Many creative entrepreneurs are concocting all sorts of cannabis-laced drinks, but there is more to launching a beverage company than a good recipe. This is where Breck Speed comes in, a veteran of 25+ years in the beverage industry who pivoted to cannabis to work with companies to seamlessly develop and bring their beverage products to market with his latest company, Farmington Research.

You stepped into the industry manufacturing hemp/CBD-based beverages, but now you are adding THC to the mix. Is this because of consumer demand?

Yes, our hemp clients found that their consumers prefer a little bit of THC in their drinks, which leads us to dip into THC products. I believe the consumer is convinced that just a micro dose of THC makes a big difference in a product.

Cann, the low-dose THC beverage, seems in demand and well on its way to becoming a nationally recognized brand.

They very consciously came out with a low-dose beverage to meet the needs of the people who are cannabis curious. They created it based on flavor and enjoyment and not getting wasted. I’ve also seen drinks with 100 milligrams of THC. What the heck is that? You’re only going to sell one bottle. Why not make them where a consumer can have an evening of two or three?

How does someone get around the legality of 100 milligrams per can?

There are a few restrictions on the amount of THC allowed, the way they get around it is to claim there may only be 10 ounces in this, but it’s five servings.

So, I know this is a big question. But if someone came to you looking to launch a cannabis beverage line, what would you say is involved, and what should be considered?

For the first part, many people in this industry don’t have prior beverage experience, there are a few, but most of them are brand new to it. So we spend a lot of time helping them understand the co-packing situation, what kind of appropriate container is needed -glass or plastic, or powder stick or whatever they’re trying to do. And then we also help talk them through sales, marketing, distribution, and all the things you have to go from idea to putting it into the consumer’s hands -it’s a lot. So, even though we only charge people for our water-soluble extract or the technology for the water-soluble extract, we spend about 80% of our time helping folks get their arms around the entire industry. And we’re happy to do that because we want our customers to be successful and pay their bills. Right? 

I see a lot of products coming out in powder form versus bottled liquid form. Do you think one will be more popular than the other? From a store’s perspective, it’s easier to stock powder form than cases of cans or bottles. Also, is the technology better with the powder form versus the liquid form?

There is not a big difference in technology. It’s more about portability because water weighs a lot. If you ship it, whether commercially to another business, retail location, or directly to a consumer, it’s expensive because water weighs more than powder sticks. 

Consumers like ready-to-drink beverages, but there are lots and lots of use occasions where powders will be preferred. How about the convenience of adding a single-serve powder stick to your can of Lacroix at a party? It’s also very discreet if you don’t want to be so brand-forward with your friends. 

I think there will be a large market for powder, and it already exists with non-cannabis brands.

The powder form is a new way to consume cannabis, but I think the consumer will embrace it. I can envision mixologists adding it to mocktails in consumption lounges since alcohol sales are not allowed under the same roof in most states.

Is the extraction technology sufficient, or do we have more to learn and develop on potency, bioavailability, and fast onset?

The industry is young and evolving. We at Farmington Research are always looking for new solutions. We have patent-pending technology, but there’s not one single solution. 

It’s a challenge, and it’s fun to create the beverage that the brand owners envision. They have been enormously innovative using different flavors, additives, adaptions, and other ingredients. All of those things react differently with cannabis. So there is no single solution that takes care of every potential situation. We have to be and are glad to be flexible.

We have to work within a single product line with different flavors and ingredients to make sure that we have a consistent effect throughout, and that is the challenge that is the art and science of Farmington Research.

It’s a new industry that you’re developing. Your company is at the forefront of this brand-new technology of putting THC in beverage form.

It’s been fascinating. We’ve done powders, capsules, drinks, and hot beverages with a sugar cube that’s coming. I think there’ll be many different kinds of successful applications, much like there are now. There are so many varieties of beverages. I don’t know which of them will be the big winners, but the consumers will tell us at the end of the day, as they always do. 

So I’ve been reading that there’s a supply chain issue causing bottlenecks and putting the industry’s growth at risk. Do you see problems in the supply chain right now for cannabis products?

Initially, there was some concern about aluminum cans, for instance. But, the aluminum can manufacturers have worked with their brokers and smaller producers to ensure they have options. Glass bottles can be a challenge. To buy glass bottles directly from a producer usually requires orders in the hundreds of 1000s, but again, some brokers will provide stock bottles.

Closed borders in the beverage industry mean they must have their whole supply chain operating within their state. It doesn’t currently exist because the non-cannabis industry has its supply chain spread throughout the country. How do you think this will affect the growth of the industry?

Co-packing is the bottleneck and a serious challenge right now. I went to the cannabis drinks conference in Illinois last November, and it was striking to me there’s not a single beverage co-packer in Illinois. There we were at a meeting for cannabis drinks, and you couldn’t launch a beverage in that state because of inadequate supply chain issues. And this is repeated state by state. 

Given the lack of co-packers, there are challenges with volumes and other things. The expertise across what’s available is spotty. And people are going about that in different ways. Some products are getting hand-canned in Colorado. You’ve got brands like Wink, who are taking it upon themselves to put together a mobile canning solution where they take their equipment from state to state and work with licensees to get their brand distributed more widely. 

The biggest companies will likely get involved soon, like the alcohol giants Constellation, Anheuser Busch, Molson Coors, and others who will push for cross-state transportation. However, that’s not going to be helpful to the craft brewers of the cannabis industry. They will probably look for local or mobile solutions, much like the craft beer and wine industry does now. They will rely on a system of mobile canning and bottling.

How will Farmington Research work with entrepreneurs in different states?

We build manufacturing partnerships in each state. For example, in California, we have a relationship with a licensed processor called Still Works out of Sacramento. They’re working with us on products for our beverage customers there. 

We enter into a legal licensing relationship to fully comply with their local state law. We not only provide the extraction, but we also help with everything else from R&D to co-packing and distribution. We will oversee the first production run to ensure everything works smoothly and ensure the co-packer does what’s needed to produce the beverage that the brand owner envisioned. 

Maybe this is not a big thing, but I love the idea of the mobile canning cart to solve production issues. Is that something Farmington Research will eventually provide?

We are studying that right now, and it’s a business that’s been well-proven. There are a couple of different ways that it can work. For instance, Wildgoose Canning out of Colorado makes excellent canning units, and it comes on a skid that you can put within a licensed facility. Several different suppliers in this industry make mobile packaging solutions.

How will these states scale production when resources are currently scattered across the country?

I agree that a solution will have to occur shortly to provide services to brands that want to sell in multiple states. 

The mobile canning business seems like a low-cost barrier to entry for entrepreneurs compared to the high costs of opening a dispensary or cultivation facility.

As the industry grows, there are many other supplier opportunities and everything that goes with it. I’m sure it will become vertically integrated as time goes on as people decide to grow, process, package, and do everything themselves. And you have better margins with each of those things, and the more you can add, the more money you can make.

Is there one area in the beverage supply chain that you would suggest someone enter?

Right now, it appears the worst place to be is cultivation, particularly within the beverage industry. The margins in that area will probably continue to be relatively low unless it’s something exceptional. 

If I were a beverage brand, I would probably set up in all states because eventually, they need national brand awareness to compete and generate enough sales.

If consumers like a specific brand in their home state, they certainly want to access it while they’re on vacation, business, or otherwise.

You can listen to this interview on our podcast, The Mary Jane Society.

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