For centuries, not much about drinking has really changed. If you wanted to wind down with a beverage at the end of the day, or maybe cut loose a little, you had the choice of different variations of three things: beer, wine and hard alcohol.
Of course, there have been a few disruptors to the alcohol marketplace over the past 20 years. The first was craft beer, a movement that got started in the 1960s, saw a major revival starting around the great recession that led craft breweries taking 40 of the 50 spots among U.S. breweries by 2017. Craft beer popularity continues — as of 2023, the industry accounts for 24.7% of the $117 billion U.S. beer market.
Around the time of another difficult period in history, the COVID-19 pandemic, another variation, this time in hard alcohol, was dominating the marketplace. Spurred by a renewed consumer focus on health and the novelty of a new option, hard seltzers started to really gain popularity in 2016 with the release of White Claw and Truly — alcoholic beverages with a light taste and fewer calories, carbs and sugar. Hard seltzer sales increased 130% in 2020, with almost 300 new brands launched in the U.S. from July 2020 to July 2021 — up 60% from the year before. By 2021, this relatively new category made up 10% of the total alcoholic beverage market.
Meanwhile, the realm of adult substances saw another major change with the passing of the 2018 farm bill, which legalized the sale of hemp and hemp-derived products across the country. In 2018, 33 states had legalized marijuana to some degree and consumer demand for the drug for both for medical and recreational use was continuing to grow.
Hemp and marijuana are both cannabis plants; the distinction is only a legal one that defines hemp as cannabis that contains less THC (0.3% or less). THC — a chemical compound in cannabis responsible for creating a “high” — can still be derived from hemp.
Four years after the doors opened for hemp, with the industry booming across the country, the Louisiana Legislature passed a bill in 2022 that allowed the manufacturing and sale of hemp products, stating that “the total THC in a product shall not exceed eight milligrams per serving.” That amount was falsely thought to not be able to produce a high. The bill also didn’t limit the number of servings a product (like a bag of gummies, or even a canned beverage) could contain.
Since the bill’s passage, approximately 2,000 hemp-related businesses have popped up across the state, including BakPak, the brand name of hemp-related products created by another company called Louisiana Hemp Extractors, which launched in 2019 in Arnaudville, Louisiana. Both are owned by Paige Melancon, a native of nearby Leonville, Louisiana. A well-known figure in the burgeoning industry, Melancon recently concluded his term as president of the Hemp Association of Louisiana and now serves on its board of directors.
“We make hundreds of products for ourselves and white label for other people,” said Melancon of his companies, “and we do everything in-house, from extract the oil to make the water soluble for the drinks.”
Hemp vs. Marijuana… What’s the difference?
Hemp and marijuana are both names for the same species of plant. The differentiation was created on the legal side to identify how much THC a plant contains. To be called hemp, a cannabis plant must have 0.3% or less THC by dry weight.
“The drinks” Melancon refers to are THC-infused beverages — the latest disruptor of the adult beverage industry, and the first not to include alcohol. The beverages have essentially built off the popularity of hard seltzers but swapped the alcohol for THC.
The beverages have multiple selling points that appeal to consumers. The first lies in what they lack.
Concern over the health effects of alcohol consumption have grown in recent years, especially among younger consumers. In fact, according to the latest Gallup data, only 62% of adults under 35 say they drink, down from 72% two decades ago. Unsurprisingly, alcohol companies have been feeling the hit. U.S. beer production and imports were down 5% in 2023.
“There are so many reasons people don’t want to, or can’t drink,” noted Marie La France, one of four founders of Louie Louie, a New Orleans-based company that launched its first THC-infused beverages in 2023. “Maybe you’re a cancer survivor, maybe you’re a mom that can’t afford to be hungover the next day, or maybe you just want something different once in a while.”
The movement toward marijuana and away from alcohol has grown so popular a new term has popped up for it — Cali (or California) sober.
Marijuana acceptance and popularity continues to grow. It is now legal for recreational use in 24 states, and 38 have legalized it for medicinal use. This past spring, a study reported that more Americans are using marijuana on a daily basis than alcohol.
Compared to alcoholic options, cannabis beverages also tend to have less calories and less sugar and promise a faster-acting high (typically 10-15 minutes) than smoking, vaping or taking an edible, and one that doesn’t last as long. In the first quarter of 2024, cannabis data company BDSA tracked sales of THC infused beverages in just 15 states — together they totaled about $50 million, and that was not including many states that can now sell hemp-derived THC beverages like Louisiana.
Louisiana’s Leader Among the handful of Louisiana companies making THC drinks, Crescent Canna is the largest, and the company’s website goes a step further, touting its Crescent 9 THC seltzer as “the fastest-growing cannabis seltzer in the U.S.”
Crescent Canna launched in 2019 as a manufacturer of CBD topicals and tinctures. (CBD is short for cannabidiol, a non-addictive chemical in cannabis that doesn’t create a high and may have benefits for anxiety, insomnia, chronic pain and addiction). The company is run by Joe Gerrity, a native Californian who moved to New Orleans to attend Tulane University and never left. A real estate professional, Gerrity still owns a real estate brokerage, a property management company and an investing company.
“We saw the potential in selling THC products that were high quality and significantly cheaper than what you could find both on the black market and from recreational marijuana states and medicinal marijuana states,” he said. “One of my partners is a liquor distributor in Tennessee, and he and I had discussed potentially getting into the beverage industry. Ultimately, we decided to pivot in the summer of 2022 toward manufacturing beverages, as opposed to manufacturing our own edible products.”
Gerrity expanded the manufacturing facility he had in North Carolina, which is now about 9,000 square feet.
“We effectively built a small brewery,” he said. “We learned all about the ins and outs of manufacturing a beverage product, logistical challenges, the changes in manufacturing, and we launched our first product on the beverage side in, I believe, February of 2023.”
Success came fast.
“Very quickly we became the top-selling THC product in this market, and also one of the top-selling products in Nashville, which was the second place that we launched,” Gerrity said. “We then decided to focus heavily on New Orleans. Because of the regulated environment here, it was very specifically legal, and we wanted to spend money in a place where the laws would not be changing drastically.”
Gerrity said his product was welcomed by other local companies like Rouses and Martin’s Wine and Spirits.
“There was a period where we were out selling every other beverage [Rouses] carried,” he said. “We’re selling close to 400 cases a month at some individual grocery stores, which is a lot for a canned beverage product. We found a lot of success in the local market, and we’ve parlayed that success into establishing relationships around the country with other large distributors and grocery chains.
Headquartered out of an office on Magazine Street that is home to about a dozen staff, Crescent Canna also has a team of five at its facility in North Carolina and about a dozen sales reps around the country. The company currently sells in 15 states, as well as direct-to-consumers online.
“We manufacture about 1 million cans at a time, every other month, with revenue close to $2 million a month,” he said. “We’ve seen 350% year-over-year growth.”
Brewery Diversifies Since opening in 2016, Urban South had established itself as a popular local craft brewery always looking to try something new. In addition to a 40,000-square-foot facility on Tchoupitoulas Street that is home to a tasting room and all of the company’s manufacturing and distribution operations, (along with about 50 employees), Urban South also operates a burger truck in New Orleans and a hospitality group and taco truck in Pensacola, Florida.
Following about six months of research, in December 2023, the brewery launched its first THC-infused beverage, Driftee, a seltzer with no calories, carbs or sugar.
“We saw some trends like hard seltzers and RTD (ready to drink) cocktails come online, and we didn’t really get in early enough to be an established player,” explained Jacob Landry, founder and president of Urban South. “Since this was an entirely new category, we loved the idea of jumping in relatively early and really trying to establish ourselves as one of the early movers. And then on top of that, craft beer sales have kind of plateaued and are a bit stagnant, so we also thought, just as a company, we needed to hedge our bets and diversify a little bit.”
Landry said the move has paid off, and fast. Offered in three different flavors, Driftee is
distributed statewide through Wines Unlimited, as well as throughout Alabama. The company just added distribution in Hattiesburg and Jackson, Mississippi, in September.
Following the quick success of Driftee, which Landry said he’s pretty sure is the second-best selling THC beverage in Louisiana, Urban South just released its second brand, Stratus.
“Stratus is our flavor-forward brand,” said Landry. “The flavor we have started with is peaches and cream. Stratus does have sugar; it also has fruit puree and flavorings that make it a more robust flavor experience.”
Less than a year into production, Urban South’s THC drinks already account for 10% of the brewery’s income, and Landry said the manufacturing process is a lot simpler than with beer.
“Because beer needs fermentation time, the process can take anywhere from two to four weeks,” he said. “But with these beverages we’re taking water, we’re carbonating it, adding flavoring and adding THC isolate, so we can do a batch within about 24 hours.”
According to the National Institute on Drug Abuse, “Chronic, heavy — every day or almost — use of cannabis products with THC is associated with developing cannabis use disorder, a type of substance use disorder. Studies have estimated that 22% to 30% of people who use cannabis have the disorder. The strongest predictor of cannabis use disorder is how often someone uses it, but other factors, like a family history of drug use and how long a person has been using cannabis, can also play a role.”
A Friends and Family Affair Louie Louie is another top contender in Louisiana’s THC-infused beverage marketplace. The company was initiated by Eric Becker, a lawyer who has spent years working in the world of cannabis regulations and compliance. In the summer of 2022, Becker witnessed what happened when Minnesota changed some its laws that allowed local breweries to start making low-dose THC beverages.
“It gave me the idea that we could start doing something like that here,” he said.
Becker and his wife, Michelle, who has a background in large scale food operations, decided to reach out to another married couple they had known for years — Ken Jackson and Marie La France. Jackson is a lifelong fine food connoisseur and restaurateur who was one of the founding partners of the acclaimed restaurant Herbsaint. He had a passion for ingredients, sourcing and recipe development and had been crafting cocktail recipes for 25 years. La France is a publishing and digital marketing professional whose background includes seven years at Vogue.
Together, the two couples possessed all the necessary business knowledge to take on this new venture — now they just needed to make it happen.
While Jackson turned the couple’s kitchen into something resembling a chemistry lab, the others went to work securing ingredients and developing a marketing plan.
“Our goal from the beginning was to be all about New Orleans,” explained La France. “With Louie Louie we are selling NOLA to the world.”
The first flavor, satsuma, was created with real fruit, herbs and organic cane sugar, a trend the company continued with the launch of blackberry lemon — far and away the most successful to date — and their third offering, ginger cucumber.
It’s no accident that Louie Louie’s flavors create a Carnival color palette of purple, green and gold; every part of the marketing is New Orleans-centered. The company’s name was inspired by the popular song, but it’s also a nod to Louis Armstrong (who Becker noted was a big cannabis advocate). The font used for the word “Seltzer” on the cans was inspired from an old Ramos gin fizz glass from The Sazerac Bar inside The Roosevelt New Orleans hotel.
Launched not long after Carnival 2023, Louie Louie currently has 250 accounts in Louisiana and close to 100 in Texas.
“We just launched into Alabama and the Florida Panhandle,” said Becker. “We’re growing at such a clip right now that the challenge is keeping up with demand.”
A small operation by design, the company manufactures its product using a few tanks inside Port Orleans Brewery. Louie Louie is currently taking orders from 30 states direct from its website and fulfilling them through two warehouses — one on the Westbank and one in Elmwood. In addition to the four founders, the company has three full-time employees and is currently looking to add three or four part-time representatives in key markets.
Flavor, said Becker, remains the focus.
“We’re the only ones really coming at this from a behind-the-bar standpoint,” he said. “The way we approach our recipes is that if it comes from New Orleans, it better taste good.”
Legal Issues Arise Business was booming in this new marketplace when a new threat suddenly appeared. On March 1 of this year, Sen. Thomas Pressly (R-Shreveport) introduced a bill (SB237), that would have effectively banned all THC consumables.
The industry quickly mobilized.
“This year, the Louisiana Hemp Association was actually asking for more regulations on the industry because regulations actually give it legitimacy,” explained Becker. “A lack of regulation can keep some of the bigger, more established chain grocery stores or liquor stores from getting into the category. And then suddenly instead, we have this bill to ban it all.”
As everyone with a stake in the market headed to Baton Rouge, Landry joined as a fighter for not one, but two industries.
“I’m president of the Louisiana Craft Brewers Guild, so I was also coming from the perspective of making sure the breweries were still allowed to be manufacturers of the product,” he said, “just trying to preserve as much of what we had as possible.”
Becker said local bars and restaurants also faced a potential loss with the passage of a ban.
“Our restaurant industries are embattled enough. The thought of taking away another potential line of profit just seems absurd to me,” he said, noting that restaurant support for the beverages has even extended to the Napoleon House, which created a new cocktail offering at its establishment — the Louie Louie Pimm’s Cup.
“We have the opportunity for people to come here and try unique New Orleans beverages and then go back home and buy them,” added La France. “That just extends the NOLA experience.”
The burgeoning industry mobilized fast, firing off what Becker described as “thousands of calls and emails to legislators.”
“We were told we were dead in the water this last legislative session,” said Landry. “Some of the richest people and most powerful people in this state, including the governor, the senate president and multiple billionaires, especially from the medical marijuana industry, all wanted this product gone, and we somehow, some way, were able to survive. And that is thanks largely to our lobbying presence, as well as the grassroots movement that we were able to harness to really make a lot of legislators aware that these products are wildly popular, and that people do not want their freedoms taken away just to benefit big business.”
Three months later, on June 3, the Louisiana legislature granted final approval to House Bill 952 (now known as Act. 752). The greatly altered legislation allowed restaurants and bars to continue selling the beverages if they already had secured permits, as well as any new establishments that became permitted by June 17.
