ATLANTA – Georgians have had a long relationship with beer, an affection that grew during the pandemic before it started to unravel.
Now, many are attracted to a new and different product, something with intoxicating power but without the familiar downsides: hemp beverages.
Beer sales plummeted nationally and in Georgia after COVID-19 subsided. The golden liquid comprises two-fifths of state revenue from alcohol beverage taxes, and income from that tax had been bubbling up about 1% a year before the big lockdown. Then, during fiscal year 2020, which ended that July, four months into the pandemic, it fizzed up 4%. The next year, like a shaken can of beer, the sales tax exploded by nearly 10%, according to the Georgia Department of Revenue.
But sales flattened as the pandemic subsided, hitting negative territory starting in fiscal year 2023.
Breweries started closing, and Georgia was hit hard, said Matt Shirah, co-founder of Scofflaw Brewing in Atlanta.
“Smaller breweries with distribution are experiencing heavy double-digit declines,” he said.
Lawmakers even introduced a bill this winter called the “Georgia Craft Brewery Innovation and Survival Act.”
Observers cite many reasons for the shift away from beer, including a post-pandemic hangover, generational change, rising costs, and concerns about alcohol toxicity.
“I think that alcohol is kind of the tobacco of our generation,” said Ian Dominguez, a fund manager who has long invested in alcohol but is shifting to hemp products. He thinks hemp beverages are entering a period of tremendous growth.
“We think this category is going to be bigger than craft beer in 10 years,” he said. “I’ve never been as confident of something in my career.”
Hemp beverages had a global market valued at $1.16 billion in 2023, according to the industry trade publication Beverage Information Group, which reported projections of compound annual growth at 19.2% to 2030.
Canada and the United States are major markets, as is Europe and particularly Germany — that bastion of beer.
Last month, Shirah attended the International Cannabis Business Conference in Berlin, where industry representatives, policy makers and others from more than 80 countries were expected to attend. The organizers cited market research that had the overall cannabis market in Germany alone reaching $4.6 billion in less than a decade. Lawmakers legalized cannabis in that country last year.
Cannabis is not legal for general consumption in Georgia, but hemp is legal due to a 2018 federal law called the Agriculture Improvement Act.
As long as the intoxicating component known as tetrahydrocannabinol, or THC, is 0.3% or less “on a dry weight basis,” it’s no longer considered a controlled substance.
Katherine Russell, policy director for the Georgia Department of Agriculture, told state lawmakers in March that she believed Congress wanted to open a legal lane for industrial hemp, for products such as Hempcrete or for flooring used in construction.
In doing so, federal lawmakers — and President Donald Trump, who signed the farm bill into law during his first term — opened what some are calling a loophole for cannabinoids, the intoxicating substance in the plant.
Subsequently, Georgia began passing laws to allow and to regulate the industry, with new rules coming online late last year.
In the interim, all sorts of hemp products of varying quality flooded Georgia convenience stores and other outlets.
Hemp and cannabis are essentially the same plant, as similar as an azalea and a dwarf azalea, Russell explained, adding that the intoxicating capacity of the plant can be controlled by practices such as the timing of the harvest and the admixture of other compounds, such as hexahydrocannabinol, or HHC, a semisynthetic analogue of THC.
“We’re dealing with an industry of entrepreneurs who are very creative thinkers,” Russell said. “We’ve seen people have novel responses to some of the regulations.”
Gary Long, CEO of a Georgia hemp consumables production company, said highly intoxicating products were getting dumped onto shelves by companies from outside Georgia during the period between the federal farm bill and Georgia’s new Hemp Farming Act, which took full effect last Oct. 1.
Before that, with little in the way of a regulatory framework, state enforcement of the federal limits was inconsistent, he said.
“There are products, or have been products, in our market in Georgia that have far exceeded the federal limits,” said Long, who started out as a licensed medical cannabis provider then, last year, opened ONE59, with a new 133,000-square-foot hemp production facility in Glennville. His products include hemp gummies, absorptive skin creams, and beverages aimed at consumers seeking transparency with ingredients.
“I think the Department of Agriculture is now enforcing the law much more readily than they were,” he said.
This winter, Georgia lawmakers had mixed reactions to the onslaught of hemp products. They unleashed a flurry of conflicting billsthat would have alternately promoted and suppressed the budding industry, including a bill from the Senate that would have banned hemp beverages altogether.
That bill died by the hands of Rep. Alan Powell, R-Hartwell, chairman of the House Regulated Industries Committee. Instead of substantial change, both the House and Senate settled on establishing a committee to review the subject. “We’re going to be studying this in depth this summer,” Powell said in March.
Jim Higdon, co-founder of Louisville-based Cornbread Hemp, which sells beverages, gummies, oils and related products, said something similar happened in the Kentucky legislature, where he said distillers used their clout in an attempt to kneecap his industry.
He said hemp advocates limited the impact by asking customers to contact their lawmakers about it.
Higdon thinks lawmakers will eventually embrace hemp for a simple reason. “The tax revenue potential for hemp beverages and hemp products writ large is significant,” he said.
“Wine and spirits are definitely against hemp beverages and want them to go away,” he added. “But the microbreweries and hemp beverages have a symbiotic relationship because what hemp beverages need is a good canning line, and these microbreweries have canning lines with capacity.”
Shirah said it was clear to him by 2023 that he had to pivot Scofflaw into hemp drinks.
“Hemp beverages will drive at least half of our revenue this year and at least two thirds of 2026 top line revenue, maybe more,” he said.
Scofflaw makes several THC-infused beverages, with Strawberry Lemonade and Sweet Tea Lemonade among the more popular items. Shirah said he is working on a hemp-infused, non-alcoholic, malt-based beverage.
Meanwhile, the Hemp Beverage Alliance is high on Georgia. Their national expo will be July 9-11 at the Omni Atlanta Hotel.
Minnesota was among the first states to embrace the hemp industry, and Christopher Lackner, the president of the alliance, said communities there have seen the benefits of the tax revenue. He said Georgia is primed to follow, despite the ban proposed during this year’s legislative session.
“Since the Georgia regulations and rules came in last year, we have all pegged Georgia as the next Minnesota, which is to say, the next hemp beverage marketplace,” he said. “So we’re very excited that this legislative session ended without a ban.”