space.
They are the beverageindustry's leading source for
(04:42):
news, analysis, and education.
And he's been reporting on foodand beverage since 2016.
Um, before that, he was aculture contributor to the
Boston Globe and the BostonHerald, and he's worked um at
other national media outletslike USA Today and Reuters.
And um, we are just reallyexcited to have him on to talk
(05:03):
with us today about all thingsbeverage.
Welcome, Martin.
Martín Caballero (05:08):
Thanks for having me, guys.
Super excited to be here.
Great timing.
AnnaRae Grabstein (05:12):
Yeah, we we booked this like about a month
ago, and we did not know howgood the timing would be, but
sometimes it just works out.
Ben Larson (05:21):
I wish the timing wasn't so good.
Like if it could just beanother week, that would have
been much more preferable.
But yes, thank you for beinghere on this fortuitous moment.
Yeah.
AnnaRae Grabstein (05:32):
Help our listeners understand a little
bit about BevNet andspecifically um when BevNet
started covering cannabinoids uhin general to set us up a
little bit.
Martín Caballero (05:43):
Yeah, for sure.
I mean, so BevNet, as youmentioned, sort of were a trade
publication focused on thebeverage industry.
So we're always looking attrends in nutrition and consumer
preferences and ingredients,uh, when they interact with the
beverage industry and when theysort of begin to appear there.
So certainly we started uhtalking about cannabinoids
(06:05):
probably around 2018-2019, justafter the farm bill, um, when we
really started the uh startedseeing the appearance of CBD
drinks on the market.
And that, I think between2019-2021 was a pretty
significant trend, as many ofyou guys probably know and seen.
Um, and that sort of opened thedoor and developed into the
(06:27):
kind of thing that we'reprobably going to discuss more
today and the current subject,which is the sort of
hemp-derived THC market andthese beverages that sort of
existed in that loophole createdby the 2018 Farm Bill.
Um, so that's really been amajor theme over the course of,
I'd say, the past 18 months inparticular, um, really just
(06:47):
reshaping the distributionlandscape, the retail landscape,
the way consumers areinterpreting these products, the
way they're interpreting maybeother functional products and
opening the door to thosethings, the Maha movement.
It's really been sort of aflashpoint for a lot of the
things that we've been covering.
So uh really been fascinated tosee that development.
Ben Larson (07:07):
So I've often reported on the podcast and
elsewhere that this is the mostexciting beverage category
that's ever existed.
And of course, I'm gonna saythat I'm in it, but I have been
hearing it from retailers anddistributors, and I'm just
curious what your perspective onit.
And and the reason I'm askingis because there's different
narratives that you hear in thespace, and and one that kind of
(07:29):
like irked me last week,although it was valid, was that
like sorry your THC seltzersaren't important enough to hold
up the government.
And I'm like, true, but that'snot the point, anyways.
Mart Martin, from yourperspective, is this the most
exciting beverage category thatyou've seen?
Martín Caballero (07:50):
I think so for multiple reasons.
And I think because if youobserve the beverage industry, I
mean it's it's relatively thethe trends can be uh are usually
softer rather than steeper.
So, you know, bottled water,you know, iced tea, you know,
certain categories, they theydon't really change much from
year to year.
And once they're established,there's sort of there's little
(08:13):
things that you can tweak aboutthem.
For example, in you know, insoda, we over the past year
we've seen uh, or over the pastcouple years, we've seen a lot
of interest in these sort ofbetter for you gut health sodas
of the poppies and the olipopsof the world for people who are
familiar with that.
And that's really justbasically that's really just
sort of changing a few things inthe classic soda formula and
(08:34):
and sort of what people expectfrom that soda, and it it
becomes a new thing.
It becomes a different way forpeople to read to imagine the
category and interpret that theyknow that they shouldn't be
drinking high fructose cornsyrup.
Okay, there's a better option,sort of tweaks and incremental
changes uh in that sense.
But with cannabis drinks andthe Hemp Temp derived THC
(08:56):
drinks, I think it's just beenthe biggest thing because it
hits on so many levels, so muchdeeper than that.
And we're talking about peoplewho uh would never use CBD, have
you know, turned off by smokingor are sort of stigmatized for
various reasons, opening thedoor and becoming customers.
We're seeing retailers who youknow are in, you know, selling
(09:16):
beer and wine having a brand newcategory, a new shelf, a new
section that is driving amajority of the or driving a
significant amount of their uhtheir revenue.
It's the kind of thing thatit's funny because it would take
a Coca-Cola or Pepsi, it wouldtake years and millions of
dollars for them to prove outwhat has been proven out in by
(09:40):
this loophole.
I mean, they would spend somuch 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'sget retailers on board.
That's all happened sort oforganically.
So this, when you flip it backto the prohibition, as you
mentioned, it's sort of the mostit's one of the most stunning,
uh, most important beveragesources, but it's also kind of
(10:03):
one of the most amazing owngoals ever scored because you
did all this work and then youshut the door after doing it.
So uh it's uh I think that parthas just been fascinating.
And and hopefully thisopportunity hasn't been
squandered.
Um, because again, like I said,like this is the stuff that
beverage companies would kill todevelop one type of product
(10:26):
that uh that has had this kindof resonance.
Ben Larson (10:28):
Was it an own goal or was there like a 11th man
that entered the field?
I don't know how I'm not asoccer 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 (10:38):
Sports metaphor of your choice, you're
choosing.
Yeah, yeah.
You can mix it up.
If you're you know a footballfan, use a football metaphor.
You know, I went for the easyone.
AnnaRae Grabstein (10:45):
Well, so let's let's lay the groundwork
for the news that that happenedlast week, and then we'll dive
into the details and theimplications.
So, as part of theappropriations bill and the
government shut down, MitchMcConnell and some of his
buddies created some languagethat they inserted into the bill
that would create an off-rampinto a hemp ban 365 days after
(11:10):
implementation.
But it's not exactly a ban.
It is a limit of 0.4 milligramsper package.
And it does a lot of otherdetail, it creates a lot of
other details around kind of howthat affects other cannabinoids
and directives to the FDA,things like that.
After that language wasinserted, Rand Paul offered up
(11:32):
some other language that createda pathway for the Senate to
vote to take that language outand replace it with some other
language that would not havebeen a ban and would have been
an opportunity for research anda regulatory pathway.
And uh that failed heroically.
Um, three-quarters of theSenate voted to keep the
(11:53):
language as is, and one quarterof the Senate voted um with Rand
Paul, which is basically likean exact mirror opposite of the
public support for marijuanalegalization, which is at around
70%.
So it really seems prettyupside down.
And um, and then the languagepassed out of the Senate through
(12:16):
the House, and President Trumpsigned it.
So the industry is now on this365-day clock moving towards the
implementation of this newrule.
And that's that's where we landtoday, um, about five days,
five days in or so.
Did I get that right?
Martín Caballero (12:35):
Yeah, that's that is a very good summation of
it.
Um, I think the conditions thatallowed this to happen are
really a significant part of thestory.
As you mentioned, you know,Mitch McConnell um and uh as
well as the uh representativefrom Maryland have introduced
language and proposed languagesimilar to this at different
times that has been taken out ofuh of other bills and
(12:56):
reintroduced.
So it has been something that'sbeen simmering in the political
sphere.
But, you know, the the uniquesituation of a bill, a funding
bill that you know was going topass in some form or fashion.
There was no way that thegovernment was not going to
reopen at some point, really, Ithink created this opportunity
(13:17):
and for the bill to be includedin there.
And that's why I think you sawsort of a lot of attention
within maybe our circles uh onthis particular issue as it was
happening.
But you know, many other mediaoutlets and and other places
were sort of only reporting hey,did you did you notice that the
hemp beverages are also are arebanned or hemp at THC is gonna
(13:38):
be banned, included in that billthat passed a few days ago?
It was a it was retroactive, itwas after the fact because
again, this so many other thingsgoing on in Washington and the
shutdown, that was gonna takeprecedence.
So I think that's important tonote this really was a unique
set of circumstances thatallowed it to be passed so
quickly and overriding themomentum of of uh anyone uh
(14:00):
opposing it, I think.
Ben Larson (14:01):
My my father literally texted me yesterday
being like, So does this hempban thing affect you?
And I'm like, yeah, kinda.
Oh let me tell you.
Martín Caballero (14:13):
Um, I mean, I think Ben too.
I mean, you you probablynoticed in in conversations, it
it's interesting because I thinkeveryone can understood that
the farm bill loophole wasn'tsort of a forever solution, and
we weren't going to continuesort of on the status quo
forever.
So there's a desire to create,you know, regulations and desire
(14:35):
to to do on both sides, but youknow, the the breakdown
politically and the breakdownand sort of in that sense has
been very interesting and andnot maybe what people expected.
Ben Larson (14:46):
Yeah, it's it's it's been really interesting because
of the past week, how much buzzthere's been about it.
I think there's actually evenmore recognition of the space
now.
And we've been talking to somebrands and retailers, and
they're like, oh yeah, likesales have actually popped.
And you could say it's one oftwo reasons.
One, there's more recognitionof it, people people are
(15:08):
becoming aware, or two, peopleare stocking up because they
don't want their beverages to goaway.
But either way, Martin, youyou've been tracking beverages,
and as you said, as you said, ifPepsi or Coke were to enter the
space, they would spendmillions of dollars to prove out
you know what we've alreadydone.
With this level of excitement,like how do you imagine this
(15:29):
goes in the next year?
Like, how do you expect thisbuzz, this excitement to carry
the category forward and andavoid this existential crisis?
Martín Caballero (15:42):
I would say that it's a fragile situation.
Um, I think, you know, as youmentioned, there's certainly as
a journalist, I certainly canappreciate the power of a
deadline to get you into action.
Um, you know, there'sdefinitely uh a reason to be
engaged and there's a reason tobe motivated, and there's a
whole industry that you knowneeds to figure this out.
(16:05):
But it's really unclear becauseyou know, this situation
essentially existed prior to youknow last week.
There was a desire to getregulations.
There was, you know, somepeople were pushing Congress to
do something, others werelooking to the FDA.
Again, this has been ongoing,and they're we're in the
(16:27):
situation we're in now becausenothing happened previously.
You know, it's kind of the ideathat you know you should start
the divorce proceedings in orderto, you know, spark the romance
back and get the marriage backtogether.
I don't know if that's the wayI would go about things.
Um, so I think it's a fragilemoment.
Um, you know, and and thedesire from brands and certain
you know, people in the industryis is one factor, but there's
(16:52):
is it many things at play?
It's supply chains.
If those are disrupted, if ifpeople decide to take other
avenues or make changes, thatcan you know have whole effects
on the market in that sense.
Uh, investors who have put alot of money into this in in
bets in this category, are theygoing to double down and sort of
(17:14):
look at the situationoptimistically to be first in
line for a better future?
Or are they gonna look to cuttheir losses?
And you know, uncertainty isnot the friend of investors.
So what their sort of tacticsfrom here are gonna be very
telling.
