The Drinks Gamble: How One Dispensary Is Betting On Cannabis Beverages

“A lot of people who are afraid of or have a stigma with cannabis have been trained their whole lives to drink liquid out of a can that gets them buzzed.”

Relatively speaking, in an industry as young as legal cannabis, someone who has been around since the dawn of adult-use is a seasoned player. They’ve seen peaks, valleys, and cliffs, and can speak on lessons learned up to this point like wise elders.

“It was an extremely exciting time,” Matthew Gamble recalls. Currently the COO of Native Sun which operates two recreational dispensaries, back in 2017 he was working with Theory Wellness. “It was pre-recreational, so there were very few companies involved in the scene,” he says. “What I always appreciated was it was a chance for us to make mistakes when the stakes were a lot lower. Now, the tolerance for that is zero. It’s going to be a lot tougher of a go.”

Way before a lack of competition turned into the sweltering hot current market, Gamble started to cut out a niche in drinks. His pre-cannabis career was in beer during the craft boom, including as the director of operations for Clown Shoes, and he had beverages on the brain from the beginning. As an early executive at Theory, he helped develop the company’s Hi5 seltzer brand.

“We wanted to use the same methods and infrastructure that the alcohol industry has been doing for 100 years,” Gamble said. “I always say, strategically, it’s a very similar business. We produce a biological product, we preserve the output, and we get it to the customer as quickly as we can. Whether it’s a fresh IPA or a fresh jar of flower, you’re dealing with the same microbial concerns.”

Gamble always said he’d make the jump from suds to buds when the right time came, even telling colleagues in the beer biz, “The second I am allowed to work in legal cannabis, that’s what I’m going to do.” “I was always in the cannabis business,” he says. “It just wasn’t always legal at the time.”

Once he arrived in the licensed weed space and honed in on infused drinks, Gamble started seeing big potential right away. “I think it’s a natural pairing,” he says. “A lot of people who are afraid of or have a stigma with cannabis have been trained their whole lives to drink liquid out of a can that gets them buzzed.”

Native Sun held Seltzer Saturday events through the summer with pop-ups from companies like Cantrip

Over the past five years, new technology and dosing methods have only increased the opportunity to expand the sub-market. Gamble is a particular fan of products that allow for a “faster on and off ramp.” Such advancements, he says, will continue to attract people from the beer and wine world. Infused drink sales in Mass have been around $14.4 million over the past year, about the same as the prior 12-month period but nearly double the year before that.

While consumers are quickly coming on board, though, retailers can be a tough sell. Massachusetts regulations call for products to be under lock and key, and cases upon cases of seltzers and sodas take up valuable cage space—especially in smaller urban stores. 

“With beverages, I have heard a lot of trepidation from retailers,” Gamble says. “I was managing the Hi5 business for a long time and we faced a lot of those challenges.” All of which, he says, are completely “understandable,” as is a pricing disconnect on the purchasing side. He adds, “There are insane tax rates and a high cost of doing business. The economics of someone paying $7 for 5mg of THC isn’t something that adds up anymore. If we want people to buy 100mg, we can’t charge them 35 times that.”

Moving on his instincts, Gamble cooked up an original approach to selling cans for Native Sun, which has dispensaries in Hudson and North Attleborough with a third shop coming soon to South Boston. “I’m really connected with the beverage producers and really impressed by all the creativity we’re seeing,” he says. “We want to use our store as a case study where selling beverages works for more than just the retailer.”

Gamble continues, “From my beer experience, I knew the name of the game is volume, and the cannabis retail environment is more focused on margins than it is on volume. I would see for myself that I would sell a drink [wholesale to a dispensary] and they would triple the price [for retail].”

As he sees it, beverages have the potential to eventually surpass flower as the top-selling product category. That could take 50 years, he says, but one important change that’s needed in order to push a lot more liquid in the commonwealth is around dosing. With current regulations that limit the amount of THC in each drink to 5mg, some people will have to piss four times before they catch a buzz.

“The 5mg limit is very prohibitive to cannabis beverages,” Gamble says. “Looking at the raw economics, the THC is a relatively small percentage of the overall cost. If you buy a can for $3, more than $2 is for the can and the label … while the THC part is pennies.” With a higher limit, he adds, “We could provide a much more economical cost per milligrams.”

Even with the hurdles, Native Sun is going hard in this lane. In North Attleborough, they’re moving more than 1,000 drink units on a good week, many of which are four or six-packs. For those looking for bulk buys, they offer some cases for as low as $60, pre-tax. And because of their spacious stores, they are able to stock a remarkable number of options; at the time of this writing, North Attleborough has more than 70 varieties of bubbles and beverage enhancers for sale.

“What I’m trying to show,” Gamble says, “is that if retailers and producers of these products are willing to work out a better profit margin, then we can turn people who are consuming cannabis beverages into full on converts.”