FROM NA TO THC: HOW RETAIL MEDIA IS EVOLVING WITH THE NEXT BIG BEVERAGE BOOM
Retail Media is Evolving with the Next Big Beverage Boom: THC
The shelves are changing, and they’re changing fast. THC-infused beverages are following the non-alcoholic movement’s playbook, moving from niche to mainstream faster than anyone predicted. With Target testing hemp-derived THC drinks in Minnesota stores and Total Wine replacing craft beer sets with cannabis beverages, the question isn’t whether THC will become a mainstream category. It’s how quickly brands can adapt their retail media strategies to capture this $123.6 billion opportunity compliantly.
The convergence of consumer wellness trends, regulatory evolution, and retail experimentation is creating a rare category-defining moment. Just as non-alcoholic beverages grew from $925 million to over $1 billion in a single year, THC beverages are poised for similar explosive growth. For retail media agencies and THC brands, understanding how to navigate this regulated space isn’t optional. It’s the difference between leading the category and watching from the sidelines.
Key Takeaways at a Glance
THC beverages reached $54.6 million in Q1 2025 sales, up 15% YoY, with major retailers like Target entering the space
Hemp-derived THC products leverage the 2018 Farm Bill to access mainstream grocery and liquor distribution
Four in five cannabis beverage consumers report reducing alcohol intake, signaling a fundamental shift in consumer behavior
Cannabis marketing requires age-gated targeting, geo-restrictions, and platform-specific compliance. This is expertise DIGITS has honed through years of alcohol retail media
The brands partnering with experienced retail media agencies now will own the category as regulations stabilize
What’s Driving the THC Beverage Boom?
Consumer demand for wellness-oriented alternatives, regulatory pathways through hemp-derived products, and retailer willingness to allocate shelf space are converging to create unprecedented growth.
The Data Behind the Movement:
The U.S. cannabis market is projected to reach $123.6 billion by 2025, with direct retail sales exceeding $35 billion. Within this massive market, beverages represent the fastest-growing format:
Cannabis beverage sales totaled $54.6 million in Q1 2025, posting 15% year-over-year growth
Beverages now capture 6% of all edible cannabis sales, ranking fourth behind candy, chocolates, and pills
Top 10 brands (including Keef Cola, Uncle Arnie’s, and Ayrloom) control 64% of total sales, up from 52% a year earlier
Michigan leads growth at +112%, followed by Ohio (+79%) and Illinois (+47%)
For context, Minnesota’s public liquor stores generated $437 million in 2024, which was the first full year of THC beverage availability. At Top 10 Liquor, THC drinks already account for 10% of total sales and are expected to double by 2026.
Why This Matters for Retail Media: As distribution expands beyond dispensaries into mainstream retail, brands need digital marketing strategies that reach consumers where they already shop, while maintaining strict compliance with evolving regulations.
How Are Retailers Responding to THC Products?
Major retailers are cautiously expanding THC sections, reallocating space from traditional alcohol categories, and testing regional rollouts to gauge consumer response and regulatory stability.
The Retail Transformation:
Target’s October 2025 pilot program in 10 Minnesota stores marks a watershed moment. The retailer (known for conservative category expansion) is testing a dozen local hemp beverage brands including Trail Magic, Surly Brewing, and Indeed Brewing. For a national chain to dedicate shelf space to THC products signals confidence in both consumer demand and category maturity.
Total Wine and regional liquor chains have gone further, replacing 10-20 feet of craft beer sets with THC products. Coolers that once held seltzers and IPAs now showcase low-dose THC drinks with packaging designed to appeal to wellness-conscious consumers.
This shift mirrors the non-alcoholic beverage evolution. According to NielsenIQ, the NA category surpassed $925 million in 2024 and is on pace to exceed $1 billion by end of 2025. Both categories appeal to the same consumer psychographic: adults seeking control, balance, and new experiences.
