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The Future of Cannabis Beverages: A Conversation with Paulo Sobral

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We recently sat down with Paulo Sobral of Area 1075, a cannabis and functional beverages producer, to discuss the future of cannabis beverages and the industry as a whole.

Read the transcript below or watch the video.

Qredible: Welcome to the Qredible Live Broadcast. Today, we’re going to be talking about challenges and changes in the cannabis beverage industry. I’m here with Brian Fitzpatrick, CEO of Qredible, and Paulo Sobral, General Manager for Area 1075. Paulo has a background in the beverage industry and has helped lead innovation in cannabis-infused beverages.

To start, can you give us some background on your career and what led you to cannabis beverages?

Paulo: I worked at PepsiCo for 6 years before joining the cannabis industry in California in 2016, pre-recreational legalization. I was looking to transition from corporate and build something myself that I was more passionate about. I started researching CBD and cannabis and saw huge potential in cannabis beverages. In 2019, I helped lead the development of infused beverages and saw the challenges limiting the category’s potential. I recently joined Area 1075 as GM to help advance quality standards in manufacturing.

What are the Challenges of Cannabis Beverages?

Qredible: You’ve mentioned the word “challenges” a few times. What do you see as the big issues facing the cannabis beverage industry today?

Paulo: I believe cannabis beverages can become the largest cannabis category. The main obstacles are distribution and manufacturing. Once regulations allow broader retail access alongside traditional beverages, the market will take off. Most current production is by startups without proper beverage equipment and unable to achieve economies of scale, leading to higher costs. We aim to solve this with Sierra Nevada’s expertise in quality beverage production.

Qredible: The consumer demand seems poised for huge growth as well, with younger generations open to cannabis as an alternative to alcohol. What are your thoughts on the emerging consumer market?

Paulo: I see three consumer categories currently. First is existing cannabis users looking for new consumption methods. Second is the alcohol alternative market, which offers the most short-term potential. Third is mainstream consumers who will enter the market as stigma declines and retail access expands. If costs come down, the market could be anyone open to cannabis.

Federal Legalization is Necessary

Qredible: Manufacturing and distribution challenges make it hard to achieve economies of scale. How can brands manage this, especially crossing state lines?

Paulo: Federal legalization is needed to fully solve this, so brands should focus regionally in the short term. This allows you to concentrate expertise and marketing in select markets versus spreading yourself thin. Contract manufacturing and varied regulations across states already pose operational hurdles for brands before you factor in interstate commerce.

Qredible: Supply chain vetting and compliance are so important in this industry. What’s your advice for properly vetting manufacturing partners?

Paulo: The key is finding partners with experience and proven track records. Have them recommend other supply chain partners they’ve worked with successfully. This ensures fewer hiccups and that any issues are addressed collaboratively. Proper certifications are a must, but experience brings invaluable knowledge of cannabis production nuances.

Qredible: As an expert in the space, what recommendations do you have for brands looking to enter the market or expand responsibly despite regulatory volatility?

Paulo: Stay focused regionally rather than pushing for quick nationwide growth. Hyperfocus on your target jurisdiction–laws, producers, retailers, and consumers. Avoid overextension making decisions based on hopes of changing regulations. Persist daily in your mission, but guard your mental health amidst the challenges. The market is coming, so keep learning and steadily influencing change.

Qredible: Paulo, thank you so much for sharing your insights today! How can our audience best connect with you if they want to learn more?

Paulo: I’m most active on LinkedIn, or you can reach me by email at paulo@area1075.com.

Qredible: Excellent, thanks again for joining us!

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