While it’s probably too early to crown any winners in the THC beverages space, certain groups are quietly betting on a bigger and better future, developing serious distribution, technological, and strategic advantages.

One of these groups is WHEREHOUSE BEVERAGE CO, the owners of THC beverage brands WYNK and COUNTDOWN, as well as a massive beverage co-packing facility in upstate New York.

This week I sat down with Angus Rittenburg who holds two positions in the organization, serving as CEO of WHEREHOUSE BEV CO as well as CTO of WYNK. Rittenburg has a mechanical engineering background and was formerly a Battery Design Engineer at Tesla. 

Rittenburg and I discussed WHBEVCO’s unique approach to the market, the challenges and opportunities of the hemp and cannabis markets, the future of regulations, and played out the ideal scenario for THC beverages ubiquity.

Why THC beverages?

I asked Rittenburg about his cannabis experience before WYNK, and surprisingly, he said that he had never a big cannabis user before this and had only done it a couple of times. “All three founders are pretty relentlessly social, but we all have businesses, and we need to be productive,” said Rittenburg.  They saw an opportunity to create a low-dose cannabis drink, that could specifically connect with the non-cannabis community who was interested in drinking less alcohol or giving it up completely.  The idea behind WYNK’s name was “seltzer with a WYNK of THC.”

How WYNK Shines in a Sea of Seltzers

Despite having a first-mover advantage and the clear technological advancement WYNK and WHBEVCO has made in the space, I was still interested to hear what Rittenburg would say when asked what makes their brand stand out against the rest, especially in a category that is roughly 50% seltzer brands or products.

“I would break this up into two categories, consumer-facing and industry-facing,” said Rittenburg.

Consumer-Facing

WYNK has 0 calories, unique packaging like printed cans and cardboard boxes, variety packs, a commitment to quality, and a very low cost when compared to most competitors. “Our packaging looks like the rest of the beverage world,” said Rittenburg, and they are determined to continually improve quality while bringing down production cost for WYNK and COUNTDOWN by owning and mastering their products’ production. While boxed beverage offerings are table stakes in the alcoholic and non-alcoholic beverage markets, the hemp beverage market has been slow to catch on and multipacks are primarily sold with plastic Paktechs, which limits total pack size and does not have the same professional look.

Industry-Facing

They have a co-packing facility of their own called Best Bev, which is a 230,000 sq foot facility in upstate New York. It boasts impressive stats like an ability to pump out 1,800 cans a minute. “The infrastructure is pretty developed at this point, the main issue we see in other brands is quality, and we believe that the best way for the category to grow over time is if people can trust the products,” said Rittenburg.  While Best Bev produces both WYNK and COUNTDOWN, it also produces for a number of other competing brands in the THC beverage space.

A Tech Forward Approach

“In 2020 (when WYNK was founded), there was no hemp-derived world,” said Rittenburg.  To sell THC beverages, you had to play in the regulated cannabis markets, you needed a co-packer in every market to sell. “We saw this as an interesting distribution opportunity.”

While WYNK initially had some CBD beverage offerings, Rittenburg said that “the opportunity seemed a lot more limited.” 

WYNK’s first technological innovation was “WYNK Wagons”, which were tractor-trailer tankers that allowed them to make their seltzer base at their own facility, pull up to a licensed facility in any state, dose it, can it, and sell it within that market.  This was a huge competitive advantage, allowing them to expand into new cannabis recreational markets rapidly throughout the Midwest and East Coast. Until the explosion of the hemp-derived THC beverage market changed the distribution channel for low-dose THC beverages, WYNK had (and still has) one of the largest national footprints in terms of cannabis beverage distribution through the regulated markets.

But from here they pushed even further, creating a unique system where they could manufacture and ship un-dosed, sealed cans, and dose them in whichever market they plan to sell them in, using local cannabis extract and emulsion.

How did they pull this off, and how the heck can you dose a beverage that’s already been canned?

“We use normal Crown and Ball cans, but we developed a method to modify them at scale so that we can dose cans after canning,” said Rittenburg.  The method involves punching a little hole in the bottom of a can, adding a small rubber valve that allows liquid to be put into the can but does not allow it to come out.  The dosing machines are the size of desks, can just be plugged into a wall outlet, “work like filling a vape cartridge”, and inject cans with THC.

My first question following this was how do they ensure homogeneity?

The cans are dosed upside down in cases and then flipped right side up after, and this is apparently enough to ensure that each can has a homogenous dose of THC.  Rittenburg said that not only have they done extensive testing on their own to confirm this, but that many states have testing requirements from 3rd party labs, and that their cans are always able to pass these with no issue.

Cannabis Rec vs Hemp Market

While many beverage brands have left the cannabis rec markets in droves to pivot to the hemp-derived markets, WYNK is one of the few that still includes the cannabis markets as a big part of its game plan.  “The dispensary channel is still a huge part of our business,” said Rittenburg.  While both WYNK and COUNTDOWN are sold in the cannabis rec and hemp markets, in the long term, Rittenburg sees lower dose products like WYNK being more focussed on the hemp market, while COUNTDOWN and other high dose products they develop being focussed on the cannabis rec market.

I asked Rittenburg to give his opinion about the clash of support between the hemp markets and the cannabis markets, as many legacy cannabis operators see hemp as an unregulated loophole that is stealing revenue from people “following the rules.”

Rittenburg first clarified that “we are not the enemy, we are much more of a supporter” since their business still operates in both markets.

