WOODBURY, N.Y., and DENVER —Iced-tea maker AriZona Beverages and Dixie Brands Inc., a cannabis consumer packaged goods (CPG) company, have signed a binding letter of intent to partner for the production, distribution and sale of cannabis-infused products containing tetrahydrocannabinol (THC).
Under the terms of this deal, Herbal Enterprises LLC, an affiliate of Dixie Brands, will direct brand and product conceptual design, and Dixie Brands will develop, formulate, manufacture and distribute the new portfolio of AriZona-branded, THC-infused packaged goods.
“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, Woodbury, N.Y. “The cannabis category is an ideal space to bring the flavor and fun of AriZona into new and exciting products, and we selected Dixie Brands as our partner to bring these products to market after touring their best-in-class manufacturing facilities and spending considerable time building a strong relationship with their management. Both companies share a heritage of quality, excellence in manufacturing and doing things the right way, and we look forward to all this partnership has in store.”
“AriZona is a power brand and the most iconic and recognized CPG brand to extend into the cannabis market, providing the evolving cannabis consumer with a fun and flavorful experience alongside an iconic brand they know and love,” said Chuck Smith, CEO of Dixie Brands. “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 CPG brands.”
AriZona and Dixie Brands agree to complete definitive agreements within 45 days of the date of their signed letter of intent, or other date mutually agreed to, including a license agreement that will grant Dixie Brands the right to use certain AriZona trademarks, brand and other necessary intellectual property along with Dixie’s extensive formulation, manufacturing and distribution expertise.
In connection with this deal and receipt of any additional required approvals, AriZona or its affiliate may complete a strategic investment in Dixie Brands through the exercise of warrants granted to AriZona equal to the value of up to $10 million in subordinate voting shares of Dixie Brands at price of 59 cents per share for a term of 24 months.
The initial term of the partnership is three years, with an option to renew for up to two additional terms of two years each.
Dixie Brands has been formulating THC- and CBD-infused products since 2010. It operates in six U.S. states, with plans to expand internationally into Canada and Latin America by the end of the year. The company started with a single flagship product, the Dixie Elixir, a THC-infused soda. Its portfolio has expanded to include more than 100 products in more than 15 different product categories: edibles, tinctures, topicals and extractions, as well as CBD-infused wellness products and pet dietary supplements.