AriZona Ice Tea goes cannabis

Ready-to-drink tea brand AriZona Beverage is entering the cannabis industry. The company announced last week that it had entered into an agreement with Dixie Brands, which manufactures and sells cannabis-containing beverages, chocolates, jelly beans and topical creams. Under the partnership, Dixie, which operates in six U.S. states, will manufacture and distribute AriZona products in the CBD and THC in authorized dispensaries.

However, as a private company, AriZona Ice Tea could run into some difficulties. Indeed, although cannabis is legal for recreational use in 11 states and for medical use in over 30 states, it is still prohibited by federal law. This means that the products cannot be transported across state borders, posing packaging and distribution problems. However, under the agreement, Dixie would manufacture the products in the states where they are sold. In addition, profits from cannabis sales may also be limited by the banks.

«Cannabis is ideal for combining AriZona's flavor and fun with new products,» said Don Vultaggio, president of Arizona Beverages in a press release. AriZona is looking to diversify its products after losing its top spot as the leader in ready-to-drink tea to Pure Leaf, a partnership between Unilever PLC and PepsiCo, Inc. Over the past two years, AriZona has launched new products such as beef jerky and fruit snacks, and plans to launch a line of seltzers with fruit juices later this year.

Other beverage brands have also begun to take an interest in cannabis. In 2017, beer maker Corona Constellation Brands announced a stake of nearly 10% in Canopy Growth Corporation, the world's largest publicly-traded cannabis company, and increased the investment by $4 billion last year. The Coca-Cola giant had also expressed interest in 2018, just like the British company Diageo, which markets Johnnie Walker whisky and Guinness.