So I think there's certainlyreason to be optimistic, but
there's also reason to beskeptical.
(17:36):
And I think um, again, we're inthe very early stages of this
365-day period.
There's a lot of differentissues that people need to get
on the same page on.
Yeah.
AnnaRae Grabstein (17:46):
Outside of the actual brands that have been
operating in the intoxicatingDHC beverage space, the other
beverage companies that havebeen looking in and watching
this, whether they are afunctional beverage or maybe
they are an alcohol company thatis watching their consumer
demand decline.
(18:06):
I'm curious what you're hearingfrom behind the curtain, kind
of your inside perspective fromthe 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 ascompetitive?
Have they looked at it ascomplementary?
Maybe they think of it assomething that is coming no
(18:27):
matter what, like inevitable.
And how is that changing overthe last week or is it?
Martín Caballero (18:33):
Well, I it's a great question.
And I think like we've likewe've seen, there's so there's
competing interests and there'sdifferent sort of perspectives
on this within uh you know,within a single sort of
umbrella.
So if you have something likeuh like alcohol companies,
certainly um, you know, alcoholconsumption is falling.
(18:53):
Um, you know, uh youngerconsumers are looking for
alternatives, whether they besort of different intoxicating
beverages or just turning awayfrom alcohol in general.
So alcohol companies aredefinitely conscious of this.
Um I think there's theparticular other aspect that
that makes it a little bit moredifficult for them is that um
these products, not all of them,but they a big part of their
(19:17):
story and resonance withconsumers is as an alcohol
replacement and as somethingthat specifically sort of
highlights alcohol's weaknesses,be it you know, uh health
issues or hangover and thingslike that.
So it's a fragile, it's afragile thing to know to sort of
pursue.
And I think for those companiesuh and the hemp industry, I
(19:40):
think it's it's complicated tosee like, you know, both want to
play in these vice categoriesand and sort of exploring and
and and and growing thatcategory, but that's gonna have
an effect on how people perceivealcohol and and and the other
products that are coming fromthose same companies.
So it's a it's a delicate thingto balance.
(20:01):
And I think that there's, youknow, maybe some other people
feel the same way.
I don't know if you guys feelthe same way, but I think the
reason why a lot of alcoholcompanies were in favor of this
prohibition or at least, youknow, stopping it now and then
developing regulations is thatthat allows them to sort of be
at the forefront of thatconversation.
That allows them to sort of setthe table a little bit more
(20:23):
with those regulators, with theyou know, uh stronger lobbying
uh muscle that they have.
AnnaRae Grabstein (20:30):
So they're pissed that they're behind.
Is that is that what you'resaying?
Martín Caballero (20:34):
I think, yeah.
I think, well, they're they'reconscious of falling behind and
they're conscious of territory,you know.
These guys, if there's if theseguys are taking away their
shelf space, if these guys aretaking away their sales, they're
certainly not gonna uh sort ofsit by and let that happen.
Um and so yeah, I mean, I thinkas we've seen from companies
like you know, the Boston BeerCompany operating in Canada.
(20:56):
Um, we've seen you know Tilrayalso, you know, operating in
Canada and sort of layinggroundwork there.
They they certainly want tomake money from this.
Uh and the their support behindthis particular action that we
saw last week, I think is kindof indicative of where they're
at, as opposed to thedistributors who you know are
seeing uh this is somethingthat's gonna lose them a lot of
(21:18):
sense.
Ben Larson (21:19):
I think it even goes beyond territory, though.
It is also like the the powerdynamic that shifted in the
relationship of all thesedifferent players.
With alcohol, you have thethree-tier system, and the
suppliers have a very importantrole in those three tiers.
And exactly in the most youknow, recent years with this
this category, you know,everyone was being very
(21:42):
innovative with how uh theywanted to explore the the the
lack of the three-tier system.
I think that's also uh a bigbig driver to it.
On the capital front, I justwant to point out that like one
of my takeaways from from theshow here is that everything is
literally on pause and untilthere's there's certainty.
And so, you know, it is a veryfragile space.
(22:06):
And how fragile it is, like I'mactually like pulling some
other signals from the rest ofcannabis, and like we always say
it's like, oh, you like we havethis idea that we can't go
backwards, but you have stateslike Massachusetts and Maine
that are trying to repeal theirtheir legal cannabis, and so
it's it's just a reallyinteresting time.
You have a you have a Galluppoll where you show like
(22:27):
slipping uh support forcannabis, you have Republican
consumers reporting at less than50%.
It's hard to tell where it'sall gonna go.
One of the biggest challengesthat we have as far as making
progress in the next year isunity of voice, and as we were
talking about at the beginning,and the fact that cannabis
(22:47):
beverage is only like a verysmall portion of the total
conversation.
Is there any precedent aboutthis kind of like crossover of
other form factors with existingbeverage companies that you
know might be reporting to toBevNet?
Martín Caballero (23:01):
Yeah, I mean, I think it's interesting, it's
an interesting point that youbring up because it's not just
big alcohol has has a stake inthis as well, but also just what
about the regular regulatedcannabis market themselves and
the beverages that are goingthrough that market?
Um, we saw just in the pastmonth um a lawsuit in
Pennsylvania against Total Wineand DoorDash by uh uh cannabis
(23:23):
MSO, you know, for saying that,you know, this is creating an
unfair, unlawful marketplace.
Um, so basically, you know, andand we've seen in California,
you know, that um there's beenthose efforts to sort of steer
this market into that regulatedcannabis channel with its own
taxes and and sort of differentstructure in that sense.
(23:43):
So yeah, I mean, I I I'm tryingto think back to your original
uh question there.
Um there's there's definitelybeen um yeah, I mean, there's
definitely sort of competinginterest there.
I'm I'm I have to recall whatyou you your original question
was.
Ben Larson (23:57):
So let me clarify just a little bit.
I I my question actually liesin like, do you think these
beverage companies have aninterest in beyond beverage?
Like, do you think they willlobby for control of THC
gummies, so to speak?
Like, do they care about thator do they just want the
beverage category?
Gotcha.
Especially when we're talkingabout power dynamic and and
building unity.
Martín Caballero (24:17):
Yeah, um, it's hard to say.
I mean, I think definitely ifyou look at beverage companies
in general, I think they tend tostick to their core uh
competencies.
So I I think it would be a bitof a stretch to be sort of doing
both at once, like looking atgummies and certainly inhalables
and other things.
I mean, again, I think thebeverage format has really been
(24:38):
the key here.
I think this is what this iswhat has the wide appeal.
This is what sort of works indifferent channels.
I think gummies and and otherthings are um, again, like, you
know, that's uh maybe moreassociated with as a candy, is
something for for kids.
Um, you know, I just thinkthere's a lot of like contextual
differences outside of thebeverage category that would I
(25:00):
don't I don't think necessarilythese beverage companies are
looking at that just yet.
But certainly, you know, it'smoney, it's CPG, it's sort of,
you know, they're they're notlooking to overlook
opportunities.
But I think uh, you know, ifthe case of something like
Boston Beer Company doing the uhteapot drink in Canada, I think
it's really like, okay, whatwhat can we sort of how can we
(25:22):
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 ofother moving parts that we need
to sort of go to next?
And I'm not sure if uh, youknow, there's there's maybe some
better data out there uh onthis, but you know, the the
crossover between these hempbeverages leading to purchase of
(25:44):
other formats like gummies oredibles, or leading to uh, you
know, someone who buys a hempdrink in a liquor store, does
that lead to them making apurchase of flour or something,
a high potency product in alegal dispensary?
Um, you know, that I'm not surehow strong that crossover is.
I think the beverageopportunity is pretty unique
(26:05):
here.
So I would imagine they wouldstick close to that for now.
AnnaRae Grabstein (26:08):
I think you're honing in though on the
complexity of this issue,because even if the alcohol
brands are not interested incompeting in non-beverage
formats, I think that they dobelieve that intoxicants, legal
intoxicants that are widelyavailable are competitive to
their product category.
(26:29):
Similar to the way that theregulated cannabis space has in
many instances lobbied againsthemp as potentially competitive
to their business.
And yet there's also anargument to be made how hemp
beverages in a low-dose formfactor could be an on-ramp into
either category, into morepotent beverages that could be
(26:52):
alcohol, could be cannabis, orcould be introducing new
consumers to the market.
And it just speaks to kind ofthis how do we find unity?
Where is the place that thatall of these different groups
can agree in a way that then wecan have a unified voice for our
policy ask?
Within that context, though,even if some group of people are
(27:16):
able to coalesce one message orone agenda, there will be
businesses in the space thatthat lose, whether it's higher
potency or different formfactors.
And then those people are loudin the corners, making it
complicated.
And this plays into the I'vebeen thinking about it as like
(27:37):
the policy or the lobbyingindustrial complex.
You know, people have talkedabout the um, you know, the
prison industrial complex foryears.
And and and sometimes sometimesas I've been thinking about how
how regulations might happenover the next year, it it just
keeps coming back to dollars.
(27:58):
It's like, well, are we goingto be able to put dollars behind
behind lobbyists and be able todonate to PACs and all the
things that that need to happen,which were the things that
happened that made MitchMcConnell introduce this
language?
And Ben just said that there,that capital is drying up.
And Martini, you said the samething.
And and it's a complicated timefor for people to be making
(28:22):
these investments.
But I I do think that thatgroups that are already invested
in the space are going to try.
Uh I'm I'm wondering if youguys agree.
Do you think that people aregoing to be putting dollars
behind this?
And and am I missing something?
Is there some other way to getit done without putting money
behind it?
(28:42):
Is is just the will of thepeople good enough?
Martín Caballero (28:45):
I I mean, I think that's that's so fast.
It's so interesting with likethe uh, you know, the will of
the people, uh, I because Ithink 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, youknow, case study now that that
can be presented that okay,these products are growing, you
(29:07):
know, things are going in theright direction.
Um so why has that translatedinto this situation that we've
seen now?
Or why is that translated intothis decline that you mentioned
in sort of GOP support forcannabis legalization?
If we're making if if that'sthe case, are we have we
overestimated the amount of umdestigmatization, you know, the
(29:31):
the destigmatizing that has beendone?
And there's maybe there's stilljust a lot of people who are
drugs are bad, THC is bad, getit all out.
Um, so I think like the themessaging around that is is
gonna be, you know, uh is gonnabe a critical piece of that.
And and to the point aboutmoney, yes, uh I you know I'm
I'm of that belief as well.
(29:53):
And I think you know, when youconsider that, that really opens
the door for the people withthe most money.
So that's what I Would expectyou know the the alcohol lobby
and the spirits lobby and someof these you know deeper
pocketed stakeholders tosupersede some of the grassroots
uh activism that we've seen sofar.
(30:13):
Um, you know, and that's it'sunfortunate.
Um, and I hope I'm wrong inthat sense, but um, but you
know, money might talk.
Ben Larson (30:21):
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 singlecategory over the last couple
years, is that there's just nounified voice from our side.