Retail Media Implication: As THC products gain prime shelf placement, brands need onsite and offsite retail media strategies to drive trial and repeat purchase, just as they do for alcohol and premium CPG categories.
What Are the Marketing Compliance Challenges for THC Brands?
THC marketing faces a complex patchwork of federal, state, and platform-specific restrictions requiring age-gated targeting, geo-fencing, content limitations, and platform navigation expertise.
The Compliance Landscape:
Cannabis marketing operates in a legal gray zone. While federally regulated marijuana advertising remains illegal across state lines, hemp-derived products (under 0.3% THC by dry weight per the 2018 Farm Bill) have more flexibility, though state rules still vary dramatically.
Key Compliance Requirements:
- Age Verification: 70-90% of target audiences must be 21+ (varies by state)
- Content Restrictions: No health claims, youth-oriented imagery, or implied medicinal benefits
- Geo-Targeting: Cannot advertise within specified distances of schools, parks, or public spaces
- Platform Policies: Meta and Google prohibit most THC advertising; X (formerly Twitter) allows limited hemp-derived promotion; retail media networks offer compliant alternatives
These restrictions mirror the Tied House laws and trade compliance requirements that govern alcohol marketing. This is a space where DIGITS has spent nearly a decade building expertise.
The DIGITS Advantage: Our team has successfully navigated similar regulatory frameworks for alcohol brands at Target, Walmart, and regional grocers. That same compliance-first approach, combined with data-driven retail media execution, positions us to help THC brands scale responsibly.
What Can THC Brands Learn from the Non-Alcoholic Movement?
Mainstream acceptance requires consistent visibility, responsible marketing, and strategic retail partnerships—exactly the formula that transformed NA beverages from niche to $1 billion+ category.
The non-alcoholic beverage movement offers a blueprint for THC success:
Start with Early Adopters: NA brands built credibility with wellness-focused consumers before expanding to mainstream shoppers
Invest in Education: Clear messaging about benefits (alcohol-free enjoyment) and formats (beer, wine, spirits) drove trial
Secure Retail Space: Moving from specialty to core shelf sets required retailer relationships and sales data
Market Compliantly: Age-appropriate messaging and responsible positioning built trust with consumers and retailers
Scale Through Data: Performance metrics proved category viability, justifying expanded distribution
THC beverages are following this exact trajectory, only faster. Both categories target the same consumer: wellness-driven adults seeking functional indulgence. As NA and THC products begin sharing cooler space, the distinction between “alcohol alternative” and “cannabis beverage” will blur into a broader “mindful indulgence” category.
Why This Matters: Brands that apply proven retail media strategies (onsite search, offsite display, digital coupons, loyalty integration) will capture share while competitors navigate compliance alone.
Action Steps: What THC Brands Should Do Now
Here’s how to prepare for mainstream THC retail media success:
- Audit Your Compliance Foundation
- Review age-gating capabilities across all digital channels
- Ensure creative assets meet state-specific content restrictions
- Document geo-targeting exclusions (schools, parks, public spaces)
- Verify platform eligibility (retail media networks vs. social platforms)
- Build Retail Partnerships
- Identify regional liquor and grocery chains testing THC products
- Develop co-marketing opportunities with retailer loyalty programs
- Create retailer-specific promotional calendars aligned with key events
- Leverage DIGITS’ existing retailer relationships for faster onboarding
- Develop a Test-and-Learn Media Strategy
- Start with retail media networks offering compliant THC advertising
- Use programmatic display with age-verified audiences and geo-fencing
- Test digital coupon strategies to drive trial (where legally permitted)
- Measure lift using control markets and pre/post campaign analysis
- Invest in Data Infrastructure
- Secure access to retailer sales data for campaign measurement
- Build market share tracking across key geographies and retail formats
- Implement attribution models that connect media spend to in-store sales
- Create reporting dashboards for stakeholders (brand, legal, retail partners)
- Partner with Experienced Agencies
- Work with teams that understand regulated category marketing
- Prioritize agencies with alcohol retail media expertise (the closest parallel)
- Ensure your partner can navigate compliance AND drive performance
- Choose agencies with established retailer relationships (DIGITS at Target, Schnucks, regional chains)
FAQs: THC Beverage Retail Media
Q: Can THC brands advertise on major retail media networks like Roundel or Walmart Connect?
