Cannabis Companies Are Now Making More Money Selling Beer Than Weed

In its fiscal quarter ending May 2024, Tilray Brands generated $76.7 million in alcohol revenue and $71.7 million in cannabis revenue. It was the first time in the company's history that beer outsold weed. For a company that launched its 2019 IPO explicitly positioning itself as a disruptor of the alcohol industry, the reversal is worth examining carefully.

This is not a story about one company's struggling cannabis business. It is a story about what happens when an entire industry's foundational assumptions collide with regulatory reality, and what the resulting strategic pivots reveal about the future of both cannabis and beverage alcohol.

How Tilray got here.

Tilray went public in 2018 at a valuation that briefly touched $20 billion. The thesis was straightforward. Cannabis legalization was coming to the United States. When it arrived, cannabis would cannibalize alcohol consumption at scale. The company that built the strongest brand and distribution infrastructure before legalization would capture an enormous share of the adult recreational market.

That thesis has not played out on the timeline anyone anticipated. Federal rescheduling remains incomplete. The state-by-state patchwork of legalization has created a fragmented, high-cost operating environment that makes it nearly impossible to build a nationally scaled cannabis business with margins that justify the infrastructure investment. Tilray's cannabis retail base has lost roughly two-thirds of its value since the 2019 peak. The company that was going to disrupt alcohol needed alcohol to survive.

Faced with that reality, Tilray started buying beer companies. Since 2022 it has acquired at least twelve US craft breweries, including four brands from Molson Coors. Its portfolio now includes SweetWater Brewing, Montauk Brewing, Breckenridge Brewery, and several others. The company that said it would disrupt alcohol is now one of the larger craft beer operators in the United States. The irony is not subtle, but the strategy underneath it is more rational than it first appears.

The strategic logic underneath the pivot.

The surface reading of Tilray's move into beer is desperation. The cannabis thesis failed and the company needed revenue from somewhere. That reading is not entirely wrong but it misses the coherence underneath the decisions.

The brewery acquisitions serve three distinct purposes simultaneously. First, they generate cash flow in a regulated industry where Tilray already has compliance infrastructure and operational expertise. Running a brewery is not entirely unlike running a cannabis operation in terms of regulatory environment, production complexity, and the distributor relationships required to move product through the market.

Second, the acquisitions give Tilray a national retail footprint and distributor network that would be immediately valuable the moment federal cannabis legalization creates the opportunity to sell THC products through conventional beverage channels. The craft beer distributor carrying SweetWater today is potentially the cannabis distributor carrying a Tilray THC beverage tomorrow. Building that relationship now, at the cost of running a beer business, is a long-term infrastructure investment disguised as a short-term revenue decision.

Third, the alcohol business generates the cash flow stability that keeps the company viable long enough to see federal legalization through. The cannabis pure plays that did not diversify are running out of runway. Tilray bought itself time, and time in a regulatory waiting game is worth more than most analysts credit it for.

The convergence that is already underway.

The most important implication of Tilray's trajectory is not about Tilray specifically. It is about the convergence between cannabis and beverage alcohol and the speed at which it is accelerating regardless of what happens at the federal regulatory level.

Cannabis companies are moving into alcohol because they need cash flow and distribution infrastructure. Alcohol companies are moving toward cannabis and hemp-derived THC beverages because they are watching their core consumer base shrink and they need new occasions to replace the ones they are losing. Both industries are circling the same consumer, and the overlap between the two is growing every quarter.

Hemp-derived THC beverages occupy a particularly powerful position in this dynamic. Unlike traditional cannabis products, they can be sold and shipped nationally due to provisions in the 2018 Farm Bill. They do not require a cannabis license. They move through conventional beverage distribution channels. They sit on shelves next to energy drinks and functional beverages in convenience stores, grocery stores, and independent retailers across the country.