And in order for grassroots towork, you need to have a unified
voice.
And while we might be able toachieve that somehow in the long
(30:43):
run, which I hope we do, thatwas kind of like the message uh
uh ignite it, it's not gonnahappen in the next year.
And really, if we don't want tostart seeing companies go away,
it has to happen in the nextlike three to six months, and we
need to start getting traction.
And so when we start thinkingabout money and how it's being
deployed, everyone's gonna betrying.
I I heard that there's likethree new hemp coalitions that
(31:05):
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'spalatable?
And and then we think about thealcohol side, like you said,
they're already in there,clearly.
How do we speak to their needs?
How do we at least makeourselves a part of that
conversation so that we're notjust completely shut out and
they make stupid rules andregulations that bury the
(31:27):
industry?
Martín Caballero (31:28):
Yeah, and I think timing is key here as
well, because the same way thatthis kind of appeared out of a
special circumstance andsituation, I think the timing,
as you mentioned, uh the thenext three to six months, um,
you know, you could say thatright now, now that this topic
is at the forefront uh ofpeople's minds, that's why maybe
you're seeing now is a greattime to sell beverages.
(31:49):
Maybe now is a great time toreally be aggressive and try to
get the sort of regulatorymomentum going right now and and
um and just keep that keep thatup.
Um, because you know, the waythat political winds blow, I
mean, we're not talking aboutthe same things uh that we were
last month, and there's surethere's gonna be more craziness
(32:10):
to come.
Finding that sort of the themind space for collective action
on a federal level is gonna bejust as tricky.
AnnaRae Grabstein (32:19):
Uh well, let's be clear too, because this
is not a a game of of hempbeverages versus alcohol.
Uh, there are a lot of piecesof the alcohol space or the
alcohol stakeholder groups thatare very much supportive of the
category.
We've got the retailers whohave seen tremendous excitement
(32:40):
from consumers and and justreally great velocity of and and
and just brand success.
And they still want theseproducts.
And then the distributors thatare delivering these products to
the retailers similarly um haveseen lots of empty space in
their trucks as beer companiesare losing shelf space because
(33:02):
it's just not selling.
And so the distributors are allfor it as well.
And over the past year, therehas been lots of public policy
uh statements from thosestakeholders of support for the
category, where we're seeingkind of prohibition behavior is
really coming from the brandsthat are directly competitive
with the brands that are takingtheir shelf space at retail.
(33:24):
And so that's, I think, wherethe reckoning really has to come
from.
And and I'll be interested tosee how much of those retailers
and distributors are ready toflex back at those brands that
they carry on their shelves andtry to get them on board.
I think that would be a reallyuseful and helpful path to be
like, all right, you know, winebrand ABC that is doing lots of
(33:49):
lobbying and get against thiscategory.
Like we we need you to back offand let's like figure out a
path through this because thoseare the people that are buying
those brands.
The retailers and thedistributors are paying the
bills for the brands.
So I'd I'd like to see themflex a little bit to help
everyone figure out a pathtowards mutual alignment if it's
possible.
Martín Caballero (34:09):
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 wereall of a sudden stocking these
products on their shelves.
And I think when you have aretailer like Target or a Circle
K involved in this andvalidating the category, that
(34:30):
can certainly be veryinfluential and that makes a
difference in these sort ofbigger conversations, showing
that you know these can existoutside of a liquor and wine
retailer and that kind of thingas well.
So that would have been nice tosee.
It would have been nice to havea couple months under the belt
uh with with that um before thishappened.
AnnaRae Grabstein (34:51):
Do you have insights after years of like
working with these brands oreven the trade associations like
the wine institute or discus,the ones that were supportive of
the ban uh compared to the WSWAand the wholesalers?
Like, what is what would yousay is the way that the THC
beverage category should bebuilding coalition or getting
(35:11):
these groups on board?
What's the convincing argument?
Martín Caballero (35:14):
Well, I mean, I think that there's just gonna
have to be there's gonna be haveto some some compromise on the
side of getting warming up tothe alcohol retailers in the
alcohol lobby.
I mean, I think the model thatI think a lot of people are
would be interested in or havetalked about is to sort of, you
know, have low-dose beveragesmoving through the three-tier
(35:34):
system, all the other stuffgoing through um regulated
dispensaries.
That certainly fits in withalcohol, the existing system,
sort of allows them to sort ofbe driving that situation.
So I mean, I I think that'ssort of been in the backdrop of
of our conversation for for thelast um bit here is is really,
you know, the alcohol companiesand these, you know, the
(35:58):
corporations are really going tobe driving this conversation.
So it'll be, you know, there'llhave to be some some
compromises on the side of thebrands and um self-regulating um
in terms of trying to get thethe quote unquote bad actors,
you know, sort of to carve themout of the situation and to just
have a a relationship forbeverages directly with uh you
(36:21):
know with alcohol in thatthree-tier system.
They're gonna be driving thoseconversations.
Um the question is again, likewill these brands and this sort
of set as we now see itcomprised, will that be on the
other side?
Or or will be that be, youknow, the time where these
alcohol brands are releasingtheir own products and are sort
(36:42):
of putting more of their ownpersonal stamp on the category?
Ben Larson (36:44):
Yeah.
There was a very clearstatement in the letter that the
American distributors ofdistilled spirits alliance,
sorry, uh the Beer Institute,the Wine Institute, and Wine
America.
They said at the end of theletter, we stand ready to work
with Congress and theadministration to enact
meaningful regulations thatprotect consumers and ensure a
(37:05):
safe, orderly marketplace forthese intoxicating products once
this loophole is addressed.
And so they're at the ready.
I think that's an invitation tohear their needs and their
wants and kind of find a way tomeet in the middle.
So I'm gonna I'm gonna do whatAnna Ray did and direct a
question at both of you.
(37:25):
And we'll start with Anna Rayactually, because we've talked a
lot about trying to buildalignment and trying to not pit
the industry against each other,but the theme that keeps rising
up is like we have to get thisacross for beverage, and the
beverage companies are gonnawant beverage.
How do we do that withoutcompletely like fractioning the
(37:46):
industry?
AnnaRae Grabstein (37:47):
Oh, um, I mean, I think that you do have
to fractionate the industry tosome degree.
I think it is really importantfor beverages to figure out how
to align with regulated cannabisand to figure out how to align
with alcohol.
And that potentially meansseparating and moving away from
(38:07):
inhalable form factorscompletely.
And that's that's what I wouldsuggest is is like a path
towards short-term politicallegitimacy and and regulation.
And while I don't it's it'sreally hard.
I'm trying, I'm like mincing mywords here.
I feel bad for the folks thathave built businesses that that
(38:29):
might not make it through this.
But my hope is that some peopledo.
And I think that there is apath through for beverage if it
separates itself from thebroader form factors, in
particular, um, vapes, flour,and pre-rolls that are
proliferating in the hemp space.
I think that that's just thereis not a path forward for that
(38:50):
in the next 365 days.
So I think that the beverageformat does require a
non-dispensary retail channel,and that I believe that
regulated cannabis could beconvinced of that with some
consumer data that shows thatintroducing new consumers to the
category is a net positive fordriving people into the
(39:12):
regulated market.
And I think that there isenough stakeholders on the
alcohol side in the retail anddistributor kind of category
that we just need a few strongpartners on the brand side that
that want to be able to takeadvantage of this and that are
ready and willing to pivot.
And working with companies likeVertosa and others that are
(39:33):
helping brands develop productsto be able to come into the
space, to make them feel likeit's not too late.
Um, and and that there's stilllike plenty of green space,
white space, whatever you wantto call it, to enter the
beverage category uh with theseexisting brands that they
already have is a is anopportunity.
The question is how fast can wepull this all off?
(39:55):
I think that that's the pathforward.
Martín Caballero (39:58):
And I think, well, another factor too is also
just this another thing that'sbeen in the background and and
you know, uh maybe foolish tobelieve, but uh, you know,
legalization or descheduling ona federal level, um, you know,
that's been something that'sbeen teased by uh the president
at various points.
It's really hard to see, youknow, what if it's serious or
(40:20):
not.
Um, but in terms of that sortof what Anna Ray mentioned, is
sort of, you know, the carve-outfor these beverages and how
they're sort of dealt with.
I mean, I think that maybe it'smore of a pipe dream than uh
than even uh these next yearthat we're talking about, but
something that couldlegitimately unify the plant and
(40:41):
legitimately say, okay, you canmake these low-dose products
without, you know, having hempbe 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 interms of the sourcing would be
uh another great advantage, Ithink, for people in this
(41:03):
industry.
But you know, again, that'sthat's another uh very difficult
one to see uh coming down theline.
AnnaRae Grabstein (41:09):
But well, and and you bring up one plant,
people are talking a lot aboutone plant and what that means.
And I think there's even agroup in the last week that
started called the One PlantAlliance.
I've seen other groups calledOne Plant, this or that.
I think in some ways, too, theother thing that we need to do
is stop creating um new groupsand stop trying to capitalize on
(41:31):
this opportunity as membershipdrives, not throwing shade at
anyone.
And um, and it's not, and Ialso am not making any moral
judgment about people that arechoosing these other form
factors that I say that I don'tsee a path for in the next 360
days.
I think that there are peoplein lots of markets that don't
have access to regulatedcannabis that are finding a lot
(41:52):
of relief from a diversity ofproducts that are coming from
the hemp plant.
It's just we're in this, like,okay, what next?
And and I think what next isthat we need to choose to rally
around some leaders and groupsthat probably are in existence
today, and to have very clearand specific and a small list of
(42:16):
asks.
Um, and I think that focusingon beverage um is probably the
the most choice path withinthat.
And potentially some like I'veseen some people in the comments
talking about topicals.
Like, I think some things likethat sure, like that are much
more specifically medical, um,are are an option too.
(42:37):
But even that could muddy thewaters uh and confuse things.
And so I think we have to becareful what we ask for, which
is something that my mom used totell me as a child.
Um and she's she's in my headright now, like careful what you
ask for.
So let's let's be choice aboutwhat we what we say we want.
Martín Caballero (42:56):
Or if you don't know what to ask for, ask
for more time, right?
An extension, um, I think wouldcertainly be uh something that,
you know, certainly in thecards, I would imagine uh
certainly used to these thingswould always be.
Yeah, exactly.
A little hurry up and waitgame.
Uh so yeah, that that couldalso be uh effective.
AnnaRae Grabstein (43:15):
I thought about the extension idea this
morning.
It was my thought of well, thesimplest thing is that if we
could go from 365 days to 730days, would would give us a
little bit more time.
So maybe not simpler.
Ben Larson (43:30):
More time, just more uncertainty.
But yes.
That's true.
So I like to do scenarioplanning as all good business
operators.
And now I don't want this tohappen, but in a downside event,
has this industry or categorybecome popular enough to
actually drive people intodispensaries?
The the thing that we'velamented over the years is that
(43:53):
low-dose beverages didn't reallyhave a place in dispensaries,
dispensaries didn't want them,the customers weren't going
there.
