The beverage giant cites the lack of certainty about the federal legalization of cannabis products, resulting in the unwillingness of other interested parties (such as retailers and distributors) to take on CBD brands.
Difficulties launching and scaling CBD products
The goal was to “carve out a new space at the intersection of the beverage world and the CBD frontier,” with its premium non-alcoholic beverages and beverage drops.
Unlike the Canadian joint venture, Truss USA has focused solely on CBD drinks (never exceeding 0.3% THC) per US regulations.
Hemp-derived CBD water Very welllaunched in Colorado in January 2021, and Truss USA now ships to 26 states including Alaska, Arkansas, Colorado, Connecticut, Florida, Iowa, Kentucky, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Texas , Vermont, Virginia, and West Virginia.
However, the company doesn’t see enough potential in the category in the near term to keep operations running: in particular, it sees difficulties in expanding business as it would hope to do in an emerging beverage category.
“While several US states have legalized cannabis products in recent years, including some in the recent election cycle, there is no short-term path to federal legalization, creating uncertainty in the marketplace.” says the company.
The FDA recently sent out a series of warning letters to certain CBD-infused brands – creating what appears to be a “punch” position against brands that fail to clearly market their products.
While Truss USA was not one of these companies (and its announcement to shut down US operations came before the FDA warnings), the crackdown illustrates the ongoing regulatory minefield and a patchwork of state regulationsthat CBD brands face.
“That has left some retailers and distributors hesitant to accept CBD beverage brands, complicating distribution and making the path to profitability challenging.”
However, if the regulatory landscape in the US changes, the company says it would be prepared to re-enter the space.
importance of scale
Meanwhile, Molson Coors and La Colombe Coffee Roasters jointly agreed to finalize a distribution agreement for the latter’s RTD coffee beverages in March, with La Colombe combining the operations of its RTD coffee business with its bagged coffee and coffee multi-services. cold.
Molson Coors says the decisions on coffee and RTD cannabis will allow the company to “invest more time, energy, and resources behind spaces outside the beer aisle that offer the most growth potential,” such as ZOA in the beverage space. energy drinks, Five Trail in the pure spirits space and Topo Chico Spirited, an upcoming offering in the spirits-based ready-to-drink cocktails space.
The company also continues to sample and test other non-alcoholic beverages through its partnership with LA Libations.
“Not all projects or innovations will meet our ambitions. The important thing is that we learn from each other and build capacities that will serve us in the future”,Pete Marino, president of emerging growth for Molson Coors, said in an email to US dealers.
“The key for us is to go big after what works and get smart out of what doesn’t work from a scale standpoint, like CBD drinks.”
Hear from Truss Canada and LA Libations in our beverage innovations webinar
Don’t worry if you missed last week’s beverage innovations webinar – featuring speakers from Truss (Canada), LA Libations, Rabobank, GoodSport and Nerd Focus! You can still catch up on the lawsuit for FREE here.