“What many people don’t understand is that the hemp-derived space is a huge on-ramp for non-cannabis users to eventually start using higher dose products found in dispensaries, and they have the potential to get people more interested in going to dispensaries,” said Rittenburg.

On the subject of safety concerns, he stated “there are many deaths each year from alcohol and tobacco, there are essentially none from cannabis.” While I understand that there still could be concerns about product quality with hemp-derived products, what I believe Rittenburg is trying to illustrate here is that even the cannabis rec market is probably a bit over-regulated (especially for low-dose products), and that similar substances that we regulate less are much more dangerous for the general public than hemp and cannabis.

The Future for WYNK & the Broader THC Beverage Market

Regulation

Rittenburg had a lot of insights on the future of regulation within the THC beverage space.  His broader point seemed to be focused on giving the most access to consumers, while still having appropriate safeguards like dosing caps, taxes, and education.  

“The right thing for the consumer is for 10mg and under to be sold through the bevalc channel that has the proper 3rd party testing and age gating, and for anything above 10mg, I would support the existing structures through the dispensary channel” said Rittenburg. He elaborated on this and said that high dose products should be “selling in a space where people can inform and educate them,” referring to budtender staff at dispensaries who are typically well versed on the products in their store.  “It will take a period of many years for the public to understand how the doses and effects from different cannabinoids differ” said Rittenburg. Rittenburg equated this model to what has played out in different state liquor markets, and gave Pennsylvania as an example, where beer and liquor were not allowed to be sold in the same store until only a few years ago.

On the tax front, Rittenburg believes whether it is a high or low-dose product, taxation needs to be enforced. “Substances are taxed to protect the public and limit consumption. Alcohol should be taxed higher than cannabis, and a tax rate should be set that properly throttles consumption in a way that also encourages responsible consumption. Then money can go back to the government to put up education and other infrastructure to support it.”  Right now cannabis is often taxed 30x - 40x higher than alcohol, despite the fact that alcohol seems to cause a lot more negative externalities. Rittenburg’s statements point to a current system that is clearly set up to perpetuate the long-held vendetta against cannabis, instead of encouraging economic growth and the alternative consumption opportunity for consumers to enjoy a substance that is proven to be much safer than alcohol.

We agreed upon the fact that state cannabis taxes are far too high, and that they are likely limiting the revenue potential for states. If an equilibrium can be struck where the tax rate is dropped but total revenue climbs and then increases total tax collection for the state, this would seem to be a win for everyone: businesses get more customers and increased revenue, states collect more annual taxes, and consumers are encouraged to purchase and explore a category that is a much safer alternative to alcohol and other substances.

When I asked him about the possibility of TTB oversight, Rittenburg said “A lot of the TTB framework makes sense: retail, taxation, distribution. I would be happy to see them create clearer regulations.” I pushed further and asked if the TTB closed or inhibited the e-commerce channel for hemp beverages, would he be okay with that? “Some alcohol is sold online, so if this were continued with hemp beverages there definitely needs to be good age checkers to ensure customers are 21 plus,” said Rittenburg. But for the long term, we both seemed to share a similar belief that while e-commerce is a great marketing tool, in the long term, it will not be a sustainable channel.  “When’s the last time you purchased beverages online before hemp beverages,” Rittenburg asked. He shared that while WYNK does well through the e-commerce channel, they are a lot more concerned with continuing to attack traditional retail channels and get WYNK and their other brands right alongside other alcoholic and non-alcoholic beverage brands in traditional retail outlets.

Dosing

I asked Rittenburg about his thoughts on the fact that right now in the hemp market, 10mg is seeing the highest sales velocity.  I also expressed the fact that I didn’t believe this would last, and that 2mg - 5mg would likely be the more reasonable range for average consumers to be able to “session” multiple cans in the long term.

“It’s been interesting seeing on-premise stuff play out,” said Rittenburg. “In Minnesota, bartenders don’t want 10mg anymore because they can’t sell many of them, and it’s hard for the average person to drink multiple 10mg cans.” He also said that some retailers in the state are seeing an uptick of sales with 1mg gummies. Rittenburg hypothesized that this is likely a sign that consumers are better understanding how to dose themselves, and over time demand will even out in between 2mg and 10mg and as they learn what works best for them.

I also told him that I believe that the overtaxed and high prices of beverages in the cannabis rec markets has set an unusual precedent, where many operators are convinced that consumers are looking for the most mg of THC per dollar.  And even while hemp beverage prices are still relatively high compared to alcoholic beverages, my personal belief is that most consumers are not shopping this way, and if they are, once prices come down it will all be about brand, quality, and taste.  Rittenburg agreed and said that they just recently launched 2.5 mg, 12-count variety packs that are meant to be direct competitors to hard seltzer variety packs.  “I could be wrong, but I would venture to guess it is a price issue, not a dose issue,” said Rittenburg, referring to how low-dose beverages typically did not perform well in the cannabis rec market channels. 

Once cost comes down, I believe that brands will have a harder time touting mgs per dollar, and 10mg drinks will likely be less popular for the average consumer.

WYNK and WHBEVCO

Rittenburg said that they have a couple of new product development projects in the works, and even a whole new product line releasing later this year.  He couldn’t share many details, but he stated it would be “a set of very compelling alternatives to alcohol.”  Rittenburg is particularly excited about some of the innovations they have done in terms of function with the use of minor cannabinoids and other added ingredients.  “I think people will be surprised by how different these products will feel in terms of effect,” and he emphasized his excitement for the launch of this new product line.