Arizona Tea maker enters the cannabis market

Marijuana products will soon hit the masses, as the maker of Arizona Tea enters the cannabis market, starting with vape pens and THC-infused gummies.

Privately held Arizona Beverage announced Tuesday that it reached a licensing deal with Dixie Brands, which makes and sells drinks, chocolates, gummies and topical creams that are laced with marijuana. Through the partnership, Dixie, which operates in six U.S. states, will manufacture and distribute products branded with Arizona’s name. The products will be sold through licensed dispensaries.

The deal also gives Arizona the right to buy a stake of up to $10 million in the cannabis company.

Arizona Beverage’s namesake iced teas are a staple at convenience stores and supermarkets around the country, including 7/11s, Walmarts, and Walgreens, which might indicate marijuana products are edging closer to the mainstream. The agreement is one of the first examples of a major consumer company entering the cannabis market.

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

Other beverage brands have also been dipping their toes into the marijuana space. In 2017, Corona beer maker Constellation Brands announced a near 10% stake in Canopy Growth Corporation, the world’s largest publicly traded cannabis company, and it increased the investment last year by $4 billion. California-based Lagunitas Brewing, owned by Heineken, also launched cannabis-infused sparkling water to be sold in select California locations.

However, as a private company, Arizona may have more leeway to take this step. Although marijuana is legal for recreational use in 11 states and for medical use in more than 30 states, it remains prohibited by federal law. This means it can’t be transported across state lines. Profits from marijuana sales also can be restricted from banks.