CBD-infused drink mix maker OLEO, Inc. announced today it has raised $1.5 million in a convertible note round, which will help the Seattle-based brand scale distribution for its line of products.
Speaking to BevNET, OLEO co-founder and CEO Skyler Bissell said the financing served as a “bridge round” between its 2016 series seed and a yet-to-be-determined future funding round.
Bissell said the round consists of several private financing groups and individuals, however OLEO’s Crunchbase profile notes that California-based firm UniWill Ventures is also an investor in the brand.
Founded in 2015, OLEO launched its first line of powdered CBD drink mixes last year. The products are developed using a proprietary “Micro-Encapsulation” process that allows the cannabinoid to be easily dissolved in cold water. In April, the brand rolled out a line of flavored drink mixes intended for post-workout recovery use occasions with varieties including coconut and three rooibos tea extracts — raspberry, passion fruit, and tangerine. Those offerings retail for $19.99 per box of six single-serve packets.
According to Bissell, OLEO products are currently available in more than 500 retail stores nationwide, including drug, grocery, and fitness channel accounts. While, the bulk of its distribution is through independent retailers in the Seattle region — including Washington drug chain Bartell Drugs — OLEO is available throughout the Southeast and Midwest in Books-A-Million stores.
Bissell said he anticipates “dramatic expansion on the horizon” for OLEO, with much of its growth targeted at specialty retailers and drug stores. He added that he expects drug stores to embrace CBD products in the near future, calling it a “when and not if scenario” that OLEO plans to capitalize on.
“There is hesitancy [for CBD products in drug] due to a number of unknown factors in terms of the regulatory environment,” Bissell said. “That said, many retailers are willing to test and are taking steps to move quicker. The biggest factor is that there’s just a natural fit when it comes to dietary supplements of all kinds and a drug store. So we see drug as one of the biggest channels that will continue to be activated for OLEO, as well as grocery and fitness retailers.”
To guide the brand’s expansion, OLEO hired former Campbell Soup Company executive Ray Martinez to serve as EVP of Sales earlier this year. Bissell added that the funding round will allow the company to hire additional team members on all levels of the business, including a CMO and an operations lead. The financing will also go towards facility improvements and expansions, he said.
Bissell said OLEO has a broad innovation pipeline with two forthcoming products; a single-serve packet of its flavorless CBD Original Mix — which is currently sold in 1 oz. tubs — and a sugar-free variety of its rooibos extract products.
In addition to its own branded products, OLEO offers business-to-business wholesale for food and beverage manufacturers. The company has developed a “Powered by OLEO” label for partner brands, and Bissell said he expects several products to launch next year. Recently, OLEO developed a line of drink mixes for Colorado-based CBD company Elixinol, but Bissell said the brand is also working with several beverage companies to develop hemp-infused offerings.
“We believe there’s a need for standardized trust in the marketplace when it comes to CBD as a food additive,” he said. “Therefore we’re really careful when we do launch partnerships to make sure there’s designation of that powered by OLEO trust mark…. We will, over time, sacrifice business opportunities in order to improve trust and quality and perception for the customer.”
While CBD will remain OLEO’s focus for now, Bissell added that THC products are a future possibility for the brand.
“I do think [THC] will happen in the future, but I don’t think it’s the main strategic focus for our business as we are committed to CBD,” he said. “But over time, we will find the right licensing partner and enter the market with Powered by OLEO products that contain THC.”