But a lot of consumers havetried these now.
Like, do you think it's bigenough and popular enough now to
like drive some volume backinto the dispensaries if it if
it did get shut down?
Martín Caballero (44:08):
I'm a bit skeptical of that scenario, to
be honest.
Um, I mean, I think there'sjust there's the practical
financial mechanisms of you knowselling uh that beverage in a
in a dispensary.
I mean, again, there'sdifferent taxes, they have
different overhead.
Um, there's vaulting has been abig issue.
I know in Massachusetts, um, interms of just you know how much
(44:31):
real estate do they have in thestore to stock these.
Yeah, I've and a lot ofvaulting conversations about you
know, you got to keep thoselocked up, um, it creates a big
headache.
Um, and I think I agree withyou that I think that there will
be a large contingent of ofcustomers who will want to
(44:51):
continue their relationship withthese beverages and would be
open to going to a dispensary.
But I think there's again thequestion of they're gonna walk
in and see a different price,they're gonna walk in and have a
different just sort of storeexperience where you know
they'll check an ID before yougo through a security door.
Um, you know, they're notdisplayed in the same way.
(45:12):
There's gonna be less variety,it it and also just proximity.
You know, most people have youknow liquor stores or uh grocery
stores or someplace near themwhere they can access this
stuff.
If you have to drive a couplemiles, five, ten miles to to go
get it, is are you gonna be asmotivated to make that purchase
and and add gas onto yourexpenses as well?
(45:34):
Um, it's a tough economicenvironment, as we all know.
So unfortunately, I think I Isee more reasons to be skeptical
than to be optimistic thatthere would be a really easy
transition.
And that's not even countingall those, you know, a big
reason why this uh category istaken off is the what people
(45:54):
being able to order online andaccess those products that
aren't being sold anywhere intheir state at all.
AnnaRae Grabstein (46:00):
So yeah, a a big difference of why beverage
is so different is that as therehas been sort of on and off
prohibition um policy, whetherwhether it's on the state level
or at the federal level, whathappens generally with cannabis
products is that when theybecome prohibited, people go
(46:21):
back to the illicit, unregulatedmarket to buy their products
because people can go growcannabis flour in their
backyard.
It is not as simple to have anillicit cannabis beverage.
There is a lot of complicationthat goes into making a
beverage.
And one of the reasons that theproducts have have found
(46:42):
success in hemp is not onlybecause of the legality, but
because of the access to ascaled supply chain and
interstate commerce.
And that's even part of why thedispensary model at the state
level hasn't worked as well, isnot only because of real estate,
but because of the amount ofinfrastructure that it takes to
really scale beveragemanufacturing and distribution.
(47:04):
And there's an existing kind ofrail system.
So whether this moves forwardor becomes prohibited, I just
don't see that that beveragesare going to become an illicit
market product that that peopleare getting from their plug or
their guy, right?
Martín Caballero (47:22):
Yeah.
And I mean, you know, that's agreat point.
And also just these the thehard work that these beverage
brands have done to create theirtheir brands and products are
with that, you know, the WholeFoods or the Total Wine or those
other places in mind.
So we can you can bring thoseinto a dispensary and they're
not necessarily gonna work inthe same way.
(47:42):
Um, certainly the Lodos uh, youknow, has a very different
context when you can get as muchas you want in a dispensary.
Um, so there's a lot ofpractical challenges that uh
that are not, you know, it's nota simple switch.
Ben Larson (47:58):
Martin, as we get closer to the top of the hour,
what's your prediction?
What do you think is going tohappen?
Martín Caballero (48:05):
I think something will get done.
There's enough momentum behindthis, and the fact that you have
Ted Cruz coming out in supportof this, and you know, the fact
that this whole experience ofTexas earlier this year, I
think, has really shown that ina in a time where there's not
really much politicalflexibility, this seems to be an
issue where there's a littlebit.
There's some some um somepolitical will on both sides to
(48:25):
do something.
But again, I think theregulations that will come out
of this and sort of the tablethat will be set will be tilted
towards the larger players, aswe mentioned, you know, the
people who are gonna be spendinga lot of money on lobbying and
are gonna really be able toshape that conversation.
So I don't think it's the endof this market.
(48:46):
And I would have to say, youknow, the one thing that I'm
just not totally sure on is howthat's gonna affect everything
else.
Uh like we're saying, like theregulated cannabis market and
and um and stuff like that.
So I do think they're gonnafigure it out.
I don't think it's gonna lookthe way it is.
Ben Larson (49:02):
You brought up uh an interesting stakeholder, right?
We have a number of states, alot of them red ones, that have
opened up these markets and uhand and have built regulatory
structures.
And so we saw Tennesseeregulators post a notice after
this, after this law was passedsaying business as usual until
we are forced to do itotherwise, right?
(49:22):
And I think similar messagingis going to come out of other
hemp regulated states.
And so that's anotherinteresting nuance and just
layered on top of the fact that2026 is the midterms.
So, like, how does that playinto all of this?
Martín Caballero (49:36):
Yeah, and and and look at Minnesota.
I mean, like Minnesota was likethis constant example of you
know, they're trying to getahead of this, they're trying to
develop uh uh, you know, uhinfrastructure around it, and
their attorney general came outand signed the letter and to
back the prohibition.
So, you know, it's yeah, uh thehome state of Target, just like
we were talking about.
So it's just there's a lot ofuh there's a lot of crossover
(49:58):
and and and um you knowcompeting interests, let's just
say look, Martin, I think thatwe want to keep talking to you
for the next couple hours.
AnnaRae Grabstein (50:06):
We've got great engagement with our online
listeners.
People really care about thisissue and are trying, I think,
to just absorb all theinformation that they can.
So let's keep having thisconversation.
We'll keep talking about it asthe news unfolds.
But I think for now we have tomove to our last call, um, which
is our time to give you the micone last time for a final
(50:28):
message, advice, call to action,closing.
Uh, what's your last call?
Martín Caballero (50:32):
Well, I just like to say first of all, just
thanks so much for having me.
And yes, like this is somethingwe could definitely talk about
for much longer, and we willdefinitely be covering it uh
ongoing on bevnet.com.
I'd just like to also thank umall the entrepreneurs and brand
leaders and companies that havetalked to me over the past, you
know, 18 months and longer as asthis really has developed.
Hopefully we've been able tosort of bring your voices into
(50:54):
the mix.
And I just very much appreciateyou guys getting on the phone
with me and talking with meabout this uh on on both good
days and bad days, uh, which Iknow is uh is tough.
Um so just want to shout themout.
Um and then also, of course,quick plug for our BevNet Live,
our actually our BevNet CPGMedia events, which are gonna be
taking place um in earlyDecember in Los Angeles and
(51:17):
Marina Del Rey.
We have our Nosh Live event,which is gonna be focused on the
food business.
Of course, BevNet Live, whichis December 7, 8th, and 9th,
which is focused on the beveragebusiness.
I will have another panel therewhere I'll be talking with some
of the uh brand leaders in thissegment um about sort of what
they're doing next and a lot ofthe questions we we talked about
today, sort of curing theirperspective.
(51:38):
So um there'll be someannouncement on that very soon.
And then, of course, we haveBrewbound Live after that, which
is focused on the beerindustry, which definitely has a
lot of crossover as we'vetalked about, and uh that will
be a major part of that uh eventas well.
So you can register and getyour tickets uh at bevnet.com.
Hope to see you there andalways happy to hear from from
people in this industry, and andagain, always uh happy to join
(52:00):
you guys.
Ben Larson (52:01):
Amazing.
Really looking forward to toBevNet Live.
It's one of my favorite eventsof the year.
So we'll be there, the Virtosateam will be there in force.
And uh yeah, Mart Martin,really appreciate everything
that you do for the category forspending the last hour with us
and yeah, just reporting oneverything.
Hemp beverage, THC beverage,whatever you want to call it,
(52:23):
beverage.
All right, until next time.
Uh we'll we'll we'll talk toyou soon.
Martín Caballero (52:28):
Thanks, guys.
Ben Larson (52:29):
All right, and Ray, that was a very timely
conversation.
AnnaRae Grabstein (52:34):
Yeah, I mean, we we don't have any answers.
So if you're listeninglistening today thinking that we
were going to un speak foryourself.
Ben Larson (52:42):
I have all the answers.
AnnaRae Grabstein (52:44):
Oh, yeah, talk to Ben.
But uh, I have lots of ideas,so I'm I'm ready to get to work.
Ben Larson (52:50):
Well, work is what we need.
How about you folks?
Are you ready to get to work?
You're probably alreadyworking.
Let's be honest, we don't stop.
Thank you for stopping andtuning in and engaging and
listening to us.
Please let us know what youwant to hear next.
Who should we have on the show?
Thank you, thank you to ourteams at Virtosa and Wolfmeyer,
(53:10):
and of course, our amazingproducer, 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, staycurious, stay informed, and keep
your spirits high.
That's the show.
I guess we're live, huh?
(53:34):
All right.
AnnaRae Grabstein (53:36):
No intro.
I think something will get done.
There's enough momentum behindthis, and in a time where
there's not really muchpolitical flexibility, this
seems to be an issue wherethere's a little bit.
There's some some politicalwill on both sides to do
something.
Ben Larson (00:18):
Hey everybody, welcome to episode 114 of High
Spirits.
I'm Ben Larson, and with me asalways is Anna Ray Grabstein.
We're recording Tuesday,November 18th, 2025.
And it's another week, anotherairport lounge.
Sorry for any background noise.
I'm sitting in DC, just gotdone with the Ignited
(00:39):
conference.
It was awesome.
It was all policy focused.
And based on the happenings ofthe last week, I would say it's
pretty timely.
So another shout out to ourfriends, the Lane brothers,
Elliot and Patrick Lane.
Another incredible event.
The lineup was incredible.
Anna Ray, I saw all of ourfriends.
You were missed.
(01:02):
You were missed.
AnnaRae Grabstein (01:03):
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 andalmost just booked a flight.
And then I thought, okay, Ben'sgonna be there.
He'll represent, he'll givehigh fives to all my friends.
It's it's been a week, youknow, and sometimes being around
people is is the best thing todo after a big complicated week.
(01:27):
It helps me work kind ofthrough my perspective on things
often.
Ben Larson (01:30):
Yeah, yesterday was a long day.
I think it was about 7:30 a.m.
till about midnight.
That's a lot of socializing forme.
And it was just a lot of hardconversations, I think.
They're necessaryconversations, but a lot of
talk, you'd be proud, about youknow, just the convergence of
our regulatory systems and kindof sorting through what this all
(01:51):
means and what what thetrajectory is.
And I I there was a lot ofcalls 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 (02:07):
I mean, I would say that in the context of
the work that I do as anexternal consultant with
companies that are in bothworlds of hemp and cannabis,
it's it's just really hard tonot be in denial about what's
happening because when you workin the cannabinoid space, what
sometimes feels like obscurepolitics is actually the type of
(02:29):
action that can decide whetheryou can pay your mortgage or
support your family.
