Today, cannabis is making its way into various sectors of the food and beverage industry. However, a decade ago, it was viewed as a dangerous narcotic. Its presence in food and drinks resembled more of a homemade tray of pot brownies than the polished products now appearing on store shelves. In 2009, Erik Knutson, his brother Kelly Knutson, and Andrew Veron were working in construction. They faced significant job losses and could no longer secure construction loans as the Great Recession ravaged the housing market. Hailing from Boulder, Colorado, known for its progressive stance on cannabis, they brainstormed a new business idea to bring cannabis products to a broader audience. Thus, Keef Brands was established as one of the first companies to introduce cannabis-infused soda.
Keef has since expanded its product line to include sparkling water, energy shots, healthy juice blends, and oils. The company is collaborating with Ceria Brewing Company, founded by former Blue Moon brewmaster Keith Villa, to manufacture and distribute a non-alcoholic THC-infused beer called Grainwave. Keef’s products are available in retail locations across California, Colorado, Arizona, Nevada, Michigan, and Puerto Rico, with some distribution in Jamaica. Knutson aims to expand into Massachusetts, Oklahoma, Oregon, and Washington this year, and sales are thriving. Last year, Keef sold its one millionth product in the United States, with Knutson noting that the company sells around 50,000 items each month.
While the edible cannabis market is now saturated, Keef was instrumental in laying the groundwork for this category and continues to innovate to satisfy consumer demand. In an interview with Food Dive, Knutson discussed how he pioneered the drinkable cannabis sector and his vision for its future.
ERIK KNUTSON: We were brainstorming and analyzing the market. I recognized that the two most widely accepted forms of social adult interaction are drinking and smoking, and since everyone else was on the smoking side, we identified a significant market need for a beverage that offered a truly social way to enjoy cannabis. After all, most people don’t gather around to slice brownies; they tend to have beverages on the table. Historically, drinks have acted as a social lubricant, so this idea felt logical.
KNUTSON: The first beverages we produced were in clear glass bottles, emphasizing a natural color presentation while resembling typical sodas. We prioritized using pure cane sugar, agave, or monk fruit, avoiding high fructose corn syrup and artificial sweeteners. We aimed for a clean sweetness profile, though some consumers preferred colored beverages. Our original products were soft drinks, featuring vibrant colors like super blue and deep purple.
By mid-2010, we launched Keef Boosts, a 5-hour energy-style drink formulated entirely in-house. The first variant, named Flo, acted as an energy booster enriched with B vitamins and vitamin C, combined with agave for a clean product free from food coloring. We produced and distributed these until 2015 when packaging regulations changed, prompting us to pivot our direction.
KNUTSON: We have developed multiple product lines within our brand. Currently, we offer Keef Life, a clean label, non-sparkling, low-calorie beverage, alongside our Keef sodas and colas. Our sparkling water product is likely the healthiest edible on the market, consisting of sparkling water infused with THC and a hint of monk fruit sweetener. We’ve worked to create products that cater to various market segments, and I believe we’ve succeeded.
KNUTSON: Our target consumer is anyone who consumes cannabis and seeks an alternative delivery method or a social product to bring to gatherings. We refer to it as “after-recreation medication.” As a beverage, it provides hydration and a fun experience. We aim to create products for nearly every demographic in the cannabis market. Recently, we launched a product called Ceria in Colorado, in partnership with Keith Villa, who is well-known for creating Blue Moon. This non-alcoholic beer closely mimics the flavor of Blue Moon, and we believe its low-milligram THC content (five milligrams per beer) will attract new cannabis consumers who might not have otherwise tried it.
KNUTSON: We had been exploring this concept for a while. Through another business focusing on hops extracts, we experimented with it for a couple of years. When the opportunity arose with Keith, it felt like a natural partnership, given our position as a leading beverage manufacturer in Colorado. The synergy we discovered allowed us to move forward effectively.
KNUTSON: The response has been phenomenal. We sold our first batch within a week, both wholesale and retail. It’s a genuinely unique product that tastes like beer, with the body of a beer, but without the alcohol. The flavor profile is unparalleled, and having someone like Keith on board, who is one of three Ph.D. brewologists in the world, adds credibility. While many companies produce high-quality cannabis products, most edibles currently available do not match the standards of traditional consumer packaged goods.
KNUTSON: I believe any form of cannabis legalization, whether it involves hemp, THC, or CBD, benefits everyone. It increases revenue across the industry. Our venture in the hemp space began in 2012, and we’ve witnessed firsthand how it helps with revenue generation. Each new deal opens up fresh avenues for income that weren’t available before.
KNUTSON: We’ve collaborated with several CBD companies on beverage products and are preparing to launch a tea product with a partner for the X Games later this month. We are actively engaged with major traditional consumer packaged goods and beverage companies to develop and launch CBD products, especially beverages. Although our focus on THC products demands much of our attention, launching a Keef CBD drink is certainly on our agenda.
KNUTSON: Innovation is crucial. Being a first mover offers advantages, but it doesn’t guarantee success, as seen with Blockbuster and other companies. Continuous innovation and exploration of new opportunities are vital. One of the significant benefits of being a pioneer is gaining insight into upcoming trends. Our consulting business has been instrumental in our R&D efforts, helping us to develop products like our beer and sparkling water.
We are also exploring collaborations with local wineries in northern California to create non-alcoholic infused wines, aiming to disrupt the adult beverage market. This presents a viable alternative for many, enabling them to feel part of social occasions without consuming alcohol.
KNUTSON: From a pricing standpoint, we were the first to offer a 10 mg cannabis drink in Colorado, effectively establishing the price point currently set at $5-$6 for a soda and $8-$10 for a beer. We prioritized packaging that appeals to consumers, which has elevated the entire industry as larger consumer packaged goods companies enter the market.
KNUTSON: Our focus is on expansion. I am currently dedicating substantial time to California, a massive and largely untapped market. The number of retailers is projected to more than double in the next year, with the potential for further growth thereafter. With states like New Jersey poised to legalize recreational use, we anticipate significant changes in the industry landscape in the next 12 to 36 months.
With federal legalization on the horizon and states moving forward, we expect significant developments within 24 months. Major financial institutions and traditional CPG companies are rapidly entering the cannabis space, recognizing the market’s potential—estimated to be worth $50 billion at its lowest and up to $80 billion at its peak, excluding the black market.
KNUTSON: Choose your partners carefully. As with any new industry, there are numerous challenges. It’s essential to approach this venture with realistic expectations, as many have mistakenly believed it would be a quick and easy path to profitability. The cannabis industry can be as challenging, if not more so, than traditional business due to high taxes and regulations. Nevertheless, it is an exciting field filled with opportunities.
I also advise against overextending yourself. Focus on your strengths and excel at what you do. Companies that attempt to become all-encompassing too quickly often struggle. By producing a superior product and committing fully, you stand a better chance of success than the competition.
KNUTSON: We will continue expanding through partnerships and the development of third-party lines. Our formulation for Keef gummies, dubbed Keef Caps, is complete. These bottle cap-shaped gummies will mirror the flavors of our sodas, representing a natural product extension. We are also advancing our vape pen lines and expect to finalize our tea formulations soon, incorporating calcium citrate USP and vitamin D3 to enhance their nutritional value.