The consumer response has been significant. Brands like Wynk, Cann, and Cycling Frog have built real businesses selling THC seltzers and tonics to consumers who want the relaxation effect of cannabis without the dispensary visit, the smoking, or the social stigma that still attaches to traditional cannabis consumption in many markets. These products are not niche novelties. They are capturing real occasions, specifically the wind-down evening occasion that alcohol has historically owned, and they are doing it with a consumer experience that a growing number of drinkers find preferable to a second or third drink.

The brands caught in the middle.

The craft beer segment is bearing the sharpest edge of this dynamic. Craft beer volumes have declined for two consecutive years. The consumer who drove the craft beer boom, young, curious, willing to pay a premium for something distinctive and experiential, is exactly the consumer who is most open to THC beverage alternatives. Every occasion that shifts from a craft beer to a THC seltzer is a sale that does not come back to the beer category.

Tilray's own craft beer portfolio is not immune to this pressure. The company is simultaneously running beer brands that are losing ground to THC beverages while positioning itself to be a player in THC beverages once the regulatory environment allows it. That tension is not comfortable, but it is strategic. They are hedging across both sides of a category convergence they believe is inevitable.

The broader craft beer industry is dealing with the same tension without the cannabis upside. Independent breweries that spent years building loyal consumer followings around discovery and variety are now watching that same consumer curiosity extend into THC beverages, functional drinks, and non-alcoholic alternatives. The occasion is the same. The product filling it is changing. And unlike the hard seltzer wave, which largely stayed within the malt beverage regulatory framework, THC beverages represent a genuinely different product category with different economics, different regulatory dynamics, and a different consumer relationship.

What Green Thumb and Canopy are watching.

Tilray is not the only cannabis operator paying close attention to beverage as a bridge strategy. Green Thumb Industries CEO Ben Kovler openly courted Boston Beer Company in a letter posted publicly, signaling that the interest in alcohol-cannabis convergence runs across the industry. Canopy Growth, through its subsidiary Wana, launched its first hemp-derived THC product in 2024 specifically to capture national distribution before full federal legalization arrives. Curaleaf CEO Boris Jordan predicted his company's THC drinks business would generate $100 million annually by the end of 2025.

The common logic across all of these moves is identical. Hemp-derived THC beverages represent the only legal pathway to a nationally distributed cannabis beverage business right now. Every operator that builds brand equity, consumer relationships, and distribution infrastructure in hemp-derived THC before federal legalization is positioning themselves to convert that foothold into a far larger business the moment the regulatory barrier lifts. The beverage format is the vehicle. The national distribution opportunity is the destination.

What every brand builder should take from this.

The categories that feel permanent are almost never as permanent as they appear from inside them. Alcohol has been the default adult recreational beverage for the entirety of modern consumer culture. The assumption that it would remain so indefinitely shaped decades of brand strategy, distribution infrastructure, and regulatory framework across the entire industry.

That assumption is now being tested in real time by a combination of health consciousness, economic pressure among younger consumers, and the emergence of genuinely competitive alternatives that did not exist five years ago. The brands navigating this environment successfully are the ones that are honest about what is happening rather than the ones waiting for the old dynamics to reassert themselves.

The Tilray story is a useful reminder that the path to capturing a consumer shift is almost never the straight line the early thesis implies. The company predicted that cannabis would disrupt alcohol and ended up becoming an alcohol company to survive long enough to see that prediction through. The brands that make it to the other side of major category disruptions are almost always the ones that stayed solvent and relevant during the transition, not the ones that held the purest version of the original vision at the expense of the business.

For any founder building in the functional beverage, RTD, or emerging THC space today, the question worth asking is not whether your category will be disrupted. It is whether your brand is positioned on the right side of the convergence that is already happening.

The intersection of cannabis, hemp, and beverage alcohol is one of the most consequential category dynamics in consumer goods right now, and it is one we work with directly at Liquid Opportunities. If you are building a brand in this space and want to think through where your strategy sits relative to where the market is heading, we would like to have that conversation.