NEW YORK CITY, New York: As cannabis-infused drinks grow in popularity and take over retail shelf space once dominated by beer and spirits, major alcohol companies are preparing for a potential pivot into the emerging category.

THC drinks—infused with the psychoactive compound found in marijuana—are being sold legally across many U.S. states when derived from hemp, a federally legal crop. These hemp-based beverages are increasingly available in liquor stores, convenience shops, and supermarkets, offering a legal workaround to traditional dispensary restrictions.

While leading alcohol companies have largely sat out this boom, a shift is underway. Founders of cannabis beverage brands, ingredient suppliers, and drink manufacturers told Reuters that some big players are now exploring entry points into the market, prompted by declining alcohol sales and growing consumer interest in alternatives.

Constellation Brands has been studying hemp-based cannabis drinks, according to a source familiar with its plans. Pernod Ricard recently met with Brez, a THC beverage brand, to discuss a possible investment. "They did not invest now but are circling," said Brez founder Aaron Nosbisch. Pernod declined to comment.

U.S. alcohol sales have cooled since their pandemic-era spike. Beer volumes dropped nearly 6 percent through May, while spirits and wine declined by 5.6 percent and 9 percent, respectively. Public health warnings linking alcohol to cancer have also pressured the industry.

Meanwhile, hemp-based THC drinks are booming. The market is expected to top US$1 billion in sales this year and quadruple by 2028, according to Euromonitor.

Companies like Tilray are already moving in. Its THC seltzers, sold through existing beer distributors, are now available in 13 states. "There's not a real leader... and that's what we look to do," said CEO Irwin Simon.

Legacy alcohol brands are cautiously experimenting. Boston Beer, known for Sam Adams, is testing a hemp-based version of its THC tea brand Teapot in the U.S., following its rollout in Canada. "This is a source of growth for our organization, flat out," said Paul Weaver, who leads the company's cannabis division.

But challenges remain. State regulations vary widely. California banned hemp-based drinks last year, while other states have imposed taxes or restrictions. Senator Mitch McConnell recently proposed federal limits on intoxicating hemp products to keep them away from children.

Big brewers have also faced past setbacks. In 2022, Anheuser-Busch exited its cannabis joint venture in Canada, and Molson Coors shut its CBD beverage division in the U.S. that same year.

Despite this, retail enthusiasm is strong. Liquor stores report that THC beverages are driving higher margins than beer or spirits. At Top Ten Liquors in Minnesota, they now account for 15 percent of business and could soon rival wine in sales. "The soccer mom has really embraced the category," said CEO Jon Halper.

Distributors, too, are seeing the shift. Southern Horizon Logistics now sells more hemp-based drinks than wine and spirits. Best Brands CEO Ryan Moses said growth in this segment helped avoid layoffs by reallocating staff.

For consumers like Josh Goldberg, who swapped beer for THC seltzers two years ago, the appeal is simple: "It replaces the physical act of drinking with drinking something else."