And it gets really personal.
And and I see peoplecelebrating the hemp ban, but
it's not a win.
There are so many people whoare so stressed right now trying
to figure out how to see thefuture.
And this is about people, andeven if it benefits your
business, it's still a step backtowards prohibition.
(02:50):
Um, and we've lived throughplenty of that.
So uh I'm I'm staking my myflag in the ground here.
Uh, I think that there that wecan hold multiple things at
once.
There's urgency and seriousnessin the moment, and there's room
for evolution and innovationand and opportunity, but it is
(03:11):
really important, I think, toaccept the reality of what's in
front of us, to make cleardecisions and to be thoughtful
about our actions as leaders, ashumans, all of that within a
really complex time uh marketdynamic.
Ben Larson (03:28):
I think it's true.
It's just hard to rationalizelike what's happening right now
and how to create a unifiedvoice that is actually heard.
You know, there's so muchchaotic energy.
People are in survival mode asthey should be, and they're
calling the representatives,they're storming the hill, so to
speak, not in a January 6thstyle, but like, you know, like
pounding the pavement.
(03:48):
And you know, all I keephearing from some of the the
regulatory side is, you know,when there's so many voices,
like who do you listen to?
AnnaRae Grabstein (03:55):
Yeah.
Ben Larson (03:56):
And, you know, as Alcohol showed last week, it's
probably the people with themoney.
AnnaRae Grabstein (04:00):
Oh MG.
Yeah, yeah.
Well, so we usually do a newsupdate before we bring on our
guest, but today our guest issomeone that covers news.
So we figured that we wouldskip our regular news update and
include our guest, MartinCaballero, in the news update.
So I think I'll just cue themup and bring them on.
(04:22):
Martin is the managing editorat BevNet CPG Media, where he
writes, edits, and leads contentpublishing for BevNet.com.
And um, if you haven't heard ofBevNet, you've probably been
under a rock if you have beendoing anything in the
cannabinoid uh beverage space.
They are the beverageindustry's leading source for
(04:42):
news, analysis, and education.
And he's been reporting on foodand beverage since 2016.
Um, before that, he was aculture contributor to the
Boston Globe and the BostonHerald, and he's worked um at
other national media outletslike USA Today and Reuters.
And um, we are just reallyexcited to have him on to talk
(05:03):
with us today about all thingsbeverage.
Welcome, Martin.
Martín Caballero (05:08):
Thanks for having me, guys.
Super excited to be here.
Great timing.
AnnaRae Grabstein (05:12):
Yeah, we we booked this like about a month
ago, and we did not know howgood the timing would be, but
sometimes it just works out.
Ben Larson (05:21):
I wish the timing wasn't so good.
Like if it could just beanother week, that would have
been much more preferable.
But yes, thank you for beinghere on this fortuitous moment.
Yeah.
AnnaRae Grabstein (05:32):
Help our listeners understand a little
bit about BevNet andspecifically um when BevNet
started covering cannabinoids uhin general to set us up a
little bit.
Martín Caballero (05:43):
Yeah, for sure.
I mean, so BevNet, as youmentioned, sort of were a trade
publication focused on thebeverage industry.
So we're always looking attrends in nutrition and consumer
preferences and ingredients,uh, when they interact with the
beverage industry and when theysort of begin to appear there.
So certainly we started uhtalking about cannabinoids
(06:05):
probably around 2018-2019, justafter the farm bill, um, when we
really started the uh startedseeing the appearance of CBD
drinks on the market.
And that, I think between2019-2021 was a pretty
significant trend, as many ofyou guys probably know and seen.
Um, and that sort of opened thedoor and developed into the
(06:27):
kind of thing that we'reprobably going to discuss more
today and the current subject,which is the sort of
hemp-derived THC market andthese beverages that sort of
existed in that loophole createdby the 2018 Farm Bill.
Um, so that's really been amajor theme over the course of,
I'd say, the past 18 months inparticular, um, really just
(06:47):
reshaping the distributionlandscape, the retail landscape,
the way consumers areinterpreting these products, the
way they're interpreting maybeother functional products and
opening the door to thosethings, the Maha movement.
It's really been sort of aflashpoint for a lot of the
things that we've been covering.
So uh really been fascinated tosee that development.
Ben Larson (07:07):
So I've often reported on the podcast and
elsewhere that this is the mostexciting beverage category
that's ever existed.
And of course, I'm gonna saythat I'm in it, but I have been
hearing it from retailers anddistributors, and I'm just
curious what your perspective onit.
And and the reason I'm askingis because there's different
narratives that you hear in thespace, and and one that kind of
(07:29):
like irked me last week,although it was valid, was that
like sorry your THC seltzersaren't important enough to hold
up the government.
And I'm like, true, but that'snot the point, anyways.
Mart Martin, from yourperspective, is this the most
exciting beverage category thatyou've seen?
Martín Caballero (07:50):
I think so for multiple reasons.
And I think because if youobserve the beverage industry, I
mean it's it's relatively thethe trends can be uh are usually
softer rather than steeper.
So, you know, bottled water,you know, iced tea, you know,
certain categories, they theydon't really change much from
year to year.
And once they're established,there's sort of there's little
(08:13):
things that you can tweak aboutthem.
For example, in you know, insoda, we over the past year
we've seen uh, or over the pastcouple years, we've seen a lot
of interest in these sort ofbetter for you gut health sodas
of the poppies and the olipopsof the world for people who are
familiar with that.
And that's really justbasically that's really just
sort of changing a few things inthe classic soda formula and
(08:34):
and sort of what people expectfrom that soda, and it it
becomes a new thing.
It becomes a different way forpeople to read to imagine the
category and interpret that theyknow that they shouldn't be
drinking high fructose cornsyrup.
Okay, there's a better option,sort of tweaks and incremental
changes uh in that sense.
But with cannabis drinks andthe Hemp Temp derived THC
(08:56):
drinks, I think it's just beenthe biggest thing because it
hits on so many levels, so muchdeeper than that.
And we're talking about peoplewho uh would never use CBD, have
you know, turned off by smokingor are sort of stigmatized for
various reasons, opening thedoor and becoming customers.
We're seeing retailers who youknow are in, you know, selling
(09:16):
beer and wine having a brand newcategory, a new shelf, a new
section that is driving amajority of the or driving a
significant amount of their uhtheir revenue.
It's the kind of thing thatit's funny because it would take
a Coca-Cola or Pepsi, it wouldtake years and millions of
dollars for them to prove outwhat has been proven out in by
(09:40):
this loophole.
I mean, they would spend somuch 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'sget retailers on board.
That's all happened sort oforganically.
So this, when you flip it backto the prohibition, as you
mentioned, it's sort of the mostit's one of the most stunning,
uh, most important beveragesources, but it's also kind of
(10:03):
one of the most amazing owngoals ever scored because you
did all this work and then youshut the door after doing it.
So uh it's uh I think that parthas just been fascinating.
And and hopefully thisopportunity hasn't been
squandered.
Um, because again, like I said,like this is the stuff that
beverage companies would kill todevelop one type of product
(10:26):
that uh that has had this kindof resonance.
Ben Larson (10:28):
Was it an own goal or was there like a 11th man
that entered the field?
I don't know how I'm not asoccer 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 (10:38):
Sports metaphor of your choice, you're
choosing.
Yeah, yeah.
You can mix it up.
If you're you know a footballfan, use a football metaphor.
You know, I went for the easyone.
AnnaRae Grabstein (10:45):
Well, so let's let's lay the groundwork
for the news that that happenedlast week, and then we'll dive
into the details and theimplications.
So, as part of theappropriations bill and the
government shut down, MitchMcConnell and some of his
buddies created some languagethat they inserted into the bill
that would create an off-rampinto a hemp ban 365 days after
(11:10):
implementation.
But it's not exactly a ban.
It is a limit of 0.4 milligramsper package.
And it does a lot of otherdetail, it creates a lot of
other details around kind of howthat affects other cannabinoids
and directives to the FDA,things like that.
After that language wasinserted, Rand Paul offered up
(11:32):
some other language that createda pathway for the Senate to
vote to take that language outand replace it with some other
language that would not havebeen a ban and would have been
an opportunity for research anda regulatory pathway.
And uh that failed heroically.
Um, three-quarters of theSenate voted to keep the
(11:53):
language as is, and one quarterof the Senate voted um with Rand
Paul, which is basically likean exact mirror opposite of the
public support for marijuanalegalization, which is at around
70%.
So it really seems prettyupside down.
And um, and then the languagepassed out of the Senate through
(12:16):
the House, and President Trumpsigned it.
So the industry is now on this365-day clock moving towards the
implementation of this newrule.
And that's that's where we landtoday, um, about five days,
five days in or so.
Did I get that right?
Martín Caballero (12:35):
Yeah, that's that is a very good summation of
it.
Um, I think the conditions thatallowed this to happen are
really a significant part of thestory.
As you mentioned, you know,Mitch McConnell um and uh as
well as the uh representativefrom Maryland have introduced
language and proposed languagesimilar to this at different
times that has been taken out ofuh of other bills and
(12:56):
reintroduced.
So it has been something that'sbeen simmering in the political
sphere.
But, you know, the the uniquesituation of a bill, a funding
bill that you know was going topass in some form or fashion.
There was no way that thegovernment was not going to
reopen at some point, really, Ithink created this opportunity
(13:17):
and for the bill to be includedin there.
And that's why I think you sawsort of a lot of attention
within maybe our circles uh onthis particular issue as it was
happening.
But you know, many other mediaoutlets and and other places
were sort of only reporting hey,did you did you notice that the
hemp beverages are also are arebanned or hemp at THC is gonna
(13:38):
be banned, included in that billthat passed a few days ago?
It was a it was retroactive, itwas after the fact because
again, this so many other thingsgoing on in Washington and the
shutdown, that was gonna takeprecedence.
So I think that's important tonote this really was a unique
set of circumstances thatallowed it to be passed so
quickly and overriding themomentum of of uh anyone uh
(14:00):
opposing it, I think.
Ben Larson (14:01):
My my father literally texted me yesterday
being like, So does this hempban thing affect you?
And I'm like, yeah, kinda.
Oh let me tell you.
Martín Caballero (14:13):
Um, I mean, I think Ben too.
I mean, you you probablynoticed in in conversations, it
it's interesting because I thinkeveryone can understood that
the farm bill loophole wasn'tsort of a forever solution, and
we weren't going to continuesort of on the status quo
forever.
So there's a desire to create,you know, regulations and desire
(14:35):
to to do on both sides, but youknow, the the breakdown
politically and the breakdownand sort of in that sense has
been very interesting and andnot maybe what people expected.
Ben Larson (14:46):
Yeah, it's it's it's been really interesting because
of the past week, how much buzzthere's been about it.
I think there's actually evenmore recognition of the space
now.
And we've been talking to somebrands and retailers, and
they're like, oh yeah, likesales have actually popped.
And you could say it's one oftwo reasons.
