Sensing “Right Time,” Vertical Wellness Debuts CBD Beverage Portfolio

After waiting years to enter the CBD beverage market, Vertical Wellness isn’t wasting any time now that it’s in the door. The California-based company is preparing for a wide rollout of a suite of new cannabinoid-infused drinks spanning multiple categories and formats, as it aims to be one of the early national players in the burgeoning CBD market.

For beverage industry veteran J. Smoke Wallin, the president of cannabis brand Vertical who was named as head of its cannabinoid-based health division Vertical Wellness in 2019, drinks represent a particularly timely opportunity. Following the mantra of “wellness and branding delivered with science at scale,” he’s been active in building out the company’s infused product portfolio, which ranges from skin care and topicals (via a licensing partnership with model Kathy Ireland) to CBD strips to pet food. But plans to launch drinks had up until this point been stifled, as lack of federal regulation has left many retailers and distributors waiting for revised guidance before proceeding.

Things began to change in March, however, when Southern Glazer’s, the nation’s biggest wine and spirits distributor, changed its long-held position and announced a partnership with Constellation Brands-backed cannabis manufacturer Canopy Growth to carry its first CBD-infused drink in the U.S., Quatreau. The distributor has picked up several more brands in the months since — including Kill Cliff, MAD TASTY and CENTR — while other liquor houses like Republic National and Breakthru Beverage Group have also entered the arena with the likes of Daytrip and Recess, respectively.

The long wait for a definitive ruling by federal regulators on the status of CBD in food and beverages hasn’t ended, but conditions on the ground are such that brands now have an unofficial green light to operate, according to Wallin.

“We’ve been waiting for the right time,” he said. “The bigger companies have done their risk assessments and have clearly come down on the side of ‘the market is there and the risks are diminishing.’ They’ve decided there will be a ruling in favor of these products that will be forthcoming, or that the FDA is just simply not going to enforce [federal restrictions] and they are comfortable enough with the state regulations that have permitted ingestible in a number of states.”

Vertical’s own response has been definitive: the brand has announced plans in the coming months to release three new beverages in select markets. Those include products under existing brands Taos, which will premiere a line of flavored CBD-infused iced teas in glass bottles, and Hemp Moji, which is positioned as a more playful brand offering a shot line featuring 50mg CBD per TK oz serving, with each tailored to a different functional use: Immunity, Energy, Workout and Sleep.

Meanwhile, the latest release — a six-SKU CBD-infused flavored sparkling water line featuring 25mg of CBD per serving comes under Vertical’s Just Live brand, which produces infused topical products aimed at helping athletic performance and recovery.

In terms of distribution, Wallin declined to offer further details on retailers or partnerships, citing a forthcoming announcement. However, the products will initially launch in Arizona, Nevada, Oregon, Texas, Florida and Indiana, all states where Vertical’s strong relationships with chain retailers can be leveraged for maximum effect, he noted. At the outset, adding points of distribution will be prioritized over any volume metrics.

As distributors begin opening their doors, Vertical Wellness’ recent merger with Canadian hemp processor CannaFarma, set to close on September 20, is helping provide the company with the resources it needs to meet its growth ambitions. Wallin described the deal as the “catalyst” for Vertical’s entrance into beverages, one that has helped get products on the manufacturing line and enhance its infusion technology but will also put the company in a position to attract more capital as it scales.

“They were looking for a company with our kind of philosophy and our kind of brand portfolio, and also for someone to run the business,” Wallin said. “The fact that I could step in, take over the public company with our brands, and now have access to the kind of capital we need to support them was very exciting for me and for all of our investors.”

That portfolio of brands — each of which is tied to a specific consumer, use case and marketing identity, per company strategy — is seen as the key to unlocking the full potential of Vertical Wellness, Wallin said.

“It’s kind of a natural progression from the early brands in the CBD world, which weren’t really brands in the way that are typically defined. They were just products that had ‘CBD’ slapped on,” he said, comparing the approach to generic private labels. “Now we’ve got brands that maybe cover more categories than I would necessarily want to, but part of that is about experimentation. At the end of the day, having a focus on who you are trying to serve and what you mean to that consumer base is a winning strategy, and that’s how we’ve approached all our brands.”