Arizona Beverages, which makes Arizona Iced Tea, announced that it entered the cannabis market. Notably, Arizona Beverages signed a three-year licensing agreement with Dixie Brands.
Arizona Beverages announced a new partnership
Dixie Brands will manufacture and sell THC-infused products. The products will be sold in licensed dispensaries under Arizona Beverages’ brand. Herbal Enterprises, an affiliate of Arizona Beverages, will provide the conceptual design for the products. The deal allows Arizona Beverages to buy up to a $10 million stake in Dixie Brands.
Initially, Arizona Beverages will introduce vape pens and gummies. Later, the company plans to expand to other lines like tea, lemonade, soda, coffee, and seltzer.
So far, 11 US states have legalized recreational cannabis, while 30 states have legalized medical cannabis. However, federal law doesn’t allow cannabis usage. Due to the law, cannabis products can’t be transported across state lines. As a result, Dixie Brands will manufacture cannabis products in each state where it operates.
In the press release, Don Vultaggio, Arizona Beverages’ chairman, discussed the cannabis market. He said, “The cannabis market is an important emerging category, and we’ve maintained our independence as a private business to be positioned to lead and seize generation-defining opportunities exactly like this one.” He also said, “The Cannabis category is an ideal space to bring the flavor and fun of Arizona into new and exciting products.”
Other major players
Constellation Brands (STZ) entered the cannabis sector. The company bought a 9.9% stake in Canopy Growth (WEED) (CGC) in October 2017. Constellation Brands increased its stake to 38% in August last year. In addition, Constellation Brands owns Corona and Modelo. In June 2018, Lagunitas Brewing introduced two versions of non-alcoholic cannabis-infused sparkling water. Heineken owns Lagunitas Brewing.
Overall, cannabis stocks rose in the first half of 2019. More US states approved medical and adult-use cannabis products. However, recent scandals and escalating trade tensions between the US and China dampened investors’ sentiments.
In 2019, the Horizons Marijuana Life Sciences Index ETF (HMMJ) and the ETFMG Alternative Harvest ETF (MJ) have returned 19.3% and 15.1%, respectively. In comparison, the S&P 500 Index has increased 17.2% as of August 8.
Recently, Cronos Group (CRON) and Innovative Industrial Properties (IIPR) reported their second-quarter earnings. Notably, both companies outperformed analysts’ revenue expectations. To learn more, read Cronos Group Rises on Impressive Q2 Sales and Why IIPR’s Q2 Earnings Came in Strong.