One, there's more recognitionof it, people people are
(15:08):
becoming aware, or two, peopleare stocking up because they
don't want their beverages to goaway.
But either way, Martin, youyou've been tracking beverages,
and as you said, as you said, ifPepsi or Coke were to enter the
space, they would spendmillions of dollars to prove out
you know what we've alreadydone.
With this level of excitement,like how do you imagine this
(15:29):
goes in the next year?
Like, how do you expect thisbuzz, this excitement to carry
the category forward and andavoid this existential crisis?
Martín Caballero (15:42):
I would say that it's a fragile situation.
Um, I think, you know, as youmentioned, there's certainly as
a journalist, I certainly canappreciate the power of a
deadline to get you into action.
Um, you know, there'sdefinitely uh a reason to be
engaged and there's a reason tobe motivated, and there's a
whole industry that you knowneeds to figure this out.
(16:05):
But it's really unclear becauseyou know, this situation
essentially existed prior to youknow last week.
There was a desire to getregulations.
There was, you know, somepeople were pushing Congress to
do something, others werelooking to the FDA.
Again, this has been ongoing,and they're we're in the
(16:27):
situation we're in now becausenothing happened previously.
You know, it's kind of the ideathat you know you should start
the divorce proceedings in orderto, you know, spark the romance
back and get the marriage backtogether.
I don't know if that's the wayI would go about things.
Um, so I think it's a fragilemoment.
Um, you know, and and thedesire from brands and certain
you know, people in the industryis is one factor, but there's
(16:52):
is it many things at play?
It's supply chains.
If those are disrupted, if ifpeople decide to take other
avenues or make changes, thatcan you know have whole effects
on the market in that sense.
Uh, investors who have put alot of money into this in in
bets in this category, are theygoing to double down and sort of
(17:14):
look at the situationoptimistically to be first in
line for a better future?
Or are they gonna look to cuttheir losses?
And you know, uncertainty isnot the friend of investors.
So what their sort of tacticsfrom here are gonna be very
telling.
So I think there's certainlyreason to be optimistic, but
there's also reason to beskeptical.
(17:36):
And I think um, again, we're inthe very early stages of this
365-day period.
There's a lot of differentissues that people need to get
on the same page on.
Yeah.
AnnaRae Grabstein (17:46):
Outside of the actual brands that have been
operating in the intoxicatingDHC beverage space, the other
beverage companies that havebeen looking in and watching
this, whether they are afunctional beverage or maybe
they are an alcohol company thatis watching their consumer
demand decline.
(18:06):
I'm curious what you're hearingfrom behind the curtain, kind
of your inside perspective fromthe 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 ascompetitive?
Have they looked at it ascomplementary?
Maybe they think of it assomething that is coming no
(18:27):
matter what, like inevitable.
And how is that changing overthe last week or is it?
Martín Caballero (18:33):
Well, I it's a great question.
And I think like we've likewe've seen, there's so there's
competing interests and there'sdifferent sort of perspectives
on this within uh you know,within a single sort of
umbrella.
So if you have something likeuh like alcohol companies,
certainly um, you know, alcoholconsumption is falling.
(18:53):
Um, you know, uh youngerconsumers are looking for
alternatives, whether they besort of different intoxicating
beverages or just turning awayfrom alcohol in general.
So alcohol companies aredefinitely conscious of this.
Um I think there's theparticular other aspect that
that makes it a little bit moredifficult for them is that um
these products, not all of them,but they a big part of their
(19:17):
story and resonance withconsumers is as an alcohol
replacement and as somethingthat specifically sort of
highlights alcohol's weaknesses,be it you know, uh health
issues or hangover and thingslike that.
So it's a fragile, it's afragile thing to know to sort of
pursue.
And I think for those companiesuh and the hemp industry, I
(19:40):
think it's it's complicated tosee like, you know, both want to
play in these vice categoriesand and sort of exploring and
and and and growing thatcategory, but that's gonna have
an effect on how people perceivealcohol and and and the other
products that are coming fromthose same companies.
So it's a it's a delicate thingto balance.
(20:01):
And I think that there's, youknow, maybe some other people
feel the same way.
I don't know if you guys feelthe same way, but I think the
reason why a lot of alcoholcompanies were in favor of this
prohibition or at least, youknow, stopping it now and then
developing regulations is thatthat allows them to sort of be
at the forefront of thatconversation.
That allows them to sort of setthe table a little bit more
(20:23):
with those regulators, with theyou know, uh stronger lobbying
uh muscle that they have.
AnnaRae Grabstein (20:30):
So they're pissed that they're behind.
Is that is that what you'resaying?
Martín Caballero (20:34):
I think, yeah.
I think, well, they're they'reconscious of falling behind and
they're conscious of territory,you know.
These guys, if there's if theseguys are taking away their
shelf space, if these guys aretaking away their sales, they're
certainly not gonna uh sort ofsit by and let that happen.
Um and so yeah, I mean, I thinkas we've seen from companies
like you know, the Boston BeerCompany operating in Canada.
(20:56):
Um, we've seen you know Tilrayalso, you know, operating in
Canada and sort of layinggroundwork there.
They they certainly want tomake money from this.
Uh and the their support behindthis particular action that we
saw last week, I think is kindof indicative of where they're
at, as opposed to thedistributors who you know are
seeing uh this is somethingthat's gonna lose them a lot of
(21:18):
sense.
Ben Larson (21:19):
I think it even goes beyond territory, though.
It is also like the the powerdynamic that shifted in the
relationship of all thesedifferent players.
With alcohol, you have thethree-tier system, and the
suppliers have a very importantrole in those three tiers.
And exactly in the most youknow, recent years with this
this category, you know,everyone was being very
(21:42):
innovative with how uh theywanted to explore the the the
lack of the three-tier system.
I think that's also uh a bigbig driver to it.
On the capital front, I justwant to point out that like one
of my takeaways from from theshow here is that everything is
literally on pause and untilthere's there's certainty.
And so, you know, it is a veryfragile space.
(22:06):
And how fragile it is, like I'mactually like pulling some
other signals from the rest ofcannabis, and like we always say
it's like, oh, you like we havethis idea that we can't go
backwards, but you have stateslike Massachusetts and Maine
that are trying to repeal theirtheir legal cannabis, and so
it's it's just a reallyinteresting time.
You have a you have a Galluppoll where you show like
(22:27):
slipping uh support forcannabis, you have Republican
consumers reporting at less than50%.
It's hard to tell where it'sall gonna go.
One of the biggest challengesthat we have as far as making
progress in the next year isunity of voice, and as we were
talking about at the beginning,and the fact that cannabis
(22:47):
beverage is only like a verysmall portion of the total
conversation.
Is there any precedent aboutthis kind of like crossover of
other form factors with existingbeverage companies that you
know might be reporting to toBevNet?
Martín Caballero (23:01):
Yeah, I mean, I think it's interesting, it's
an interesting point that youbring up because it's not just
big alcohol has has a stake inthis as well, but also just what
about the regular regulatedcannabis market themselves and
the beverages that are goingthrough that market?
Um, we saw just in the pastmonth um a lawsuit in
Pennsylvania against Total Wineand DoorDash by uh uh cannabis
(23:23):
MSO, you know, for saying that,you know, this is creating an
unfair, unlawful marketplace.
Um, so basically, you know, andand we've seen in California,
you know, that um there's beenthose efforts to sort of steer
this market into that regulatedcannabis channel with its own
taxes and and sort of differentstructure in that sense.
(23:43):
So yeah, I mean, I I I'm tryingto think back to your original
uh question there.
Um there's there's definitelybeen um yeah, I mean, there's
definitely sort of competinginterest there.
I'm I'm I have to recall whatyou you your original question
was.
Ben Larson (23:57):
So let me clarify just a little bit.
I I my question actually liesin like, do you think these
beverage companies have aninterest in beyond beverage?
Like, do you think they willlobby for control of THC
gummies, so to speak?
Like, do they care about thator do they just want the
beverage category?
Gotcha.
Especially when we're talkingabout power dynamic and and
building unity.
Martín Caballero (24:17):
Yeah, um, it's hard to say.
I mean, I think definitely ifyou look at beverage companies
in general, I think they tend tostick to their core uh
competencies.
So I I think it would be a bitof a stretch to be sort of doing
both at once, like looking atgummies and certainly inhalables
and other things.
I mean, again, I think thebeverage format has really been
(24:38):
the key here.
I think this is what this iswhat has the wide appeal.
This is what sort of works indifferent channels.
I think gummies and and otherthings are um, again, like, you
know, that's uh maybe moreassociated with as a candy, is
something for for kids.
Um, you know, I just thinkthere's a lot of like contextual
differences outside of thebeverage category that would I
(25:00):
don't I don't think necessarilythese beverage companies are
looking at that just yet.
But certainly, you know, it'smoney, it's CPG, it's sort of,
you know, they're they're notlooking to overlook
opportunities.
But I think uh, you know, ifthe case of something like
Boston Beer Company doing the uhteapot drink in Canada, I think
it's really like, okay, whatwhat can we sort of how can we
(25:22):
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 ofother moving parts that we need
to sort of go to next?
And I'm not sure if uh, youknow, there's there's maybe some
better data out there uh onthis, but you know, the the
crossover between these hempbeverages leading to purchase of
(25:44):
other formats like gummies oredibles, or leading to uh, you
know, someone who buys a hempdrink in a liquor store, does
that lead to them making apurchase of flour or something,
a high potency product in alegal dispensary?
Um, you know, that I'm not surehow strong that crossover is.
I think the beverageopportunity is pretty unique
(26:05):
here.
So I would imagine they wouldstick close to that for now.
AnnaRae Grabstein (26:08):
I think you're honing in though on the
complexity of this issue,because even if the alcohol
brands are not interested incompeting in non-beverage
formats, I think that they dobelieve that intoxicants, legal
intoxicants that are widelyavailable are competitive to
their product category.
(26:29):
Similar to the way that theregulated cannabis space has in
many instances lobbied againsthemp as potentially competitive
to their business.
And yet there's also anargument to be made how hemp
beverages in a low-dose formfactor could be an on-ramp into
either category, into morepotent beverages that could be
(26:52):
alcohol, could be cannabis, orcould be introducing new
consumers to the market.
And it just speaks to kind ofthis how do we find unity?
Where is the place that thatall of these different groups
can agree in a way that then wecan have a unified voice for our
policy ask?
Within that context, though,even if some group of people are
(27:16):
able to coalesce one message orone agenda, there will be
businesses in the space thatthat lose, whether it's higher
potency or different formfactors.
And then those people are loudin the corners, making it
complicated.
And this plays into the I'vebeen thinking about it as like
(27:37):
the policy or the lobbyingindustrial complex.
You know, people have talkedabout the um, you know, the
prison industrial complex foryears.
And and and sometimes sometimesas I've been thinking about how
how regulations might happenover the next year, it it just
keeps coming back to dollars.