Not yet for marijuana-derived products, but hemp-derived THC beverages (under 0.3% THC) have more flexibility as regulations evolve. DIGITS monitors policy changes across all major retail media networks and helps brands navigate compliant activation opportunities. Regional retail media networks may offer earlier access than national platforms.
Q: How do THC marketing regulations differ from alcohol marketing restrictions?
Both face Tied House-style restrictions (no direct retail incentives), age-gating requirements, and content limitations. THC faces stricter federal oversight and more state-by-state variance. However, both require geo-targeting, age verification, and platform-specific compliance—expertise DIGITS has refined through years of alcohol retail media management.
Q: What retail formats are most receptive to THC beverage partnerships right now?
Regional liquor stores and independent grocers in adult-use states are leading adoption. Public liquor stores in states like Minnesota have shown strong performance (10% of sales at Top 10 Liquor). National chains like Target are testing cautiously with regional pilots. DIGITS helps brands identify and prioritize the right retail partners based on regulatory environment and sales potential.
Q: How should THC brands measure retail media success?
Focus on three metrics: (1) Sales lift in campaign markets vs. control, (2) New customer acquisition rate, (3) Market share growth within the category. DIGITS provides campaign-specific lift reporting using retailer sales data, plus ongoing market share analysis to track competitive positioning. This is the same analytics we deliver for alcohol clients at Target.
Q: When will THC advertising become fully mainstream?
Timeline varies by state, but expect major retail media platforms to develop compliant THC advertising solutions within 12-48 months as regulations stabilize. Brands building compliant strategies now will be positioned to scale immediately when platforms open up. Early movers gain valuable data, retailer relationships, and consumer awareness before the category becomes crowded.
About DIGITS Agency
DIGITS is a Target Vendor Services Agency specializing in Target Circle strategy, paid search, Roundel media, and 3P digital campaigns. With exclusive access to Target sales data and a decade of Circle expertise, DIGITS helps CPG brands drive measurable sales growth and maximize ROI at Target.
Conclusion: The Brands Who Act Now Will Own the Category Tomorrow
The THC beverage revolution isn’t coming. It’s already here.
With mainstream retailers entering the space, consumers embracing moderation, and innovation outpacing regulation, the opportunity for brands is enormous. But opportunity without expertise leads to compliance risk, wasted spend, and missed market share.
The next billion-dollar beverage movement won’t just be alcohol-free—it will be THC-infused. And the brands that dominate it will be those who paired visionary products with experienced retail media partners.
DIGITS has spent nearly a decade helping alcohol and regulated CPG brands succeed within complex compliance frameworks by balancing creativity, data, and legal requirements to deliver measurable growth. As the THC category matures, those same strategies will separate category leaders from category followers.
What’s the next question your brand should be asking?
Perhaps it’s: “How do we build a compliant retail media strategy that scales with this category?”
We’re ready to answer it.
Citations & References
- Cannabis Market Size: Grand View Research, “Cannabis Market Size, Share & Trends Analysis Report,” 2025
- Minnesota Liquor Sales: Minnesota Department of Public Safety, “Annual Liquor Sales Report,” 2024
- Target THC Pilot: Minneapolis Star Tribune, “Target Tests Hemp-Derived THC Beverages,” October 2025
- Platform Advertising Policies: Meta Business Help Center, Google Ads Policy Center, X Advertising Guidelines, 2025
Dave Glaza, Founder & CEO of DIGITS, remains committed to bringing digital capabilities to physical stores!
LinkedIn: https://www.linkedin.com/in/
