Althea Group Holdings’ (ASX:AGH) wholly-owned subsidiary, Peak Processing Solutions has signed a binding term sheet to form a joint venture in the US with Flora Growth Corporation to enter the thriving legal hemp derived delta-9-THC cannabis-infused beverages market.
Peak is a recognised market leader in the contract development and manufacturing (CDMO) of cannabis-infused beverages, with an unrivalled 40% market share in Canada1. Now, Peak is taking steps to expand its reach into the US via an intended joint venture JV with Flora, a prominent cannabis wellness company with extensive sales and distribution networks across the USA, including a successful e-commerce platform with over 350,000 registered customers.
Large addressable market
The US cannabis beverages market, valued at US$966.92 million in 2024, is projected to grow at a CAGR of 54.30% to reach US$19.06 billion by 20282.
Cannabis beverages containing hemp derived delta-9-THC are legal country wide in the US, with significant opportunities for market expansion.
The JV will be strategically positioned to establish cannabis beverages distribution in the US by adeptly handling regulations and facilitating market access via consumer-packaged goods (CPG) channels like wine and liquor stores, rather than state-licensed recreational cannabis dispensaries.
This approach enhances accessibility and broadens consumer reach, maximising market penetration and growth potential.
Peak USA operations
Peak intends to replicate its Canadian success, where it has a 40% market share, by manufacturing its proprietary cannabis emulsion Envision in the US from locally sourced hemp, which will become the active ingredient in its US made cannabis beverages.
Peak's model for this venture is low risk and capital light with production that is co-located within Flora’s existing manufacturing facility, whilst formulation and canning is to be outsourced to a leading third-party co-packer.
Experienced representatives from Peak’s Canadian operation will manage and supervise all aspects of its US operations, ensuring adherence to its strict product quality and taste standards.
Local partnership
Peak contributes production and quality expertise, while US-based Flora brings a wealth of sales and marketing experience within the dynamic landscape of lifestyle cannabis in the US.
Peak and Flora have initially developed five cannabis beverages: two seltzers and three sodas. The products are intended to be sold in wine and liquor stores across the US and via Flora’s e-commerce platform.
Melo, the JV's seltzer brand, will offer Wild Berry and Grapefruit flavours. Cloud Cola, the JV's soda brand, will introduce Classic Cola, Root Beer, and Orange Creamsicle flavours.
"Today's milestone in the execution of a binding term sheet to facilitate a joint venture with Flora is a testament to Peak’s unmatched expertise in the cannabis beverage space and relentless dedication to innovation and growth,” Althea’s CEO and Managing Director, Joshua Fegan, said.
“As we embark on this strategic venture, we are unwavering in our commitment to delivering excellence in the rapidly evolving cannabis beverages market in the USA. Our launch date target and first sales are set for late July 2024. With our combined expertise and shared vision, we are utilising a capital light model and poised to drive success and create sustainable value for our shareholders.”