(27:58):
It's like, well, are we goingto be able to put dollars behind
behind lobbyists and be able todonate to PACs and all the
things that that need to happen,which were the things that
happened that made MitchMcConnell introduce this
language?
And Ben just said that there,that capital is drying up.
And Martini, you said the samething.
And and it's a complicated timefor for people to be making
(28:22):
these investments.
But I I do think that thatgroups that are already invested
in the space are going to try.
Uh I'm I'm wondering if youguys agree.
Do you think that people aregoing to be putting dollars
behind this?
And and am I missing something?
Is there some other way to getit done without putting money
behind it?
(28:42):
Is is just the will of thepeople good enough?
Martín Caballero (28:45):
I I mean, I think that's that's so fast.
It's so interesting with likethe uh, you know, the will of
the people, uh, I because Ithink 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, youknow, case study now that that
can be presented that okay,these products are growing, you
(29:07):
know, things are going in theright direction.
Um so why has that translatedinto this situation that we've
seen now?
Or why is that translated intothis decline that you mentioned
in sort of GOP support forcannabis legalization?
If we're making if if that'sthe case, are we have we
overestimated the amount of umdestigmatization, you know, the
(29:31):
the destigmatizing that has beendone?
And there's maybe there's stilljust a lot of people who are
drugs are bad, THC is bad, getit all out.
Um, so I think like the themessaging around that is is
gonna be, you know, uh is gonnabe a critical piece of that.
And and to the point aboutmoney, yes, uh I you know I'm
I'm of that belief as well.
(29:53):
And I think you know, when youconsider that, that really opens
the door for the people withthe most money.
So that's what I Would expectyou know the the alcohol lobby
and the spirits lobby and someof these you know deeper
pocketed stakeholders tosupersede some of the grassroots
uh activism that we've seen sofar.
(30:13):
Um, you know, and that's it'sunfortunate.
Um, and I hope I'm wrong inthat sense, but um, but you
know, money might talk.
Ben Larson (30:21):
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 singlecategory over the last couple
years, is that there's just nounified voice from our side.
And in order for grassroots towork, you need to have a unified
voice.
And while we might be able toachieve that somehow in the long
(30:43):
run, which I hope we do, thatwas kind of like the message uh
uh ignite it, it's not gonnahappen in the next year.
And really, if we don't want tostart seeing companies go away,
it has to happen in the nextlike three to six months, and we
need to start getting traction.
And so when we start thinkingabout money and how it's being
deployed, everyone's gonna betrying.
I I heard that there's likethree new hemp coalitions that
(31:05):
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'spalatable?
And and then we think about thealcohol side, like you said,
they're already in there,clearly.
How do we speak to their needs?
How do we at least makeourselves a part of that
conversation so that we're notjust completely shut out and
they make stupid rules andregulations that bury the
(31:27):
industry?
Martín Caballero (31:28):
Yeah, and I think timing is key here as
well, because the same way thatthis kind of appeared out of a
special circumstance andsituation, I think the timing,
as you mentioned, uh the thenext three to six months, um,
you know, you could say thatright now, now that this topic
is at the forefront uh ofpeople's minds, that's why maybe
you're seeing now is a greattime to sell beverages.
(31:49):
Maybe now is a great time toreally be aggressive and try to
get the sort of regulatorymomentum going right now and and
um and just keep that keep thatup.
Um, because you know, the waythat political winds blow, I
mean, we're not talking aboutthe same things uh that we were
last month, and there's surethere's gonna be more craziness
(32:10):
to come.
Finding that sort of the themind space for collective action
on a federal level is gonna bejust as tricky.
AnnaRae Grabstein (32:19):
Uh well, let's be clear too, because this
is not a a game of of hempbeverages versus alcohol.
Uh, there are a lot of piecesof the alcohol space or the
alcohol stakeholder groups thatare very much supportive of the
category.
We've got the retailers whohave seen tremendous excitement
(32:40):
from consumers and and justreally great velocity of and and
and just brand success.
And they still want theseproducts.
And then the distributors thatare delivering these products to
the retailers similarly um haveseen lots of empty space in
their trucks as beer companiesare losing shelf space because
(33:02):
it's just not selling.
And so the distributors are allfor it as well.
And over the past year, therehas been lots of public policy
uh statements from thosestakeholders of support for the
category, where we're seeingkind of prohibition behavior is
really coming from the brandsthat are directly competitive
with the brands that are takingtheir shelf space at retail.
(33:24):
And so that's, I think, wherethe reckoning really has to come
from.
And and I'll be interested tosee how much of those retailers
and distributors are ready toflex back at those brands that
they carry on their shelves andtry to get them on board.
I think that would be a reallyuseful and helpful path to be
like, all right, you know, winebrand ABC that is doing lots of
(33:49):
lobbying and get against thiscategory.
Like we we need you to back offand let's like figure out a
path through this because thoseare the people that are buying
those brands.
The retailers and thedistributors are paying the
bills for the brands.
So I'd I'd like to see themflex a little bit to help
everyone figure out a pathtowards mutual alignment if it's
possible.
Martín Caballero (34:09):
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 wereall of a sudden stocking these
products on their shelves.
And I think when you have aretailer like Target or a Circle
K involved in this andvalidating the category, that
(34:30):
can certainly be veryinfluential and that makes a
difference in these sort ofbigger conversations, showing
that you know these can existoutside of a liquor and wine
retailer and that kind of thingas well.
So that would have been nice tosee.
It would have been nice to havea couple months under the belt
uh with with that um before thishappened.
AnnaRae Grabstein (34:51):
Do you have insights after years of like
working with these brands oreven the trade associations like
the wine institute or discus,the ones that were supportive of
the ban uh compared to the WSWAand the wholesalers?
Like, what is what would yousay is the way that the THC
beverage category should bebuilding coalition or getting
(35:11):
these groups on board?
What's the convincing argument?
Martín Caballero (35:14):
Well, I mean, I think that there's just gonna
have to be there's gonna be haveto some some compromise on the
side of getting warming up tothe alcohol retailers in the
alcohol lobby.
I mean, I think the model thatI think a lot of people are
would be interested in or havetalked about is to sort of, you
know, have low-dose beveragesmoving through the three-tier
(35:34):
system, all the other stuffgoing through um regulated
dispensaries.
That certainly fits in withalcohol, the existing system,
sort of allows them to sort ofbe driving that situation.
So I mean, I I think that'ssort of been in the backdrop of
of our conversation for for thelast um bit here is is really,
you know, the alcohol companiesand these, you know, the
(35:58):
corporations are really going tobe driving this conversation.
So it'll be, you know, there'llhave to be some some
compromises on the side of thebrands and um self-regulating um
in terms of trying to get thethe quote unquote bad actors,
you know, sort of to carve themout of the situation and to just
have a a relationship forbeverages directly with uh you
(36:21):
know with alcohol in thatthree-tier system.
They're gonna be driving thoseconversations.
Um the question is again, likewill these brands and this sort
of set as we now see itcomprised, will that be on the
other side?
Or or will be that be, youknow, the time where these
alcohol brands are releasingtheir own products and are sort
(36:42):
of putting more of their ownpersonal stamp on the category?
Ben Larson (36:44):
Yeah.
There was a very clearstatement in the letter that the
American distributors ofdistilled spirits alliance,
sorry, uh the Beer Institute,the Wine Institute, and Wine
America.
They said at the end of theletter, we stand ready to work
with Congress and theadministration to enact
meaningful regulations thatprotect consumers and ensure a
(37:05):
safe, orderly marketplace forthese intoxicating products once
this loophole is addressed.
And so they're at the ready.
I think that's an invitation tohear their needs and their
wants and kind of find a way tomeet in the middle.
So I'm gonna I'm gonna do whatAnna Ray did and direct a
question at both of you.
(37:25):
And we'll start with Anna Rayactually, because we've talked a
lot about trying to buildalignment and trying to not pit
the industry against each other,but the theme that keeps rising
up is like we have to get thisacross for beverage, and the
beverage companies are gonnawant beverage.
How do we do that withoutcompletely like fractioning the
(37:46):
industry?
AnnaRae Grabstein (37:47):
Oh, um, I mean, I think that you do have
to fractionate the industry tosome degree.
I think it is really importantfor beverages to figure out how
to align with regulated cannabisand to figure out how to align
with alcohol.
And that potentially meansseparating and moving away from
(38:07):
inhalable form factorscompletely.
And that's that's what I wouldsuggest is is like a path
towards short-term politicallegitimacy and and regulation.
And while I don't it's it'sreally hard.
I'm trying, I'm like mincing mywords here.
I feel bad for the folks thathave built businesses that that
(38:29):
might not make it through this.
But my hope is that some peopledo.
And I think that there is apath through for beverage if it
separates itself from thebroader form factors, in
particular, um, vapes, flour,and pre-rolls that are
proliferating in the hemp space.
I think that that's just thereis not a path forward for that
(38:50):
in the next 365 days.
So I think that the beverageformat does require a
non-dispensary retail channel,and that I believe that
regulated cannabis could beconvinced of that with some
consumer data that shows thatintroducing new consumers to the
category is a net positive fordriving people into the
(39:12):
regulated market.
And I think that there isenough stakeholders on the
alcohol side in the retail anddistributor kind of category
that we just need a few strongpartners on the brand side that
that want to be able to takeadvantage of this and that are
ready and willing to pivot.
And working with companies likeVertosa and others that are
(39:33):
helping brands develop productsto be able to come into the
space, to make them feel likeit's not too late.
Um, and and that there's stilllike plenty of green space,
white space, whatever you wantto call it, to enter the
beverage category uh with theseexisting brands that they
already have is a is anopportunity.
The question is how fast can wepull this all off?
(39:55):
I think that that's the pathforward.
Martín Caballero (39:58):
And I think, well, another factor too is also
just this another thing that'sbeen in the background and and
you know, uh maybe foolish tobelieve, but uh, you know,
legalization or descheduling ona federal level, um, you know,
that's been something that'sbeen teased by uh the president
at various points.
It's really hard to see, youknow, what if it's serious or
(40:20):
not.
Um, but in terms of that sortof what Anna Ray mentioned, is
sort of, you know, the carve-outfor these beverages and how
they're sort of dealt with.
I mean, I think that maybe it'smore of a pipe dream than uh
than even uh these next yearthat we're talking about, but
something that couldlegitimately unify the plant and
(40:41):
legitimately say, okay, you canmake these low-dose products
without, you know, having hempbe 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 interms of the sourcing would be
uh another great advantage, Ithink, for people in this
(41:03):
industry.
But you know, again, that'sthat's another uh very difficult
one to see uh coming down theline.
AnnaRae Grabstein (41:09):
But well, and and you bring up one plant,
people are talking a lot aboutone plant and what that means.
And I think there's even agroup in the last week that
started called the One PlantAlliance.
I've seen other groups calledOne Plant, this or that.
I think in some ways, too, theother thing that we need to do
is stop creating um new groupsand stop trying to capitalize on
(41:31):
this opportunity as membershipdrives, not throwing shade at
anyone.
