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California cannabis standout Caliva announced the acquisition of plant-powered beverage brand Zola on Monday, March 20. The vertically integrated marijuana company has more than 500 dispensaries across California and boasts NFL legend Joe Montana as an investor. This deal gives them distribution access to Zola’s 7,000 retailers, as well as infrastructure for the production of CBD beverages. 

This is the first time a cannabis firm has acquired a mainstream beverage company. Until now, it’s been the other way around. Constellation Brands has a $4 billion stake in Canadian cannabis producer Canopy Growth. Owner of Budweiser AB InBev is partnering with Tilray, another Canadian producer, to develop both THC and CBD drinks, and Molson Coors Brewing is creating cannabis-based beverages for the Canadian market with Hexo Corp.

Fueled by the passing of last year’s Farm Bill, Greenwave Advisors predicts the North American CBD market will reach $3 billion by 2021 with a long-term estimate of $200 billion. Experts believe the size of the CBD and THC infused products market will be 10 to 20 times the size of the smoking space. 

Some consumers mistakenly believe the Farm Bill legalized hemp and hemp-derived CBD products nationwide, but the bill doesn’t override the U.S. Food and Drug Administration (FDA) who prohibits CBD in foods. It’s a confusing technicality which industry leaders and lawmakers both hope to straighten out soon. Despite the legal grey area, retailers and traditional beverage makers believe that cannabis-infused drinks will make it to market in a big way. 

Lagunitas, owned by Heineken, is already offering HiFi Hops, beer-flavored sparkling water that contains both CBD and THC. Current lack of regulation means individual states can still prohibit the sale of such products. New York, for example, banned CBD in food, because of the FDA technicality.

Caliva says they plan to infuse sparkling water, functional shots, powders, teas, cold brew coffee, and sports drinks with CBD. They intend to have Zola CEO Chris Cuvelier oversee beverage initiatives.

“We believe hemp-based CBD is the ultimate plant-based ingredient and that beverages offer a unique way to deliver the many health and wellness benefits of CBD,” said Cuvelier whose company has 16 years of experience in the drink business. “I am excited to leverage Caliva’s expertise, consumer insights, and technology to create a portfolio of delicious and functional hemp-based CBD beverages.”

 

Works Cited

Micallef, Joseph V. “How The Cannabis Industry Is Revolutionizing The Beverage Sector.” Forbes, Forbes Magazine, 22 May 2019, www.forbes.com/sites/joemicallef/2019/05/22/how-the-cannabis-industry-is-revolutionizing-the-beverage-sector/#3e6917e85673.

Scully, Jules. “Cannabis Firm Caliva Buys Zola to Accelerate CBD Beverage Rollout.” FoodBev Media, 20 May 2019, www.foodbev.com/news/cannabis-firm-caliva-buys-zola-to-accelerate-cbd-beverage-rollout/.

Somerset, Sara Brittany. “Cannabis Company Caliva Acquires Beverage Maker Zola.” Forbes, Forbes Magazine, 21 May 2019, www.forbes.com/sites/sarabrittanysomerset/2019/05/21/cannabis-company-caliva-acquires-beverage-maker-zola/#18a8e1383dbd.

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