Low-Dose THC Beverages in Liquor Stores: Normalization or Unfair Competition?

Low-Dose THC Beverages in Liquor Stores: Where Cannabis and Alcohol Retail Collide

Should legal sales of low-dose THC beverages be allowed in liquor stores in states where you need a license to sell cannabis?

This question is no longer theoretical.

In New York, newly filed legislation would allow liquor stores to sell low-dose THC beverages, further blurring the lines between cannabis and alcohol retail channels.https://www.marijuanamoment.net/new-york-liquor-stores-could-sell-low-thc-cannabis-beverages-under-newly-filed-bills/

On one hand, many in the cannabis industry are intent on normalizing THC. If an adult wants to light a joint, enjoy an edible, or sip a THC-infused cocktail, they should be able to do so. Consumption patterns are changing, and there is growing evidence that cannabis may serve as a substitute for alcohol, which carries well-documented social costs.

After all, as the saying goes, the most dangerous thing about weed is that it is illegal.

On the other hand, legal cannabis operators have invested enormous sums to operate within a tightly regulated and heavily taxed framework. Lowering the retail barrier by allowing THC beverages in liquor stores raises legitimate concerns about fairness and market stability.

This is not a simple policy debate. It is a structural one.

The Case for Allowing THC in Liquor Stores

THC beverages are not a fringe product category. They are one of the fastest-growing segments in cannabis.

We have previously discussed the rising popularity of THC beverages in posts such as:THC for the Holidays: Green Wednesday Cannabis Trend https://www.pacgarden.com/post/thc-for-the-holidays-green-wednesday-cannabis-trend

And the growing participation of alcohol brands entering the space:https://www.pacgarden.com/post/alcohol-brands-enter-thc-beverage-market

Mainstream retailers are also eyeing the category: https://www.pacgarden.com/post/thc-beverage-retail-revolution-mainstream-retailers

Consumption is evolving. Many consumers are seeking lower-calorie, lower-hangover alternatives to alcohol. Alcohol brands want to meet that demand at the same point of purchase where consumers already buy beer, wine, and spirits.

From a normalization standpoint, allowing low-dose THC beverages in liquor stores could:

• Expand consumer access

• Reduce stigma

• Introduce cannabis to the “cannabis-curious” demographic

• Potentially expand the overall category

If THC beverages are inevitable, some argue that distribution should evolve accordingly.

The Case Against It

Legal cannabis is not alcohol.

Dispensary operators have paid licensing fees, complied with zoning restrictions, funded testing protocols, absorbed taxation layers, and built infrastructure around state-specific compliance systems.

Allowing THC beverages in liquor stores could:

• Bypass the dispensary channel

• Artificially lower retail barriers

• Create uneven competition

• Shift revenue away from licensed cannabis retailers

California has already taken a clear position by banning the sale of hemp-derived THC outside the licensed cannabis system. All regulated and taxed THC sales must flow through dispensaries and licensed delivery.

The rationale is straightforward: protect the regulated ecosystem.

The question is whether New York will make the same call.

Does It Grow the Pie?

The biggest competitor to licensed dispensaries is not other dispensaries. It is the gray market.

Unregulated sellers continue to move:

• Vapes

• Concentrates

• Edibles

• Flower

THC beverages are not currently a dominant product in the illicit market.

If liquor stores begin selling low-dose THC beverages, where will the revenue come from?

Our view, looking into the crystal ball, is that the sales may primarily come from the cannabis-curious segment that might otherwise visit a licensed dispensary.

Will this result in a net increase in dispensary revenue as consumers suddenly become future dispensary devotees after sampling a thc beverage from the corner bodega? Or do dispensaries lose their edge as new customer sales migrate to the corner liquor store?

Will it meaningfully reduce gray market activity? Highly unlikely.

It may simply redirect demand from regulated cannabis retailers to alcohol retail channels.

Manufacturing and Distribution Still Matter

Regardless of where THC beverages are sold, they must be properly manufactured, tested, stored, and distributed within a compliant framework.

In California, beverage production requires licensed manufacturing, compliant distribution, and controlled logistics infrastructure.

Facilities capable of supporting beverage formulation, packaging, and statewide distribution are strategic assets. For example, this Santa Cruz industrial manufacturing and distribution facility illustrates the type of infrastructure required to produce and move regulated THC products at scale:https://www.pacgarden.com/properties-1/santa-cruz-industrial-manufacturing-distribution-facility

Retail policy debates often focus on the storefront. But behind every compliant beverage product is manufacturing and distribution capacity.

If THC beverages continue to grow, infrastructure becomes more valuable.

Alcohol Brands Want In

Alcohol companies are not entering cannabis as a novelty experiment. They recognize shifting consumer behavior.

If consumers are moderating alcohol consumption or seeking alternatives, beverage companies want to meet them at the shelf.

Liquor stores represent an existing, normalized retail channel.

From a pure market logic perspective, combining alcohol and low-dose THC offerings at the same point of sale appears efficient.

From a regulatory perspective, it raises questions about cross-industry fairness.

California Said No. Will New York Say Yes?

California has decided that regulated THC belongs in the licensed cannabis ecosystem.

New York is debating whether low-dose THC beverages can coexist inside the liquor retail channel.

Both approaches have trade-offs.

The fact is that THC beverages are difficult to stop. Consumer demand exists. Alcohol brands are positioning. Retailers want diversification.

The question is not whether beverages grow. It is how they are integrated into existing regulatory frameworks.

Will allowing liquor store sales normalize cannabis further?

Or will it undermine the operators who built the legal market from the ground up?

States are supposed to be laboratories of democracy.  We have a feeling New York may roll the dice on this one, but time will tell. 

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FAQs

Q: Why are THC beverages growing so quickly?

A: THC beverages offer discreet consumption, lower-dose control, and a familiar social format. Many consumers view them as an alternative to alcohol.

Q: Would allowing THC beverages in liquor stores expand the cannabis market?

A: It could expand access and normalize the category. However, it may also shift revenue away from licensed dispensaries rather than significantly reducing illicit market activity.

Q: Why do dispensaries oppose liquor store sales?

A: Dispensaries operate under strict licensing, taxation, and compliance frameworks. Allowing liquor stores to sell THC beverages may create uneven competition within the regulated market.

Q: How does California regulate THC beverage sales?

A: California requires regulated THC products to be sold through licensed dispensaries, delivery services, and special events. Hemp-derived THC outside that system has been restricted.

Q: Does beverage growth increase the need for infrastructure?

A: Yes. THC beverages require licensed manufacturing, quality control, and distribution systems. As demand increases, compliant production facilities become strategically important.