California is currently the largest market for cannabis in the world, and as the space goes more mainstream and laws are changed, a huge market for cannabis-infused products is opening up.
25 brand launches in six months
Many startups are emerging with cannabis soft drinks, sparkling water and non-alcoholic beer for the recreational consumer. Larger established beverage companies are looking to get in on the action and develop their own offering. And even more brands are exploring and emphasizing the health benefits for those with a medical card.
Vertical president Smoke Wallin told BeverageDaily, “The one thing that all brands that succeed have in common is that whatever they’re going after, they’re able to deliver their brand promise to the consumer consistently over time.”
Vertical was founded almost five years ago to work with a launch emerging cannabis brands in the “planning, permitting, development and operation of cultivation, extraction, manufacturing and distribution.”
Portland-based Form Factory is a cannabis products co-packer and the first Oregon-based company licensed by the OLCC’s Recreational Marijuana Program to pack and bottle cannabis-based food and beverages.
In the partnership they bring together infrastructure and manufacturing capabilities to launch nearly 25 brands over the next six months, according to Wallin. If they find success in the large California space, they plan to establish brands in other legalized states.
Vertical operates a campus in Needles, California and will dedicate one of its existing buildings to the Form Factory venture, retrofitting it with new machinery.
“The key in this space is that there’s no real ecosystem and infrastructure in cannabis yet because it’s all been unregulated, and now it’s getting regulated. So having one of the largest legal grow operations in the world right now in California and significant investments in manufacturing … enables us to launch brands and support them as we go forward and as we scale up,” Wallin said.
A huge shift in the market
The beverages that Vertical produces are typically a low-dose sparkling water or soft drink infused with THC or CBD. They are engineered to be fast-acting and mimic the speed of drinking a glass of wine.
Designed as casual, adult-use products, the consumer could ideally drink two or three and get a comparable experience to the same amount of alcohol. It’s a relatively new and niche concept in the beverage industry that has the potential to explode into the mainstream in the next few years.
“I think it’s such huge shift, and it hasn’t reached the average consumer yet. But the idea that you can do what [we’re doing] and bring this product into the social setting and fabric of a mainstream, American consumer is groundbreaking,” Wallin said.
Wallin predicts that the federal prohibition on cannabis will be lifted within the next 12-18 months. But then regulations will be left up to the states, much like with alcohol. Cannabis products will only be sold by licensed cannabis retailers and availability will vary across the country.
He anticipates a lot more traffic in the market and is already fielding requests from companies of all sizes to work with Vertical on developing a cannabis portfolio.
“We’re getting a lot of incoming inquiries from people and I think it’s just going to be really exciting over the next few years to see this new category of beverages develop,” Wallin said.