Cans suck the THC buzz out of pot drinks. Where does that leave Canopy Growth? – Yahoo Sports

Cannabis beverages and aluminum cans have a problematic relationship that could prove costly for licenced producers with drink production lines built for the ubiquitous metal containers. The devil is in the molecular details.

Scientists have determined that liners inside aluminum cans can cause cannabis drinks to lose their potency. That means by the time a pot drink is put in a can, shipped, stored in a warehouse, displayed in a store, and finally consumed, the buzz promised on the label may have diminished or disappeared.

Can manufacturers add the liners to prevent drinks from taking on a metallic taste, to reduce corrosion of the can, and to improve shelf stability. But when pot drinks are under pressure, the liner can attract tiny emulsified droplets of active cannabis ingredients like THC.

Our theory is the cannabis material, the droplets, will stick to the liner and cling on it. When you open the can to take a drink, it will lose its potency, Vertosa founder and chief science officer Harold Han told Yahoo Finance Canada in an interview.

Han holds a Ph.D in chemistry from NYU, and has authored two patents in emulsion chemistry. His California-based company works with cannabis-infused beverage makers to develop emulsion solutions to mitigate the effect of can liners leeching away cannabis compounds.

Oil, cannabis or otherwise, does not mix with water. Nanoemulsion helps solve that problem by breaking down oily compounds to a microscopic level so they can be suspended in a drink.

Cannabis beverages that use the technology have a faster effect compared to edibles. They also have high bioavailability, meaning the body will absorb a higher amount of the THC or CBD. However, pot drinks have yet to emerge as a major category, even though theyve been available in U.S. states with legal recreational cannabis sales for some time.

Last year, Cowen cannabis and alcoholic beverage analyst Viven Azer told Yahoo Finance Canada the U.S. market for cannabis drinks is small, fragmented, and without a clear leader. Thats the case, she said, because early products in the United States got people stoned for too long, and lacked consistent intensity, onset, and offset for the high users feel.

In Canada, drinks were part of the swath of new Cannabis 2.0 products authorized for sale last fall. So far, only a limited selection of items like infused tea bags have hit stores.

Deloitte estimates the Canadian market for cannabis-infused beverages will be worth $529 million annually, with one-in-three consumers viewing the category as an alternative to alcohol.

Han said the problem of aluminum cans draining the potency out of pot drinks first came to his attention early last year when Lagunitas, a craft beer subsidiary of Heineken (HEIA.AS), shifted its Hi-Fi Hops cannabis drinks from cans to glass bottles.

Then we thought, lets get some can liners. Lets test our emulsions. We had two at the time, he said. The loss was horrible.

Vertosa has partnered with can manufactures including Ball (BLL), Ardagh Group (ARD) and Gamer Packaging to test solutions.

Han said its difficult for the can industry to alter linings to accommodate the relatively small cannabis drinks category, and pot drink producers prefer cans over bottles due to lower costs.

Its up to us to find the solution, he said, admitting some active ingredients will always be absorbed by aluminum cans. You will always see some percentage of loss. But as long as you can manage this loss and let it plateau, that is the goal.

Canopy Growth (WEED.TO)(CGC) has been the most active in the drinks category among Canadian licenced producers, previewing an extensive line of THC and CBD drinks in late October, the vast majority packaged in cans.

Canopy Growth's cannabis drinks are expected to be ready for retail in mid-December 2019. (Yahoo Finance)

A number of other cannabis players have struck deals or formed joint ventures to produce beverages, including HEXO (HEXO.TO)(HEXO) and Tilray (TLRY). Canopys 125,000-square-foot beverage facility was constructed with a helping hand from its largest shareholder, beer and wine giant Constellation Brands (STZ).

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The Smiths Falls, Ont.-based company said in December that its first drinks would hit the market in early January. On Jan. 17, it abruptly delayed the launch, offering few details.

In order to deliver products that meet our customers high standards we are electing to revise the launch date while we work through the final details, CEO David Klein stated in a news release.

Klein, a transplanted executive from Constellation, officially began leading the worlds largest cannabis company only days earlier on Jan. 14. The company is expected to provide an update on its beverages when it reports fiscal third quarter 2020 financial results before the markets open on Feb. 14.

Craig Wiggins of the industry research group TheCannalysts told Yahoo Finance Canada that sources tell him the delay was due in part to issues with cans.

We're hearing that there is a problem with the can linings. That THC is leaching into the can linings and making shelf stability drop, and a host of other problems, he said.

Yahoo Finance Canada repeatedly attempted to reach Canopy Growth for comment. Calls and emails were not returned by the company.

Jeff Maser, CEO of the California-based cannabis beverage company Tinley (TNY.CN)(TNYBF), said he was shocked last fall when he saw photos of Canopys hotly anticipated beverage portfolio packaged in cans.

His products are sold in glass bottles.

We tried forever to try to find a solution. We worked with everybody that came along, and we spoke directly to the can manufacturers. We even spoke directly with the Hi-Fi hops guys, Maser told Yahoo Finance Canada in an October interview.

When I say there is less cannabis, there is no cannabis left. It's literally 97 per cent absorption into the can after a few months. Guys are saying they solved that problem. Nobody really has.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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Cans suck the THC buzz out of pot drinks. Where does that leave Canopy Growth? - Yahoo Sports