Facing Shrinking Market Share, Arizona Iced Tea Co To Sell Marijuana Products

The company that makes Arizona Iced Tea is getting into the marijuana business, according to a report by The Wall Street Journal.

Arizona Beverage Company has made a deal with Dixie Brands Inc., a cannabis company in Denver that manufactures and sells weed vapes, drinks, tinctures, topical creams and candies in five different U.S. states.

Arizona Beverage Company wants to start with marijuana-infused gummies and vape pens, and the deal involves Dixie Brands making the products and selling them in licensed dispensaries. The deal will also give Arizona the right to purchase up to $10 million in stake in Dixie Brands.

After the initial launch, the maker of Arizona Iced Tea wants to start selling a variety of drinks with weed infused into them. The company also wants to get a jumpstart in the marijuana market. 

Other companies, like Corona and Molson, the company that brews Coors, are currently developing weed drinks in Canada, but they’re being cautious about the U.S. market, because despite its legality in certain states, marijuana is still illegal at the federal level.

“You’ve got to be willing to try things,” said Don Vultaggio, chairman and CEO of Arizona Beverage Company. “The upside is we’re one of the first ones in an emerging space.”

The company that brews Heineken in California also recently got into the weed beverage business, with a drink called Hi-Fi Hops. It’s currently only available in California. 

There are 11 states with legal recreational marijuana and 30 states where the drug is legal for medical purposes only. However, because of federal law, the drug can’t be transported over state borders, and many banks refuse to take money from cannabis-related industries. 

Under the deal, Arizona Beverage won’t be involved in production of the products, and Dixie Brands is going to make the products in each state in which they’re sold. 

Although Arizona Iced Tea is the leading U.S. iced-tea brand by sales volume, its market share has dropped from 23.4 percent in 2013 to 16.2 percent in 2018, according to Euromonitor International, the report said.