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Welcome Note
Welcome Back Gardeners to the 124th edition of Herbal Profiles!
Happy Friday yall!
It’s been a minute. Aside from the 4/20 Sales drop, this is the first proper newsletter since #123, and the industry decided to fill my time off with the biggest cannabis news in five years.
Quick recap if you’ve been heads-down: on April 23, the Trump DOJ moved FDA-approved and state-licensed medical cannabis to Schedule III, and ordered an expedited rescheduling hearing for the broader cannabis market that runs June 29 through July 15. Whatever your read on the politics, this is the most consequential federal action on cannabis since I started writing this newsletter.
What that order does not touch: hemp-derived THC drinks. We’re still staring down the 0.4mg-per-container November cliff. We’re now living in a split-screen reality. Medical cannabis is moving toward Schedule III. Hemp beverages are seven months from a federal ban. The competitive, retail, and distribution implications of that gap are going to define the next year, and I want to spend more time on it in coming issues.
A few other moves to flag. Target now holds 72 hemp THC licenses across every Minnesota store. Breakthru Beverage signed Cheech & Chong to expand THC drink distribution. Tilray closed its BrewDog acquisition. Retail and distribution are voting with their feet, ban or no ban.
And as always,
Let’s get into it.
-Lars
The subreddit I moderate with Chris Fontes has over 2,800 subscribers! And my other subreddit for the broader CPG industry is also growing, going over 1,400 subscribers. I would love to have you join us on either or both subreddits!
Any comments or questions? Leave comment on this post or shoot me an email. Would love to hear from you!
News Roundup
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Federal Marijuana Rescheduling Announced By Department Of Justice, Months After Trump Executive Order — Acting Attorney General Todd Blanche signed an order on April 23 immediately moving FDA-approved cannabis and state-licensed medical cannabis to Schedule III, while initiating an expedited hearing process for broader rescheduling that runs June 29 through July 15. The order also withdrew the stalled Biden-era ALJ hearing process, removing a procedural roadblock that had stalled progress since January 2025.
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Cannabis Industry Stakeholders React to Trump DOJ’s Rescheduling Order, New Hearing — Reactions from across the industry mixed cautious optimism with frustration that the order doesn’t go further. Several stakeholders pointed out that the partial scope, limited to FDA-approved and state-licensed medical product, leaves most of the existing legal cannabis market still in regulatory limbo until the broader hearing concludes.
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The Biggest Things About Schedule III You Haven’t Thought Of — A useful breakdown of the second- and third-order effects of rescheduling that aren’t getting headline coverage: 280E tax implications, banking access, research pathways, and crucially for our space, what it does to the competitive line between licensed cannabis brands and hemp-derived operators. Worth the full read if you’re operating in the hemp lane.
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Republicans In Congress Are Still Trying To Block Marijuana Rescheduling Even As Trump Moves Forward — A faction of congressional Republicans is mounting opposition to the DOJ’s rescheduling action, even with the order coming from a Republican administration. The political fight is far from over, and the June 29 hearing process gives opponents another procedural opportunity to slow or reshape the outcome.
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Target Expands Involvement In Hemp THC Drinks Market With 72 New Licenses In Minnesota — Target locked in 72 lower-potency hemp edible licenses on April 1, covering every one of its Minnesota stores. Actual product is still rolling out at a smaller subset of locations. This is the largest single hemp-license footprint a national retailer has secured, and it happened with the November ban already on the calendar.
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Indiana Is More Likely To Legalize Marijuana Now That It’s Been Federally Rescheduled, Governor Says — Indiana’s governor said the federal rescheduling action makes state legalization a more realistic conversation in Indianapolis. Watch for similar shifts in other prohibition-leaning states where governors had been waiting for federal cover.
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Massachusetts Governor Signs Cannabis Bill Changing Purchase Limits, Regulatory Scheme — Massachusetts updated its cannabis regulatory framework, including changes to purchase limits and oversight structure. The bill is part of a broader trend of mature legal markets refining their rules in light of supply gluts and shifting consumer demand.
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Ohio Judge Calls Hemp Product Ban + Cannabis Product Allowance Discriminatory, Issues TRO — An Ohio judge granted a temporary restraining order against the state’s hemp ban, calling the simultaneous treatment of hemp and licensed cannabis products legally inconsistent. The ruling adds to a growing pile of state-level legal pushback that hemp operators can point to as the November federal cliff approaches.
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THCA Flower Sales Resume In Texas After Judge Grants TRO — A Texas judge issued a TRO that allowed THCA flower sales to resume in the state. This isn’t a beverage story directly, but it’s another data point in the courtroom-by-courtroom litigation that’s keeping the broader hemp category alive while Congress debates.
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The Cannabis Beverage Industry Has An Evidence Problem With Too Few Companies Submitting Products For Independent Scrutiny (Op-Ed) — A pointed op-ed arguing that the cannabis beverage industry needs to invest in independent third-party research and testing if it wants to be taken seriously by regulators, retailers, and consumers. With November coming, it’s an uncomfortable but worthwhile read for anyone making product.
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The Tuesday Test
The First Sip
Picture your fridge on a Tuesday at 7pm. You’ve put the kids down, or finished work, or you’re staring at leftovers. You open the door. What do you reach for?
If you’re in our industry, you can probably answer that question for your own fridge. The harder question is whether you can answer it for your target customer’s fridge. Most hemp THC brands cannot. That’s the actual retention problem.
I was recently reading an article by Kate Bernot of Sightlines & she mentioned how Numerator just published its 3-year retention rates for non-alcoholic beverages, and the chart has been making the rounds. Cannabis beverages sit at 10%, the lowest of any category measured. Fruit juice is at 77%. Cola is at 62%. Pre-and-probiotic sodas like Olipop and Poppi cracked 35%. Even coconut water is at 26%.
The standard read of that chart is grim. 10% means 90% of consumers who try a hemp drink don’t buy it again over a 3-year window. That’s a brutal acquisition cost reality with a category-wide loyalty crisis layered on top.
The sideways read is more useful.
Every Category Above 10% Owns a Daily Occasion
Cola owns mealtime. Fruit juice owns breakfast. Coconut water owns post-workout. Pre-and-probiotic sodas, the most analogous category to where hemp drinks sit today, claimed the 3pm afternoon-treat slot.
Olipop didn’t beat LaCroix on flavor or undercut Coca-Cola on price. They claimed a moment. The 3pm slump. The “I want something a little sweet but I’m trying to be a little better” pause. Hit that occasion enough times and a $400M business and a $1.85B valuation show up. Hit it well enough and you exit at $1.95B, which is what Poppi did.
When I look at the hemp shelf today, I see brands fighting over format and positioning. Seltzer or mocktail. 2mg or 5mg. Sour cherry or grapefruit. What I don’t see is a brand that has named the moment.
The Three Open Lanes
There are three occasions hemp THC drinks are positioned to claim. None of them are fully owned yet.
The 5pm social swap. “I’d grab a beer but…” This is the most contested space and the most obvious. Cann is closest. But every NA brand is also fighting here, plus functional sodas, plus actual beer brands trying to keep their seat. Win this lane and you win big. You’re also competing with Athletic Brewing, every wine alternative, and the AB InBev innovation lab. Hardest to own.
The post-work decompress. “Wine night without wine night.” More distinct than the social swap because it’s more specific. Lower-dose, longer-onset, designed to wind down rather than light up. Wynk’s positioning brushes against this. The format here probably isn’t a 12oz can. It’s something cocktail-adjacent, served in a glass, designed to mark the end of a day rather than the start of a hangout.
The weekend “third place.” Coffee shop afternoons. Patio dinners. The dinner party that starts at 6pm and ends at 10pm without anyone getting wrecked. This lane is wide open. The format probably isn’t a 12oz can. It’s a 200ml glass bottle. The pricing is closer to a cocktail than a soda. The distribution is hospitality-led, not C-store.
Format Follows Occasion
The mistake I keep seeing is brands designing products and then hunting for the occasion. The retention chart suggests the opposite is what works. Pick the occasion first. Then build the dose, format, flavor, and price to match.
The 5pm swap is a 12oz can, 5mg, social-flavor profile, beer-aisle pricing.
The decompress is a 200ml bottle or a 4oz “shot,” 2 to 3mg, herbaceous or bitter, premium pricing, glass-aware.
The third-place lane is a single-serve glass bottle, 5 to 10mg, cocktail-grade flavor, premium pricing, on-premise distribution.
Three different products. Three different brands. None of them currently exist in fully realized form. Until they do, the chart is going to keep saying 10%.
The Dry January Effect
Some top liquor store retailers noted in December that January is one of their store’s strongest THC months as a percentage of sales. He framed it as a business observation. I think it’s something bigger.
January became a hemp THC moment because consumers decided it was, not because brands made it that way. Several brands did some smart Dry January marketing. Other brands rode the wave. But nobody owned January the way Coca-Cola owns Christmas. Imagine if a brand decided January was theirs. Imagine if a brand decided 5pm Friday was theirs. The “I made it through the week” moment, with a specific dose and a specific flavor and a specific can design built around exactly that occasion.
That’s how staple status gets built. Not by having the best can on the shelf. By owning a specific hour on a specific day.
Stop Selling “Alternative.” Start Selling Tuesday.
The category’s positioning fight isn’t really with alcohol. It’s with the calendar. Every week has 168 hours. Cola gets about seven of them. Coffee gets fourteen. Beer gets ten. Hemp THC drinks get whatever your brand convinces a consumer to set aside.
If you’re a founder or a marketer in this category, here’s the question worth asking your team this week: which hour are we fighting for? Not which demographic. Not which retailer. Not which dose. Which hour.
Until that question has a clean answer, retention will keep landing at 10%. The brands that find their hour first are the ones we’ll be talking about in 2030, when this chart gets updated and one of them, finally, has cracked into the staple side.
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