Arizona Beverages, the maker of 99-cent iced tea, is partnering with a Denver-based marijuana company to make cannabis-infused products.
Dixie Brands will develop and produce a new portfolio of Arizona-branded consumer goods infused with tetrahydrocannabinol, or THC. Don’t expect to buy them in states that haven’t legalized marijuana, because THC is the substance in marijuana that’s primarily responsible for causing a high.
The products will be designed and the brand will be directed by Herbal Enterprises, LLC, an Arizona-affiliated entity.
Chuck Smith, the CEO of Dixie Brands, said Arizona is “the most iconic and recognized” brand to enter the cannabis market to date.
“This partnership marks a watershed moment for the popularization and expansion of the cannabis sector overall, and is another large step forward for Dixie Brands’ strategy to build a house of famous cannabis … brands,” he said.
The companies didn’t say exactly what kind of products they’ll make, but drinks are likely to be among them. While Arizona is well known for its ubiquitous tall cans of iced tea, Dixie Brands’ flagship product is a line of THC-infused sodas it calls “elixirs.” Dixie also makes chocolates and other candies infused with cannabis.
While many companies including large brands have been exploring the use of CBD in products, fewer have looked at THC.
Arizona is privately held. Don Vultaggio, its chairman and CEO, told The Wall Street Journal that a publicly-traded company wouldn’t be able to take the same risk.
“You’ve got to be willing to try new things,” he said. “The upside is we’re one of the first ones in an emerging space.”
Under the terms of the deal, Arizona can buy a $10 million stake in Dixie Brands. The initial partnership is set to last three years, with an option to renew twice for two more years each time.