Consumers are increasingly seeking alternative methods of consuming cannabis beyond traditional smoking methods. THC (tetrahydrocannabinol) beverages, which contain the psychoactive component of cannabis, have indeed been experiencing a growing trend in recent years. THC beverages offer a discreet, convenient, and smoke-free option for consuming cannabis, appealing to those who may prefer not to ingest via smoke or vapor. Shifting attitudes toward cannabis, particularly among younger generations, have contributed to the growing popularity of THC beverages. As cannabis becomes more integrated into mainstream culture, THC beverages are increasingly viewed as a normal part of social consumption and pure enjoyment factor.
1. Understanding Minnesota's Cannabis Laws
The growing demand for cannabis products, including THC beverages, has attracted significant investment and interest from entrepreneurs, investors, and established beverage companies. This has led to increased competition and product innovation in the THC beverage market. In Minnesota, such consumer products were legalized on August 1, 2023, and with legal status came a whole new set of parameters to manage and adhere to specific to producers/sellers and everyday consumers alike.
Edible cannabinoid products are any product that:
- Are meant for people to eat or drink
- Has hemp concentrate mixed with food ingredients
- Is not a drug
Edible cannabinoid products cannot contain any of the following:
- More than 5 milligrams of tetrahydrocannabinol (THC) per serving
- More than 50 milligrams of THC per package
- Beverages may contain two servings per container (10 milligrams)
- Any artificially derived cannabinoid other than delta-8 and delta-9 THC
- Synthetic cannabinoids
2. Licensing and Permits for THC
The legalization of cannabis for recreational and/or medical use in various jurisdictions has led to increased availability and acceptance of THC-infused products, including beverages. Regulatory frameworks governing the production and sale of cannabis products have provided opportunities for the development of THC beverages. Per Minnesota statute, effective Oct. 2, 2023, all establishments (including exclusive liquor stores) that sell hemp-derived cannabinoid products must register with the State of Minnesota before they sell any hemp-derived cannabinoid product. There is no cost to register. Specific business details of licensure in Minnesota includes:
- Cannabis microbusiness (application fee $500; no initial license fee; renewal license fee $2,000)
- Cannabis mezzobusiness (application fee $5,000; initial license fee $5,000; renewal license fee $10,000)
- Cannabis cultivator (application fee $10,000; initial license fee $20,000; renewal license fee $30,000)
- Cannabis manufacturer (application fee $10,000; initial license fee $10,000; renewal license fee $20,000)
- Cannabis retailer (application fee $2,500; initial license fee $2,500; renewal license fee $5,000)
- Cannabis wholesaler (application fee $5,000; initial license fee $5,000; renewal license fee $10,000)
- Cannabis transporter (application fee $250; initial license fee $500; renewal license fee $1,000)
- Cannabis testing facility (application fee $10,000; initial license fee $10,000; renewal license fee $20,000)
- Cannabis event organizer (application fee $750; initial license fee $750)
- Cannabis delivery service (application fee $250; initial license fee $500; renewal license fee $1,000)
- Lower-potency hemp edible manufacturer (application fee $250; initial license fee $1,000; renewal license fee $1,000)
- Lower-potency hemp edible retailer (application fee $250 per retail location; initial license fee $250 per retail location; renewal license fee $250 per retail location)
- Medical cannabis cultivator (application fee $250; no initial license fee; no renewal license fee)
- Medical cannabis processor (application fee $250; no initial license fee; no renewal license fee)
- Medical cannabis retailer (application fee $250; no initial license fee; no renewal license fee)
- Medical cannabis combination business (application fee $10,000; initial license fee $20,000; renewal license fee $70,000)
3. Product Compliance
It's important to note that regulations and attitudes toward THC beverages vary by region, and consumers should familiarize themselves with local laws and guidelines regarding cannabis consumption. Specific to Minnesota, edible cannabinoid products, as defined under section 151.72 (Edibles), and products applied externally to the body that are properly labeled and contain no more than 0.3% THC (dry weight).
- Edibles can contain up to 5 mg of hemp-derived THC per serving and have a maximum of 50 mg per package.
- Beverages can contain two servings of up to 5 mg of hemp-derived THC per container for a total of 10 mg.
4. Distribution & Retail
To sell THC drinks in Minnesota, you must be a licensed manufacturer or distributor authorized by the Minnesota Department of Health's Office of Medical Cannabis. Once open in March of 2025, the Office of Cannabis Management will be managing this process. Ensure your business obtains the necessary permits and follows all regulatory production, distribution, and sales requirements.
Cannabis distribution partnerships can help navigate the complex market and its strict standards. A partnership could involve collaboration between two or more businesses in the supply chain to collectively address distribution challenges, improve efficiency, and capitalize on growth opportunities. These partnerships can take various forms, such as joint ventures, strategic alliances, or distribution agreements. By pooling resources, knowledge, and networks, businesses can create mutually beneficial relationships that drive success in the competitive cannabis market with more efficiency, collaboration, and market standards.
5. THC Marketing & Advertising Restrictions
THC beverages offer the potential for novel sensory experiences, such as unique flavors, aromas, and effects, that appeal to consumers seeking variety and exploration in their cannabis consumption.
With the exception of beverages, edibles must be prepackaged in a child-resistant container; Minnesota law requires child-resistant and tamper-evident packaging. The packaging must be designed to prevent accidental ingestion by children and protect the integrity of the product.
- All edibles and beverages must be packaged in tamper-evident and opaque packages or containers.
- Edibles - other than beverages, edibles intended for more than a single use or containing multiple servings must indicate each serving by scoring, wrapping, or another indicator that identifies the individual serving size.
THC drinks sold in Minnesota must undergo testing by an independent laboratory to ensure compliance with potency, purity, and safety standards. Labels on THC drinks must include essential information such as THC content, serving size, ingredients, warnings, and manufacturer information.
6. Tax Considerations
On May 30, 2023, a bill was signed to legalize the sale and use of recreational cannabis in Minnesota. Starting July 1, 2023, all sellers of taxable cannabis products must register with the Minnesota Department of Revenue to remit the new Cannabis Tax. The Cannabis Tax is 10% of gross receipts from retail sales of taxable cannabis products. In addition to the Cannabis Tax, taxable cannabis products are currently subject to both:
- 6.875% state general rate sales tax
- Any applicable local sales taxes based on where the transaction takes place (i.e., county and/or city applicable tax standards)
Manufacturers, distributors, and individual sellers will pay Cannabis Tax on their sales and use tax returns. The specific filing frequency depends on monthly Sales and Use Tax liability. For details on filing frequency, see the filing information from the state of Minnesota.
7. Compliance with Age Restrictions
As with alcohol and tobacco products in Minnesota, hemp-derived cannabinoid edibles or beverages may only be sold to people ages 21 or older. The retailer must verify the buyer’s age through a valid state-issued driver’s license or identification card, Tribal identification card, passport, instructional permit, or Canadian driver’s license; all meet age verification requirements within Minnesota.
Additionally, Minnesota imposes strict restrictions on the advertising and marketing of medical cannabis products, including THC drinks. Advertisements must not target minors or promote excessive or irresponsible consumption of cannabis.
8. Staying Informed and Adapting to Changes
Cannabis distribution partnerships offer numerous benefits that contribute to the success of businesses in the industry. By collaborating with strategic distribution partners, businesses can expand their market reach, enhance supply chain efficiency, access valuable expertise, gain market insights, mitigate risks, and create synergistic branding opportunities. Embracing collaboration through partnerships is a strategic approach that can propel businesses to thrive and excel in the competitive cannabis market.
A distributor stays informed about changes to state regulations, policies, and guidelines governing the sale of THC drinks in Minnesota. They regularly review and update compliance procedures to ensure adherence to evolving legal requirements and best practices. By understanding and adhering to the regulations and requirements outlined by the Minnesota Department of Health's Office of Cannabis, you can navigate the process of selling THC drinks in Minnesota responsibly and legally when a knowledgeable distributor supports your mission.