While previously, the beverages had been sold at gas stations, the bill demands the drinks be put behind the counter for now and dictates they must be sold off by Jan. 1, 2025, when gas station sales will no longer be permitted.
The amount of THC allowed per beverage has also changed from 8 milligrams to 5 milligrams per serving, clearly spelling out that a can must not hold more than one serving. Cans must also not measure less than 12 ounces and are limited to being sold in packs of four. There is, however, no limit on the number of packs a person can buy.
Moving Forward In a New Era The new regulations quickly altered Louisiana’s marketplace. As Becker hnoted, adding regulation made other players feel more secure in moving to the state.
“We were already seeing competing brands coming in from other states,” he said, “but as soon as this bill passed, we saw five brands launch here within just a few weeks.”
And while competition is increasing, the number and variety of locations that can sell these products has severely dropped, with no room for growth.
There’s also the fact that the products themselves are restricted by dosage and pack size, restrictions that can cause consumers to opt instead to just order what they want online from out-of-state companies and have it shipped.
According to Headset Data, in 2022, “The most popular [THC-infused] beverage dosage in the U.S. has been 10mg [twice what is now allowed by Louisiana companies], capturing 39% of the market.” Beverages with dosages of 100mg made up 22% of sales in the first 10 months of 2022. Those with 6mg or less made up 22% of the marketplace.
Crescent Canna’s newest offering, created in collaboration with local celebrity Big Freedia, is Wobble, a sparkling THC energy drink with 10 milligrams of THC and 100 milligrams of caffeine. Obviously aimed at the out-of-state market, the company is offering a $5 flat-rate shipping and free shipping on orders over $99.
“It definitely caps the kind of growth that we can see here,” noted Landry of the new laws. “So that’s unfortunate, because the beer laws in Louisiana are some of the worst in the country. It just reinforces that this is a very difficult place to do business.”
For all Louisiana companies, any chance at growth can only be found outside of the state.
“The opportunity now is to establish ourselves as a regional, if not national brand,” said Landry. Urban South is looking at distribution in South Mississippi, Arkansas and Georgia. “Alabama doesn’t currently have any real regulations on the books. Mississippi doesn’t either, so there’s definitely a lot more flexibility than in Louisiana in terms of the products that can be made and the formats.”
Melancon — who said he’s making moves into Texas and Florida with his hemp-derived products — said it drives him crazy when he hears people saying the hemp industry is not regulated.
“Louisiana is one of the most heavily regulated states in the United States,” he said. “We’re regulated by the Louisiana Department of Health, which follows the FDA guidelines for safe manufacturing processes, and those are the same guidelines that the medical marijuana guys follow, which are the same guidelines that are put forward by the pharmaceutical board.”
While he anticipates at 70% drop in the market share of his products due to the new regulations, Melancon is hoping to expand his beverage line, noting that “I think the drink industry is a way to really touch a lot of consumers and shut down the fear mongers around hemp products.”
Gerrity said he’s constantly looking at new marketplaces, while keeping an eye on national and state politics.
“In California, the governor recently just issued an emergency public health ruling which completely banned all hemp products in the state,” he said. “That is pending a legal challenge, of course, and that’s being done to, ironically, protect the marijuana industry, because it was doing very, very well for a long time, but in recent years they have seen significant drops, and they are pointing the finger at hemp products as the reason why… In Missouri, the governor attempted to do the same, but it was overruled.”
Noting that “the marijuana industry is probably the biggest threat to us,” he added that, “some of the biggest people in the alcohol industry want in, they want to carry us. They want to be part of the growth of this industry, to support it instead of fight it.”
Meanwhile, on the national level, in May, Rep. Mary Miller (R-Ill.) introduced an amendment to the farm bill that would change the definition of hemp to only include “naturally, occurring, naturally derived, and non-intoxicating cannabinoids,” which was countered in September by Sen. Ron Wyden (D-Or.) with a bill that would make all hemp products legal nationwide, while still allowing states to make their own regulations and restrictions on their sale.
“We’re in a race to establish ourselves and lower our prices to the point where we can compete with anybody anywhere,” said Gerrity, “while also fending off attacks from legal marijuana markets and the general marijuana industry, which prefers a much more regulated and smaller group of people competing for consumer revenue.”
La France said Louie Louie will never give up on Louisiana, or the potential that exists here, but, at least in the current climate, they must do what’s best for business.
“We have the opportunity to be leaders in this industry,” said La France of the statewide marketplace. “Not many new industries have started in Louisiana, and we have a national reputation already that I think means quite a lot. We want this to be a Louisiana success story.
– Louie LouieCo-owner Eric Becke
