Did THC Beverages Save MN Craft Beer?

Bryon Tonnis wants to be clear: Bent Paddle Brewing Co. was not going to close. But as the pandemic wore on, the Duluth brewery faced difficult decisions like reduced offerings or staff layoffs. Tonnis, CEO and director of brewing operations, knew something had to give.

Then, in May 2022, the Minnesota Legislature passed the low-limit legal weed bill.

“Like any business of our size coming out of COVID—government money drying up, inflation hitting, consumer habits changing—there were some definite pinch points when it came to cash,” Tonnis says. “THC helped that a lot. Especially the co-packing side, with some larger clients that we got early on, helped us weather the storm.”

They’re not alone. The MN Brewers Conference on March 22 in Minneapolis was abuzz with stories of how hemp-infused beverages helped breweries survive this gauntlet of a craft beverage market. Wearing branded flannel, beanies, and workwear, the brewing pros discussed successes.

“I am a true believer that it saved multiple breweries in this state,” says Nathan Smith, founder and CEO of St. Paul-based Lagersmith Can Supply Co. “That definitely was a lifeline.”

Prior to the bill’s passage, many of Lagersmith’s clients for aluminum cans and design services had been delinquent on payments. Soon after the law took effect in August 2022, Smith’s customers quickly brought their accounts current. For some, THC became the moneymaker. Now, supplies for THC beverages comprises nearly 50% of Lagersmith’s business.

“I tell that message to other states that we're in where breweries are struggling,” Smith says.

However, brewers also wanted answers to the sticky challenges: murky regulations, unreliable testing, and unpredictable demand. While challenges remain, Minnesota has an 18-month head start on the rest of the U.S. to solve them, according to Bob Galligan, director of government and industry relations for the Minnesota Craft Brewers Guild.

“Minnesota is doing shit you can't do in Amsterdam,” Galligan says. “We're leading the world in how to treat this substance.”

Should brewers be making Delta-9 drinks?

The conference devoted several breakout sessions to co-packing hemp beverages or examining new regulations. But the topic naturally came up in most others. While no one is forcing brewers to add THC to their rotation, the benefits make the case.

First, it’s financially lucrative. Second, it brings in new customers. Third, breweries already have the tools. And fourth, it’s actually pretty easy. 

While beers ferment for a month or more, a batch of THC seltzer should take about one day, according to Ariel Keeton, brewer at Excelsior Brewing Co. The process involves simple steps: boiling the water, removing dissolved oxygen, adding the cannabis emulsion, flavoring, carbonating, and canning. The main holdup is testing.

At Superior Molecular’s exhibitor booth, Founder John Dugas and Chief Scientific Officer Ben Grosberg explained the conundrum. THC beverage makers in Minnesota must have third-party validation that their beverage is within +/- 10% of the 5 mg per serving legal limit. But the testing equipment often delivers inconsistent results.

“Companies who own multiple labs around the country don't even have a standardization for that,” Grosberg says. “And the sample size that you're taking from these 40-beer-barrel sizes is like taking a 12-ounce can from something that could potentially be 100,000 ounces. In no statistical world would that ever be acceptable.”

But they’re happy to be part of the solution. Today, the company supplies emulsions and white-label weed gummies, along with selling its own products. Thanks to the 2022 law and the brewing community’s enthusiasm to take on THC, Dugas grew Superior Molecular from one part-time employee into a renovated industrial facility in White Bear Lake with eight full-time employees.

“I don't think it would have worked another way. We would just be another extraction lab waiting for recreational cannabis licensing,” Dugas says. “I’d probably still be sitting up there by myself.”

“I’d be somewhere else, too,” adds Grosberg.

“Yeah,” Dugas says. “You’d be back in medical school.”

Why isn’t everyone on board with Minnesota’s reefer madness?

Many brewers have adopted the “that’s not my job” defense that’s endemic in corporate America. Some are located in areas with local ordinances against cannabis. Others are tentative about whether it would work in their area, especially in Greater Minnesota.

“I'm a little skeptical about it, even though I do enjoy the THC,” says Betsy Shadowick, general manager of Goat Ridge Brewing Co. in New London. “But if the owner and our brewer want to make it happen, they're gonna figure that out. I am on board.”

Staff from Mineral Springs Brewery in Owatonna up to Revelation Ale Works in Hallock seemed unsure. Jayme Sczublewski, brand manager at Talking Waters Brewing Co. in Montevideo, expressed concerns but had ideas about how to move forward.

“We will likely not ever make it—I don't want to say ever—but we will probably get it and resell it,” she says. “We'll support another Minnesota brand that's got all gung-ho about it … so that we have the diversity of options to offer the customers that are now going to be expecting that.”

So who’s drinking these canna-bevvies?

Venn diagram time. Put beer drinkers here, THC enthusiasts there, and look at the overlap. It’s significant, but there remain plenty who fall outside that crossfaded center.

The beverages extend the taproom social experience to groups that are meh on beer or alcohol or the double-whammy of NA beer. That includes younger adults of legal drinking age, who consume less alcohol, and senior women, explains Galligan. 

“The main people who consume these are not stoners,” he says.

Even for bonafide beer snobs, taprooms aren’t allowed to serve THC to anyone who has consumed alcohol within five hours.

Exploring new flavors is important to evolve with consumer tastes, and that extends beyond seltzers. After the conference’s welcome and member meeting, one of the first sessions of the day was a panel discussion about coexisting as a THC copacking business and brewery.

Tonnis spoke alongside representatives from Minny Grown, Foundry Nation, and Auroch Canning about how the segment is growing to include mocktails, sodas, cold brew, juices, and more. Tonnis’s rule is: If it tastes good without THC, it’ll taste really good with it.

“The consumer is also starting to distinguish between the different brands and the high you get from the product. Based on your hemp source, your emulsion, your process, it is a little bit different,” Tonnis says. “People are honing in on what they really enjoy.”

This has worked out for Bent Paddle, which has struggled to limit cannabis seltzers to just one-quarter of its production by volume.

“THC, up to this point this year, has actually been a little over 25%,” Tonnis says. “THC continues to grow statewide, and we're now looking at other states.”

At this moment, Minnesota breweries have unique advantages. They can create alcoholic beverages and THC beverages in the same manufacturing environment. The beverages can be sold in grocery and convenience stores. They can ship those beverages to other states.

Most importantly, brewers have the opportunity to help shape policy and serve as a model for others across the nation. Because of this, Dugas says, there’s no turning back now.

“People are craving nonalcoholic offerings, and beverage companies are craving diverse revenue streams. So the consumer wants this, and the brewers want this. When you have those two things creating a perfect storm, I think [the possibility] is sort of infinite,” Dugas says. “We just hope that states keep looking at Minnesota for ways that alcohol producers can co-produce THC.”