Marijuana News: Iced Tea Giant Announces New Deal To Produce New Cannabis-Infused Products

Iced tea maker Arizona Beverage Co. on Tuesday announced it has reached a deal to join the burgeoning cannabis market. The New York-based company said it reached a licensing deal with cannabis company Dixie Brands Inc. in a move that would provide growth opportunities for marijuana-infused drinks.

Denver-based Dixie has mostly focused on selling products like chocolates, gummies and drinks that are all made with marijuana. Dixie’s partnership with Arizona will see the company manufacture and distribute Arizona branded products in the six states Dixie operates out of, which includes Colorado and Michigan.

“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,” Arizona Chairman Don Vultaggio said in a press release. “The cannabis category is an ideal space to bring the flavor and fun of AriZona into new and exciting products.”

Under the deal, Arizona will also have the right to buy a $10 million stake in Dixie.

“AriZona is a power brand and the most iconic and recognized CPG brand to extend into the cannabis market, providing the evolving cannabis consumer with a fun and flavorful experience alongside an iconic brand they know and love,” Dixie CEO Chuck Smith said.

Vultaggio told the Wall Street Journal that the deal means the beverage company is now "one of the first ones in an emerging space."

The Journal cited a Euromonitor International report that the privately held Arizona leads all U.S. iced-tea brand by sales volume, though it has suffered a market-share dip from 23.4% in 2013 to 16.2% in 2018.

This deal with Dixie makes Arizona the latest beverage company to test the waters with marijuana products. Constellation Brands, the company behind Corona beer, announced in 2017 that it had purchased a 10% stake in Canopy Growth Company. Another beer giant, Heineken, also launched its own cannabis-infused sparkling water through the California-based Lagunitas Brewing.

Just 11 states have made recreational marijuana legal — Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington.