WOODBURY, N.Y.—Arizona remains the leading U.S. iced tea brand by sales volume, but its market share has declined in recent years. Now, the company is moving into the business of marijuana-infused products to boost its numbers, reports the Wall Street Journal.
Arizona Beverage Co. has reached a licensing deal with Denver-based Dixie Brands, a cannabis company producing vaporizers, candies, drinks, tinctures and topical creams in five U.S. states. Under the agreement, which must be approved by Dixie’s board, Dixie will manufacture the Arizona-branded products and sell them through licensed dispensaries, and Arizona will have the right to buy a stake of up to $10 million in the cannabis company.
Preliminary plans call for vape pens and gummies, followed by a variety of beverages that could include tea, lemonade, soda, coffee or seltzer, officials said. Dixie would introduce the line in the U.S., then roll it out to Canada and Latin America. Dixie will manufacture the goods in each state where they are sold, and Arizona won’t be involved in production.
Most big companies take a cautious approach to the marijuana-infused market. Corona brewer Constellation Brands and Coors Light brewer Molson Coors Brewing are creating marijuana beverages for Canada but waiting for U.S. federal laws to change before moving south. Arizona Beverage Co., a privately held company, is hoping for a head start in the U.S. cannabis market.
“You’ve got to be willing to try things,” said Don Vultaggio, chairman and CEO of Arizona Beverage Co. “The upside is we’re one of the first ones in an emerging space.”
Arizona Beverage Co. may be among the first big American brands to plunge into the U.S. marijuana market, but many observers see it as a risky move and one that a publicly traded company wouldn’t make.
Eleven U.S. states have legalized recreational marijuana, and medical marijuana is legal in more than 30 states. But with cannabis prohibited by federal law, it can’t be transported across state lines. Many banks won’t take money derived from cannabis sales, and companies selling marijuana in the U.S. can’t be listed on a major U.S. stock exchange.