And um, and it's not, and Ialso am not making any moral
judgment about people that arechoosing these other form
factors that I say that I don'tsee a path for in the next 360
days.
I think that there are peoplein lots of markets that don't
have access to regulatedcannabis that are finding a lot
(41:52):
of relief from a diversity ofproducts that are coming from
the hemp plant.
It's just we're in this, like,okay, what next?
And and I think what next isthat we need to choose to rally
around some leaders and groupsthat probably are in existence
today, and to have very clearand specific and a small list of
(42:16):
asks.
Um, and I think that focusingon beverage um is probably the
the most choice path withinthat.
And potentially some like I'veseen some people in the comments
talking about topicals.
Like, I think some things likethat sure, like that are much
more specifically medical, um,are are an option too.
(42:37):
But even that could muddy thewaters uh and confuse things.
And so I think we have to becareful what we ask for, which
is something that my mom used totell me as a child.
Um and she's she's in my headright now, like careful what you
ask for.
So let's let's be choice aboutwhat we what we say we want.
Martín Caballero (42:56):
Or if you don't know what to ask for, ask
for more time, right?
An extension, um, I think wouldcertainly be uh something that,
you know, certainly in thecards, I would imagine uh
certainly used to these thingswould always be.
Yeah, exactly.
A little hurry up and waitgame.
Uh so yeah, that that couldalso be uh effective.
AnnaRae Grabstein (43:15):
I thought about the extension idea this
morning.
It was my thought of well, thesimplest thing is that if we
could go from 365 days to 730days, would would give us a
little bit more time.
So maybe not simpler.
Ben Larson (43:30):
More time, just more uncertainty.
But yes.
That's true.
So I like to do scenarioplanning as all good business
operators.
And now I don't want this tohappen, but in a downside event,
has this industry or categorybecome popular enough to
actually drive people intodispensaries?
The the thing that we'velamented over the years is that
(43:53):
low-dose beverages didn't reallyhave a place in dispensaries,
dispensaries didn't want them,the customers weren't going
there.
But a lot of consumers havetried these now.
Like, do you think it's bigenough and popular enough now to
like drive some volume backinto the dispensaries if it if
it did get shut down?
Martín Caballero (44:08):
I'm a bit skeptical of that scenario, to
be honest.
Um, I mean, I think there'sjust there's the practical
financial mechanisms of you knowselling uh that beverage in a
in a dispensary.
I mean, again, there'sdifferent taxes, they have
different overhead.
Um, there's vaulting has been abig issue.
I know in Massachusetts, um, interms of just you know how much
(44:31):
real estate do they have in thestore to stock these.
Yeah, I've and a lot ofvaulting conversations about you
know, you got to keep thoselocked up, um, it creates a big
headache.
Um, and I think I agree withyou that I think that there will
be a large contingent of ofcustomers who will want to
(44:51):
continue their relationship withthese beverages and would be
open to going to a dispensary.
But I think there's again thequestion of they're gonna walk
in and see a different price,they're gonna walk in and have a
different just sort of storeexperience where you know
they'll check an ID before yougo through a security door.
Um, you know, they're notdisplayed in the same way.
(45:12):
There's gonna be less variety,it it and also just proximity.
You know, most people have youknow liquor stores or uh grocery
stores or someplace near themwhere they can access this
stuff.
If you have to drive a couplemiles, five, ten miles to to go
get it, is are you gonna be asmotivated to make that purchase
and and add gas onto yourexpenses as well?
(45:34):
Um, it's a tough economicenvironment, as we all know.
So unfortunately, I think I Isee more reasons to be skeptical
than to be optimistic thatthere would be a really easy
transition.
And that's not even countingall those, you know, a big
reason why this uh category istaken off is the what people
(45:54):
being able to order online andaccess those products that
aren't being sold anywhere intheir state at all.
AnnaRae Grabstein (46:00):
So yeah, a a big difference of why beverage
is so different is that as therehas been sort of on and off
prohibition um policy, whetherwhether it's on the state level
or at the federal level, whathappens generally with cannabis
products is that when theybecome prohibited, people go
(46:21):
back to the illicit, unregulatedmarket to buy their products
because people can go growcannabis flour in their
backyard.
It is not as simple to have anillicit cannabis beverage.
There is a lot of complicationthat goes into making a
beverage.
And one of the reasons that theproducts have have found
(46:42):
success in hemp is not onlybecause of the legality, but
because of the access to ascaled supply chain and
interstate commerce.
And that's even part of why thedispensary model at the state
level hasn't worked as well, isnot only because of real estate,
but because of the amount ofinfrastructure that it takes to
really scale beveragemanufacturing and distribution.
(47:04):
And there's an existing kind ofrail system.
So whether this moves forwardor becomes prohibited, I just
don't see that that beveragesare going to become an illicit
market product that that peopleare getting from their plug or
their guy, right?
Martín Caballero (47:22):
Yeah.
And I mean, you know, that's agreat point.
And also just these the thehard work that these beverage
brands have done to create theirtheir brands and products are
with that, you know, the WholeFoods or the Total Wine or those
other places in mind.
So we can you can bring thoseinto a dispensary and they're
not necessarily gonna work inthe same way.
(47:42):
Um, certainly the Lodos uh, youknow, has a very different
context when you can get as muchas you want in a dispensary.
Um, so there's a lot ofpractical challenges that uh
that are not, you know, it's nota simple switch.
Ben Larson (47:58):
Martin, as we get closer to the top of the hour,
what's your prediction?
What do you think is going tohappen?
Martín Caballero (48:05):
I think something will get done.
There's enough momentum behindthis, and the fact that you have
Ted Cruz coming out in supportof this, and you know, the fact
that this whole experience ofTexas earlier this year, I
think, has really shown that ina in a time where there's not
really much politicalflexibility, this seems to be an
issue where there's a littlebit.
There's some some um somepolitical will on both sides to
(48:25):
do something.
But again, I think theregulations that will come out
of this and sort of the tablethat will be set will be tilted
towards the larger players, aswe mentioned, you know, the
people who are gonna be spendinga lot of money on lobbying and
are gonna really be able toshape that conversation.
So I don't think it's the endof this market.
(48:46):
And I would have to say, youknow, the one thing that I'm
just not totally sure on is howthat's gonna affect everything
else.
Uh like we're saying, like theregulated cannabis market and
and um and stuff like that.
So I do think they're gonnafigure it out.
I don't think it's gonna lookthe way it is.
Ben Larson (49:02):
You brought up uh an interesting stakeholder, right?
We have a number of states, alot of them red ones, that have
opened up these markets and uhand and have built regulatory
structures.
And so we saw Tennesseeregulators post a notice after
this, after this law was passedsaying business as usual until
we are forced to do itotherwise, right?
(49:22):
And I think similar messagingis going to come out of other
hemp regulated states.
And so that's anotherinteresting nuance and just
layered on top of the fact that2026 is the midterms.
So, like, how does that playinto all of this?
Martín Caballero (49:36):
Yeah, and and and look at Minnesota.
I mean, like Minnesota was likethis constant example of you
know, they're trying to getahead of this, they're trying to
develop uh uh, you know, uhinfrastructure around it, and
their attorney general came outand signed the letter and to
back the prohibition.
So, you know, it's yeah, uh thehome state of Target, just like
we were talking about.
So it's just there's a lot ofuh there's a lot of crossover
(49:58):
and and and um you knowcompeting interests, let's just
say look, Martin, I think thatwe want to keep talking to you
for the next couple hours.
AnnaRae Grabstein (50:06):
We've got great engagement with our online
listeners.
People really care about thisissue and are trying, I think,
to just absorb all theinformation that they can.
So let's keep having thisconversation.
We'll keep talking about it asthe news unfolds.
But I think for now we have tomove to our last call, um, which
is our time to give you the micone last time for a final
(50:28):
message, advice, call to action,closing.
Uh, what's your last call?
Martín Caballero (50:32):
Well, I just like to say first of all, just
thanks so much for having me.
And yes, like this is somethingwe could definitely talk about
for much longer, and we willdefinitely be covering it uh
ongoing on bevnet.com.
I'd just like to also thank umall the entrepreneurs and brand
leaders and companies that havetalked to me over the past, you
know, 18 months and longer as asthis really has developed.
Hopefully we've been able tosort of bring your voices into
(50:54):
the mix.
And I just very much appreciateyou guys getting on the phone
with me and talking with meabout this uh on on both good
days and bad days, uh, which Iknow is uh is tough.
Um so just want to shout themout.
Um and then also, of course,quick plug for our BevNet Live,
our actually our BevNet CPGMedia events, which are gonna be
taking place um in earlyDecember in Los Angeles and
(51:17):
Marina Del Rey.
We have our Nosh Live event,which is gonna be focused on the
food business.
Of course, BevNet Live, whichis December 7, 8th, and 9th,
which is focused on the beveragebusiness.
I will have another panel therewhere I'll be talking with some
of the uh brand leaders in thissegment um about sort of what
they're doing next and a lot ofthe questions we we talked about
today, sort of curing theirperspective.
(51:38):
So um there'll be someannouncement on that very soon.
And then, of course, we haveBrewbound Live after that, which
is focused on the beerindustry, which definitely has a
lot of crossover as we'vetalked about, and uh that will
be a major part of that uh eventas well.
So you can register and getyour tickets uh at bevnet.com.
Hope to see you there andalways happy to hear from from
people in this industry, and andagain, always uh happy to join
(52:00):
you guys.
Ben Larson (52:01):
Amazing.
Really looking forward to toBevNet Live.
It's one of my favorite eventsof the year.
So we'll be there, the Virtosateam will be there in force.
And uh yeah, Mart Martin,really appreciate everything
that you do for the category forspending the last hour with us
and yeah, just reporting oneverything.
Hemp beverage, THC beverage,whatever you want to call it,
(52:23):
beverage.
All right, until next time.
Uh we'll we'll we'll talk toyou soon.
Martín Caballero (52:28):
Thanks, guys.
Ben Larson (52:29):
All right, and Ray, that was a very timely
conversation.
AnnaRae Grabstein (52:34):
Yeah, I mean, we we don't have any answers.
So if you're listeninglistening today thinking that we
were going to un speak foryourself.
Ben Larson (52:42):
I have all the answers.
AnnaRae Grabstein (52:44):
Oh, yeah, talk to Ben.
But uh, I have lots of ideas,so I'm I'm ready to get to work.
Ben Larson (52:50):
Well, work is what we need.
How about you folks?
Are you ready to get to work?
You're probably alreadyworking.
Let's be honest, we don't stop.
Thank you for stopping andtuning in and engaging and
listening to us.
Please let us know what youwant to hear next.
Who should we have on the show?
Thank you, thank you to ourteams at Virtosa and Wolfmeyer,
(53:10):
and of course, our amazingproducer, 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, staycurious, stay informed, and keep
your spirits high.
That's the show.
I guess we're live, huh?
(53:34):
All right.
AnnaRae Grabstein (53:36):
No intro.
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