The beverage giant cites a lack of certainty over federal legalisation of cannabis products: resulting in an unwillingness from other stakeholders (such as retailers and distributors) to take on CBD brands.
Difficulties in launching and scaling CBD products
The goal was to ‘forage a new space at the intersection of the beverage world and the CBD frontier’, with their premium, non-alcoholic beverages and beverage drops.
In contrast to the Canadian joint-venture, Truss USA has been focusing solely on CBD beverages (never exceeding 0.3% THC) as per US regulations.
Hemp-derived CBD water Veryvell was launched in Colorado in January in 2021, with Truss USA now shipping to 26 states including Alaska, Arkansas, Colorado, Connecticut, Florida, Iowa, Kentucky, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Texas, Vermont, Virginia, and West Virginia.
However, the company does not see enough potential in the category over the near-term to keep operations running: in particularly noting the difficulties in scaling up the business as it would hope to do in an emerging beverage category.
“While several US states have legalized cannabis products in recent years, including a handful in the recent election cycle, there remains no near-term pathway to federal legalization, leaving uncertainty in the market,” says the company.
The FDA recently sent out a raft of warning letters to certain CBD-infused brands: creating what appears to be an ‘aggressive’ position against brands which fail to market their products clearly.
While Truss USA was not one of these companies (and its announcement to shutter US operations came before the FDA warnings), the crackdown illustrates the continued regulatory minefield and a patchwork of state regulations that CBD brands face.
“That’s left some chain retailers and distributors hesitant to accept CBD beverage brands, complicating distribution and making the path to profitability a challenge.”
Should the regulatory landscape in the US change, however, the company says it would be prepared to re-enter the space.
Importance of scale
Meanwhile, Molson Coors and La Colombe Coffee Roasters have jointly agreed to end a distribution agreement for the latter’s RTD coffee drinks in March, with La Colombe combining operations for its RTD coffee business with its bagged coffee and cold brew coffee multi-serves.
Molson Coors says the decisions in RTD coffee and cannabis will allow the company to ‘invest more time, energy and resources behind spaces outside the beer aisle that offer the most growth potential’, such as ZOA in the energy drink space, Five Trail in the full-strength spirits space, and Topo Chico Spirited, a forthcoming offering in the spirit-based ready-to-drink cocktail space.
The company also continues to test and trial other non-alcoholic beverages via its partnership with L.A. Libations.
“Not every project or innovation will meet our ambitions. What’s important is that we learn from each and build capabilities that will serve us well into the future,” Pete Marino, Molson Coors’ president of emerging growth, said in an email to US distributors said.
“The key for us is to go big behind what’s working and smartly pivot out of what isn’t working from a scale standpoint, like CBD beverages.”
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