CBD sparkling water Day One is getting a second chance.
Launched in 2019, Day One was initially positioned to be a leading beverage brand for Genius Fund, a multimillion dollar startup that aimed to become a multibillion dollar leader in the California cannabis market. Backed by a Russian oligarch to the tune of $164 million and at one point employing over 300 people, Genius Fund appeared for a moment to be well on its way towards that goal, until the funding dried up, the company collapsed, and Day One disappeared along with it.
Now, under new ownership, Day One is relaunching, announcing this week plans to enter retail in seven states as well as resuming online direct-to-consumer sales with its three-SKU line of beverages.
Available in Grapefruit, Lemon and Lime flavors, each 12 oz. can of Day One contains 20 mg of CBD, zero calories, zero sugar and is flavored with natural fruit juice. The drinks sell for $35.99 per 12-pack and will retail for $2.99 per can, a move that aims to drive trial by undercutting more expensive CBD-infused beverages on the market.
“I’m a huge cannabis advocate,” Day One CEO Chris Clifford told BevNET this week. “I’m a huge believer that cannabis is a wellness product and that CBD is a functional wellness ingredient…. But CBD is kind of like the gateway [into the cannabis category]. CBD has been popularized, but we’re only at the start of really truly understanding the power of this plant.”
Day One was originally developed by Clifford while he served as CEO of Natural Hemp Company, a subsidiary of Genius Fund. He first became involved in Genius in 2018 through founders Ari Stiegler and Gabriel Borden, whom he knew from business school. Before that, he worked primarily in the tech sector, including as managing partner of venture studio and software development firm Building Blocks Ventures, but had long been interested in cannabis, he told BevNET.
Clifford finally joined Genius full-time in late 2018 to develop an internal CPG studio that could create new cannabis and CBD brands with mainstream potential, which ultimately led to the launch of Day One.
Primarily funded by Russian coal magnate Dmitry Bosov, Genius Fund was composed of over 50 corporate entities and aimed to have a hand in all aspects of the California cannabis industry, from cultivation and processing operations to CPG brands and even a retail store in L.A.
But, according to a five-part report from dot.LA, Genius Fund was anything but stable and suffered from frivolous spending and poor investments. Clifford told BevNET that in one instance, the company had “deployed an incredible amount of capital” into hemp farming and manufacturing, building two facilities that cost roughly $30-$40 million each, but made the investment during a high period for CBD prices only to watch average prices plummet as they attempted to go to market.
“Their unit economics were flawed,” Clifford said. “They had their own internal issues and they were forced to shut down the overarching business after just under two years of operating.”
Though Day One only constituted a sliver of Genius Fund’s overall operations, Clifford said that the brand was growing and at its height achieved strong sell-through in retail, moving more than 20 cases per week in several accounts.
But the product was discontinued last year when Genius Fund fell apart amidst a whistleblower retaliation lawsuit and financial woes. The final blow came in May 2020 with the sudden death of its key financier; Bosov was found dead in his Moscow home, allegedly from a self-inflicted gunshot wound to the head. Initial news reports claimed authorities were unsure if it was intentional or accidental, and a translated report from Russian news site RBC suggested he had been behaving erratically prior to his death, transferring assets to himself and laying off employees.
Clifford, meanwhile, remained largely insulated from the turmoil as he focused on scaling Natural Hemp Company and Day One, but was left needing to pick up the pieces of the project after the collapse. Rather than simply moving on, Clifford said he still believes Day One is a strong brand in an emerging category that has the potential to succeed if backed by proper leadership.
So, earlier this year, Clifford acquired the rights to the Day One trademark and formulations from Genius Fund and began rebuilding the brand from scratch.
“At the end of the day, building a brand takes time,” Clifford said. “Anytime you build a brand, whether it be building the supply chain or building out the brand identity, that’s months and months of time.”
The newly independent company has raised new financing from a mix of institutional and individual investors and has brought on advisors and experienced beverage industry talent to helm sales and operations, including former Red Bull execs Chris Alfieri as COO and Andy LaRocca as VP of sales and distribution. The drink formulations have also been revised.
Though Clifford hopes the Day One brand can eventually expand into other categories within the cannabis and CBD sectors, including THC products, the immediate focus is on the single product line.
“Relaunching is a difficult thing as it is, and it’s even more difficult to raise money to relaunch something when a lot of people don’t understand why it went under. But we were able to do it,” he said. “And we were also able to bring on some pretty established beverage veterans … to help us with our distribution goals. Because at the end of the day we need to get this brand out there. We don’t want to just be a nice Instagram brand, we actually want to go to market at a large scale.”
Clifford said the brand’s rollout strategy is built around trade marketing and point-of-sale programs, while its in-house digital marketing team focuses on hyperlocal targeted ad campaigns. Though not on shelf yet, the company intends to launch the drinks in retail in California, Texas, Illinois, Ohio, Oklahoma, Kansas and Tennessee in the near future.
Day One’s relaunch comes at an opportune time, as California this week legalized the sale of CBD-infused food and beverage products, creating a regulatory framework that will help stabilize a previously uncertain retail environment.
Though the brand is still awaiting its first authorizations, Clifford said the CBD beverage market is starting to pick up momentum across the country, noting mainstream retailers like Circle K, Speedway, Kroger and Publix are now stocking infused products. Meanwhile, distributors like Southern Glazer’s Wine & Spirits have begun servicing CBD products and beverage conglomerates such as Molson Coors Beverage Company are expanding their stakes in the space.
“It was just unfortunate that we had to go offline for the time that we did, because we would have continued fostering relationships that we had at that point,” he said. “So we’re a little bit behind, but we’re bullish and I believe that we can catch up. We have the right contacts and we have the right product.”